Peaking Over The Edge Toward Destruction.

An orderly exit of Greece from Euroland could be managed without destructive mayhem. However, if it’s a fight to the wall, this little mess becomes a giant out-of-control mess, speading over Europe first and then over the world. Tiny Tim and Chopper Ben are squirming as USA Big-Boy Banks have huge European exposure. If this baby goes into a rolling Euro Crash, the Tsunami engulfs New York bankers drowning their remaining capital. New York’s Boyz are already technically bankrupt; kept alive by the Federal Reserve’s and US Treasury’s theft-takings from American taxpayers. A lingering Euro mess could backfire and implode.

“EU ratchets-up pressure with a Greek default threat. European Union officials have stepped-up pressure on Greece and its creditor banks in a complex game of three-way brinkmanship, signalling that they will allow a Greek default to run its course unless both sides accept more pain.” -Ambrose Evans-Pritchard International Editor, The Telegraph – Photo Wikopedia

European-Greecean Bondholders Gave Their “Final Offer” For Haircut Discounts.

Greece’s opponents in Greek Politics, ECB Bankers and Germany- France Want More Bond Discounts. Interestingly, Those Bondholders With Credit Default Swaps’ Insurance Want To Crash. Those Boyz Think They Get Paid More Anyway. But, CDSs’ Sellers May Not Have The Loot To Pay.

“The head of the European Commission’s economics team said Brussels is prepared to allow credit default swaps on Greek bonds to come into play if talks fail to reach a deal.”

“Austria’s finance minister Maria Fekter said patience with Athens is exhausted. ‘Greece has failed its austerity targets by a wide margin. The Greeks have made decisions, but they weren’t implemented. They have agreed to austerity measures, but costs haven’t come down. This situation has caused great consternation,” she said at a meeting of EU finance minister in Brussels.”

Editor: What pray tell did they expect with those nasty numbers? Greece has no chance for repayment. The lenders deserve to lose.

“We’re sending a direct message to Greece that the community expects more. We’re not pleased and only when there’s a written message on the table in front of us, can further assistance be discussed,” she said.”

“The head of the European Commission’s economics team Mario Buti said Brussels is prepared to allow credit default swaps (CDS) on Greek bonds to come into play if talks fail to reach a deal that gives Greece enough debt relief to claw its way back to viability. “Triggering CDS may have to be considered,” he said.’ The comment is a clear warning to private creditors holding €206bn (£172bn) of Greek debt that the EU will not step-in with fresh money to prevent a default on March 20, when Greece must make a €14.5bn debt payment.”

“The EU authorities are demanding that banks, insurers, and pension funds accept a cut in the interest rate on new bonds to 3.55 – on top of the 50% haircut agreed – to reflect the drastic deterioration in Greece. The creditors are holding out for 4%. EU officials would leave Greece’s debt at 125% of GDP by 2020, above the 120% level deemed the maximum tolerable burden.” -Ambrose Evans-Pritchard, The Telegraph Editor: Even this drastic cut is not enough. Greece is far from most any kind of repayment as they are in far too deep for a come-back.

We do not want to wish bad luck on anybody but it might be better for a disorderly default to occur spewing economic wreckage over the world so this mess is done and overwith. Unless and until the debts are repaid, or written off, there are no logical paths toward renewed prosperity. Credit for consumers, housing and commerce is frozen in time. I say let’s finish it and restore the world now.

Dow Jones Industrial Average: Closed at 12660.46 -74.17 on normal volume and gently rising momentum. The Dow has bear double-topped at 12,750 resistance, or so and is now correcting with a mild pullback. While selling is underway I do not expect much of it. Rather, good support is nearby at 12,500 (a major number) and price remains above moving averages. This is a “go flat Friday” but we still have two days remaining in January. Look for mushy price congestion between 12,500 and 12,750 until the middle of next week. Then I would be not surprised to see more upside strength.

