Stocks and Gold Update - 11/8/09

Stocks

The s&p500 made a low on Monday at 1029.38, .62 points below the 1030 support level given last Sunday. Stocks then continued higher into the end of the week as forecast with the high of the week occurring on Friday morning. Cyclically, that high could have been the top of this short term up move however the wave structure does not look complete and also the s&p500 is in between resistance zones. We are also currently withing the next swing cycle zone(11/6 to 11/9) so it could go up for 1-2 more days into the next resistance zone at 1074 to 1077, which is not much beyond Friday's high. Next resistance is at 1085 and then 1093.

Gold/GLD

Gold had another good week, moving well beyond the October high and the target price of 105.5. Wave four ended on 10/28 with wave five either complete as of Friday or near complete. GLD is within a swing cycle zone that ends today but could allow one more day of higher prices since it occurs on a weekend. Initial support for a wave two low is 100 to 101 on GLD.

One thing to watch is the length of wave five. If it extends beyond 108.58 on GLD that would make wave three shorter than wave five and wave one, which invalidates the wave count as wave three can never be the shortest wave within a five wave impulse. If that happens it indicates we are within a larger wave three that would bring much higher prices sooner rather then later.

As has been stated previously, the long term gold chart patterns look very bullish and could bring much higher prices. For that reason it is best to do minimal amounts of profit taking at short term tops as the wave counts could be wrong and surprises will tend to be to the upside.