S&P 500 Index: Closed at 1316.32 -2.11 on normal volume and flat momentum. Price is stuck and supported on a top channel price line. This line was former resistance but is now new support. Next week watch to see if the 500 Index holds1300 and if the Nasdaq can stay over 2450. If those two numbers hold-up, and I think they can, we are going higher with stocks. Resistance is 1325 and support is 1315. Price is holding above all moving averages and channel lines. As cliff divers say on the way down; so far so good. This trading situation can flip either way in our view, but the bias is long. However a technical correction is imminently due. Let’s see what the S&P traders do about 30 minutes after the Monday open.

S&P 100 Index: Closed at 595.36 -1.26 as price is jammed into a rising bull triangle but is running out of room. We are near the triangle apex.  When this happens we get a stall and price jumps either up or down; it cannot continue inside the technical triangle. Volume is normal and momentum is flat. Price is still confined inside the rising triangle channel and getting squeezed tighter. Also, 600 is major, toppy resistance and 595 on the close is support. We would suspect we have more room to go higher to perhaps 615 and maybe even 620 before the top is in and we drop about -50 points in a normal correction. Look for a final peak at the end of April when “Sell in May and go away” begins with some stronger pressures.

Nasdaq 100 Index: Closed at 2461.77 +7.14 on rising but flattening momentum and 105% of normal volume. The price touched new 12 month highs surpassing the July, 2011 top near 2425-2430. Also, very importantly, a tiny continuation triangle is forming with higher lows. This index is our leading signal for stocks. This is showing us more buying could be just ahead. The other stocks’ charts are not as strong but keep in mind they lag this faster index mover. With two trading days left, the Nasdaq 100 index could hold-on to 2450. And, with more buying coming, a potential run to 2500 is possible.

30-Year Bonds: Closed at 143.44 +1.58 on falling but basing momentum. The huge topping pattern has a bear double top and excluding those two highs above 145.00, the balance since last July has a bear parabolic top. Stocks are rising and bonds should be selling. They are trying to sell but there is too much pressure building in Europe. So we have quandary.  Bonds are trying to sell but are being supported at the same time on fear and security. Fundamentals tell us we should be afraid based upon the activities of central bankers and politics. But cash has been moving into stocks as the fund managers and others are fearful of missing the rallies. Expect the bond price to linger with indecision between 140.00 support and 143.50 resistance in a choppy trading channel until we get some solid news on Greece and Europe. That trading could cover most of next week, or even longer depending upon the news.

XAU: Closed at 202.68 +2.75 rising on a double bar breakout over Thursday and Friday on rising precious metals trading. Momentum broke-up sharply higher. The metals to shares ratio has been bottom crawling since last August. Now the ratios crossed over to the buy-side with a tiny but visible move-up. The major price of 200 is now firm support. We should touch 215 to 220 by the end of next month. In April, look for a higher price of 225-230 with a chance at something even better.  We are in the buy zone until the end of April with two mid-cycle mild corrections on normal profit-taking.

Gold: Closed at 1738.10 +16.20 on hard rising momentum coupled with a breakout above a previous top channel line. The price of 1726.50 is new support. Resistance is 1748.50.  We have now reached a 50% positive retracement. The wave counts are abnormal as the wave one up is larger than two and three on the futures chart. We expect some month-end choppy trading with price rising a little over Monday-Tuesday followed by a mild pullback. Our seasonal high should be at the end of April. That one could be $1850 to $1923 followed by two months of channeled trading in a range of about $100. Our annual highs could be posted at the end of August-early-September near $2000-2050. If things get into major upset this fall for numerous reasons, the price could be headed for $2250 to $2450 and then back to $1923, technically.

Silver: Closed at 33.91 +0.46 with a mid-channel breakout above the 200-day moving average. Momentum is up and the price lies inside congestion from $30.48 to $34.48. Once we are clearly free of $35.00, we see resistance at $36.08 and $38.15. The close was above all moving averages and the buy pressure this week has been excellent. There is also another middle resistance on the upper channel line at $37.48. A key technical difference between gold and silver is this: Gold jumped out of a major longer range selling channel on a breakout. Silver is showing us a smaller breakout inside the old down-trending channel. Gold has just advanced further and faster. Laggard silver will catch-up, but it was badly wounded in previous selling from $49.62 to $26.48. Last year, silver rallied from $26 to $49 in 90 days. Can this happen again? Not sure but we’ll see. The trend is higher for three months.

US Dollar: Closed at 78.81 -0.60 with the price skidding under the 20-day and 50-day averages. The close was above the main 200-day at 77.78. With the Euro temporarily rising on some news relief;  the US Dollar is on a sell bias. There is still stronger dollar support at 77.50 and resistance at 79.50. We think the Euro will resist at 133.50 and the dollar will support at 77.50-78.50 over the next 1-2 weeks of trading. Keep in mind that European news of any magnitude whatsoever can move both of these currencies strongly.

Crude Oil: Closed at 99.56 -0.27 on gently falling momentum and a price stuck in a trading channel between 98.50 and 102.50. Two moving averages and a supporting channel are converging on the closing price. We can see some more weakness and sideways trading followed by a tiny rally to 102 next week. Then, more selling appears with potential for oil to drop to $96.00. Following that pullback, we can see a 20 dollar rally to the end of April on techncials, fundamentals and refinery changeovers to $120.00.

“Euro is losing its relationship with riskier assets that underpinned the currency in 2011 as the deepening sovereign debt crisis reduces creditworthiness of even the biggest economies in the region.”

“The 17-nation currency has fallen -8.6% against the dollar since October, while the Standard & Poor’s 500 Index has gained +2.4 percent, and the correlation between the two dropped to 58% from a record 91% in November, according to Bloomberg. The Euro had moved almost in lockstep with investments linked to growth, including stocks and the Australian dollar, since January, 2011.”

“This decoupling is taking place as European Central Bank President Mario Draghi cuts interest rates and promises banks unlimited cash for three years to rein in soaring borrowing costs for governments ranging from Italy to Spain to France, which lost its AAA credit rating last week. The infusion drove the Euro to a 20-month low of $1.2624 last week. Strategists also anticipate more losses as the U.S. economy improves while the Euro zone shrinks, driving international investors away from the region’s assets. At the same time, European officials led by German Chancellor Angela Merkel are taking steps to contain the crisis and sovereign borrowing costs eased last week.”

“The Euro is the worst performer this year among the 10 currencies tracked by the Bloomberg Correlation-Weighted Indexes, falling -1.7%. Major peers that have appreciated the most against the dollar are Brazil’s real, Mexico’s peso and New Zealand’s dollar, currencies with a traditionally high correlation to U.S. equities and the favorites of speculators seeking riskier bets, according to Bloomberg. “Investors should be short the currency now and we’re concerned that Friday’s mass downgrades of Euro-zone countries by S&P is not fully priced yet,” Mansoor Mohi-uddin, Singapore-based chief foreign-exchange strategist at UBS, said in a January 14 report.”

“The escalating Euro -zone sovereign debt crisis is both raising concerns over the long-run growth outlook for the Euro-zone, sustainability of the currency bloc, and solvency of some members,” Lee Hardman , a currency strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in London, said in a January 11 e-mail.”

“A growing divergence between Europe and the rest of the world is driving away investors as ECB interest-rate cuts remove one of the Euro’s pillars of support. The currency appreciated as much as +6.6% between January and May, 2011 as Jean-Claude Trichet, who stepped down as head of the ECB in October, raised the central bank’s main rate twice, to 1.5% from 1%.”

“Draghi has undone those increases and foreign holders sold the greatest amount of Euro zone assets in October since February, 2000, according to ECB data released last month. He has signaled more cuts may come, saying at a January 12 press conference in Frankfurt that there are “substantial downside risks” to the economy and policy makers stand “ready to act.” -Catarina Saraiva 1-16-12 Bloomerg.net

Our Forecast Remains Intact. Greece Exits Euro Currency And Euro-land. After the dust settles on that one, then we see Portugal follow; then Italy? Others planning to enter Euro-land will stay out; especially in Eastern Europe.

“Ambrose Evans-Pritchard: 2012 could be the year Germany lets the Euro die. So we enter Year IV of the Long Slump, the cruellest, yet though not the most acute.”

“There will be no Chinese credit explosion this time, no real help from post-bubble India or over-stretched Brazil. It will be a global downturn on all fronts, aborting what remains of recovery even before industrial output in the OECD bloc has regained its pre-Lehman peak.”

“The second wave will hit with youth unemployment already at 45% in Greece and 49% in Spain; and with the US labor participation rate already at depression levels of 64%. We will hear more about Italy’s Red Brigades, Greece’s Sect of Revolutionaries, and America’s militia groups, and how democracies respond. Proto-fascism in Hungary is our warning.”

“China’s surgical soft-landing will slip control, like a Fed tightening in 1929 and 2007, or Japan’s squeeze in 1990. Once construction has run amok, bears will have their way.” – Ambrose Evans-Pritchard International Business Editor The Telegraph 1-2-12 Editor: He is correct Chickens come home to roost in Europe. They will not be alone as it spreads to parts of South America, Asia and finally North America. Key dates coming quickly: The January 27 preliminary meeting in Europe was cancelled. They have to deal with Greece first who will default on an $18 Billion bond payment due on January 20, 2012. An orderly default is best. A disorderly one could have dire consequences spreading messes over southern Europe very quickly. I think it’s orderly.

“Political corruption is the abuse of public power, office, or resources by elected government officials for personal gain, e.g. by extortion, soliciting or offering bribes It can also take the form of office holders maintaining themselves in office by purchasing votes by enacting laws which use taxpayer money. Systemic corruption, the complete subversion of a political or economic system. Governmental corruption of judiciary is broadly known in many transitional and developing countries because the budget is almost completely controlled by the executive. The latter undermines separation of powers, as it creates a critical financial dependence of the judiciary. The proper national wealth distribution including the government spending on the judiciary is a subject of the constitutional economics. It’s important to distinguish between the two methods of judiciary corruption the government (budget planning and various privileges), and the private.” The Boss Tweed Gang were pikers compared with modern bankster and polical corruption.

Political and Economic Corruption is so deep and embedded in many nations it will take high drama and revolt to root it out. We would encourage good citizenship, voting and a peaceful resolution. History says its get done with supreme violence.

“Tweed was elected to the United States House of Representatives in 1852, but his two year term was undistinguished. In an attempt by Republican reformers in Albany, the state capital, to control the Democratic-dominated New York City government, the power of the New York County Board of Supervisors was beefed-up. The board had 12 members, six appointed by the mayor and six elected, and in 1858 Tweed was appointed to the board, which became his first vehicle for large-scale graft; Tweed and other supervisors forced vendors to pay a 15% overcharge to their “ring” in order to do business with the city. By 1853, Tweed was running the seventh ward for Tammany.”

“Although he was not trained as a lawyer, Tweed’s friend George Barnard certified him as an attorney, and Tweed opened a law office on Duane Street.

He ran for sheriff in 1861 and was defeated, but became the chairman of the Democratic General Committee shortly after the election, and was then chosen to be the head of Tammany’s general committee in January, 1863. Several months later, in April, he became “Grand Sachem”, and began to be referred to as “Boss”, especially after he tightened his hold on power by creating a small executive committee to run the club. Tweed then took steps to increase his income: he used his law firm to extort money, which was then disguised as legal services; he had himself appointed deputy street commissioner – a position with considerable access to city contractors and funding; he bought the New-York Printing Company, which became the city’s official printer, and the city’s stationery supplier, the Manufacturing Stationers’ Company, and had both companies begin to overcharge for their goods and services. He also started to form what became known as the “Tweed Ring”, by having his friends appointed to office: George Barnard became recorder; Peter B. Sweeny the district attorney; and Richard Connolly the county clerk.”

“With his new position and wealth came a change in style: Tweed began to favor wearing a large diamond in his shirtfront – a habit that (artist)Thomas Nast used to great effect in his attacks on Tweed in Harper’s Weekly beginning in 1869 – and he bought a brownstone to live in at 41 West 36th Street, then a very fashionable area. He invested his now considerable illegal income in real estate, so that by the late 1860s he ranked among the biggest landowners in New York City. Tweed was elected to the New York State Senate in 1867, where he helped financiers Jay Gould and Big Jim Fisk take control of the Erie Railroad from Cornelius Vanderbilt by arranging for legislation that legitimized fake Erie stock certificates that Gould and Fisk had issued. In return, Tweed received a large block of stock and was made a director of the company.”

An Epidemic of theft and corruption has spread through politics, the banks, think tanks, the UN and its subsidiaries and of course the world’s central bankers. Us Sheeple can do nothing. They have the money, power and the guns. It ends when their money gravey train, the huge bond markets fail and fall into dissarray.

“As long as I count the Votes, what are you going to do about it?”

Boss Tweed’s Demise: “Tweed was released on $1 million bail, and Tammany set to work to recover its position through the ballot box. Tweed was re-elected to the state senate in November, 1871, due to his personal popularity and largesse in his district, but in general Tammany did not do well, and the members of the Tweed Ring began to flee the jurisdiction, many going overseas. Tweed was re-arrested, forced to resign his city positions, and was replaced as Tammany’s leader. Once again, he was released on bail – $8 million this time – but Tweed’s supporters, such as Jay Gould, felt the repercussions of his fall from power.”

“Tweed’s first trial, in January, 1873, ended with a hung jury, but his retrial in November resulted in convictions on 204 of 220 counts, a fine of $12,750 ($225,000 in 2010, adjusted for inflation) and a prison sentence of twelve years. Tweed served a year before the sentence was overturned, but was then hit with a civil suit by New York State attempting to recover $6 million in embezzled funds. Unable to put up the $3 million bail, Tweed was locked up in the Ludlow Street Jail, although he was allowed home visits. On one of these, Tweed escaped and fled to Spain, where he worked as a common seaman on a Spanish ship. The U.S. government discovered his whereabouts and arranged for his arrest as soon as he reached the Spanish border; he was recognized from Nast’s political cartoons. He was turned over to an American warship, which delivered him to authorities in New York City on November 23, 1876, and he was returned to prison. Desperate and broken, Tweed now agreed to testify about the inner workings of his corrupt Ring to a special committee set-up by the Board of Alderman, in return for his release, but after he did so, Tilden, now governor of New York, refused to abide by the agreement, and Tweed remained incarcerated. He died in the Ludlow Street Jail on April 12, 1878 from severe pneumonia, and was buried in the Brooklyn Green-Wood Cemetery.”

Ed: Expect an epidemic of USA voting corruption in November. Greece and Portugal have already installed new political leaders without elections. Russia’s Putin prepares to openly seize control of that nation after being their hidden leader for years. Fresh news says he is trying to appease street demonstrations with hollow promises. Will Putin end up like some Arab leaders de-throned and killed? We think not given his violent history and cunning. Old age and treachery continues to win. However, the herd in the street is milling around and getting nervous. It won’t take much. Some small negative event that in normal times would nothing, will set-off something really nasty. Then is goes totally out of control.

How much of this stuff can you see and understand in our situation?

Buyers like “The City” and perceive this location handier than the country for shopping, culture, commercial access and airports. Most of the best of the best in London was sold-off 2-4 years ago.

London’s Luxury House Prices Advance as Overseas Buyers Compete for Havens. “Luxury-home prices in central London gained for a 14th consecutive month in December as overseas buyers sought safer investments and competed for a smaller number of properties for sale, Knight Frank LLP said.

“Values of houses and apartments costing an average of 3.7 million pounds ($5.7 million) rose by an average of +0.8% from a month earlier, the London-based broker said in a report today. Prices are +7% higher than a previous peak, in March, 2008. ‘Demand for prime London property in 2011, despite uncertainty resulting from the Euro-zone debt crisis and ongoing global economic uncertainty, outpaced supply and led to strong price performance,” Liam Bailey, head of residential research, said in the report.”

“London luxury-home values rose +12.1% in the year through December, the smallest 12-month gain in three months. Prime central-London prices have risen around +40% since the market’s low in March, 2009, Knight Frank said. U.K. home prices overall fell- 0.9% in December to a 30-month low. ‘Tight supply has remained a feature of the prime central London property market through 2011,” Camilla Dell, founder of London-based Black Brick Property Solutions LLP, said in a separate report. “We see little reason why this might change materially in 2012.” London has the most people in Europe with a net worth of more than $30 million, according to Wealth-X, a company that works with banks and luxury brands to build a database of people who together hold around $10.7 trillion. The U.K. capital has 5,955 “ultra wealthy” people, more than twice as many as Paris, which has 2,850, according to a Wealth-X report. Zurich is third with 1,775. -Chris Spillane 1-9-12 Bloomberg.net

In our view, we like producing farmland for income versus luxury homes. But, super rich like the big homes.

 “A pipeline that would allow crude oil from the United Arab Emirates to bypass the Strait of Hormuz separating it from Iran has been delayed because of construction difficulties, two people with knowledge of the matter said.”

“As many as 270 construction issues have pushed back the completion date, said the two people, declining to be identified because they’re not allowed to speak publicly on the matter. The $3.3 billion project won’t be ready until at least April, one of them said. Abu Dhabi, holder of most of the U.A.E.’s crude reserves, had planned to start exports in January, 2011 through the pipeline to a port outside the strait, Dieter Blauberg, the project’s former director, said in May 2009. ‘The pipeline is almost complete, so hopefully it will be operational, say, within six months, by May-June,” U.A.E. Oil Minister Mohamed al-Hamli told reporters in Abu Dhabi today, confirming more time is needed to finish it. “It’s a big project, there’s a lot to do.”

“The 1.5 million barrel-a-day link would ensure the U.A.E. can export crude without risking a blockade at Hormuz, where fully laden tankers exit the Persian Gulf with one-fifth of the world’s traded oil. The possibility that Iran might try to close the waterway has intensified as Europe prepares to follow tougher U.S. sanctions on the country over its nuclear program, and prompted a U.S. pledge to take action if the strait is blocked. Iran has started to enrich uranium at its Fordo plant, the official Kayhan newspaper reported yesterday.”

“That pipeline would carry pretty much all of Abu Dhabi’s oil,” Robin Mills, an analyst at Manaar Energy Consulting in Dubai, said January 5. “It’s a critical bit of infrastructure, and it is remarkable it hasn’t been completed.” An average of 14 crude tankers sail each day through the strait, which is 21 miles (34 kilometers) wide at its narrowest point, according to the U.S. Energy Information Administration. “They’ve invested in capabilities that could, in fact, for a period of time block the Straits of Hormuz,” Dempsey said. “We’ve invested in capabilities to ensure that if that happens,

we can defeat that.” Once ready, the pipeline will transport crude from Habshan, the collection point for Abu Dhabi’s onshore oil -Bruce Stanley, Ayesha Daya and Anthony DiPaola 1-9-12 Bloomberg.net

On Friday news, commotion in Nigeria threatens to remove a huge supply of light crude oil. With so many refinery shutdowns coming for change-over-repairs and out right closings, gasoline goes to $4.

Dow Jones Industrial Average: Closed at 12623.998 +45.03 breaking out and above serious resistance through a top line channel and out of the interior of a triangle apex. Volume was 110% of normal and momentum was mildly higher. Price is far above all moving averages. Next upper resistance is 12750-13,000. The Dow is free of five key resistance points with nothing above price but clear air.  More buying on Friday and Monday and some clear sailing after this breakout for most stocks and their indexes.

S&P 500 Index: Closed at 1314.50 +6.46 on 105% of volume and rising momentum.  Price is still stuck inside its triangle but we can see the larger wave three up ready to give the S&P’s a buying boost.  The price of 1315 is current resistance at close; and 1325 is the next higher number. Price is above moving averages and support is 1300.  Erin Swenlin at DecisionPoint said today, “We finally saw a sustained breakout above 1300.  The market opened higher after a positive housing report was released and kept on climbing as good news arrived out of Greece regarding a temporary settlement with private debtors.” She is correct but the news was all a fairy tale to pump markets; but it sure worked. On Friday-Monday expect more buying, from a triangle breakout with our next stop at 1325 and then 1350 resistance. Don’t trade against rising trends.

S&P 100 Index: Closed at 594.93 +2.41 with three closes above hard upper channel line resistance. Volume was +105% and momentum is up. With buying rising freely and no nearby resistance points, we can see the price going to 600 and 615 quite easily. Current resistance is mild at 595. Support is 585.00. I can see some profit-taking at the end of January with this rally continuing for nearly another month.

Nasdaq 100 Index: Closed at 2441.70 +15.74 on faster, rising momentum and 105% of normal volume. Not only did this index jump-up and through top channel and price resistance at 2400, but it had a big up-day Wednesday and then gapped up even higher on Thursday. We are on or near the highest highs for the year for this index. Support is 2525 to 2530 and resistance is 2500. Google stumbled but IBM and most of the other techies did quite well. Look for more buying on Friday and Monday of next week.

30-Year Bonds: Closed at 142.81 -0.34 and were topping and selling against hard, upper resistance at 145.00. Improvement in the Euro currency and Euro-bond news put a cap on the 30’s rise. Price still clings to the underside of the former bull supporting channel line. With stocks rising we can see the bond pattern going into a fade and sell. The Euro was back at 126.50 this past week and is now at 129.69. It is coming back up on being oversold.  Close-by resistance is 143.00 and support is the 20-day at 142.76 and 142.11 on the 50-day. More selling pressure on Friday and Monday. In the middle of next week, bonds could be 140.00.

XAU: Closed at 188.04 -3.16 selling down toward 180.00 on our previous forecasts. Momentum was up but is turning flat to down. Price is under all moving averages. Next lower nearby support is 185 then down to 180 and maybe even 175.00. The metal to shares ratio, which is 90% correct in forecasting has turned down. Do not despair on precious metals their related shares. We should bottom out on normal technicals next week followed by new and lower basing support. Then, we see a new six week rally with at least a 25 point jump in the XAU. After a mid-March correction, an even larger and stronger spring rally extends into the first 10 days of April. This will be driven by and higher precious metals prices.

Gold: Closed at 1657.80 -2.90 on rising momentum and the price above all moving averages. January is usually a weaker or flat month for gold. However, pent-up demand from being oversold and the enormous amount of physical buying will firm this market. It provides a new floor for a major springboard rally toward $2,050 with a couple stops at 1708 and 1750-1923.  Price of 2,000 is a major resistance point. However, with the strength we see in gold, we think an overshoot could be expected to 2,048.50 major resistance. Gold can go even higher this year but we see a top at the $1923-2050 trading range for the first and second quarters. If we touch $2,250-2,450 this year, it’s probably going to be this fall in the 4^th quarter.

Silver: Closed at 30.62 +0.11 on rising momentum and a price above the 20-day average at 29.84. We have a great deal of resistance between the close and $34.48. There are probably at least 6-7 stop and go resistance points in that price range. This will slow silver to a crawl unless some real drama occurs in the news. Physical silver coin markets are setting new records. Foreign buyers especially in Asia and the Middle East are purchasing gold by the ton. Considering this, one would think the paper silver and gold should be fast track buyers. However, we must get past the settling-basing stage first. Have some patience and you will be rewarded. Expect a week of selling then we see the new rallies begin.

US Dollar: Closed at 80.10 -0.42 as the dollar peaked at 81.80 with new selling underway. The momentum pattern made a bear double top and turned down to sell. First lower support is 80.00, which is very firm. When that is broken, a next lower price of significance is 78.50 support. We also have a 50-day moving average at 79.51 providing hard support. Last year from an early January peak above 81.00, the dollar sold back to 72.50 support. While it could do that again we think the dollar stops selling in mid-March after the next major Euro-land meetings. That could be a sinker for the Euro causing the dollar to rebound. From this coming Friday to following Friday, I expect the dollar to trade between 80.00 and 78.50.

Crude Oil: Closed at 100.54 -0.41 with price in a trading channel between 98.50 and 102.50. Momentum is weaker and turning down like gold. Price remains above all the moving averages offering good support and a more bullish pattern. It is possible for oil to trade in chop for about one more month before moving-up faster in a strong spring rally. Before we really get moving up here, I think the price can sink back to $95-$96 first; then we begin a stronger move from $95 to $120-$125 by the end of April. Gasoline will be over $4 on refinery closings and inflation. Natural gas is bottoming at $2.20 to $2.40. These lows would then be followed by a mild rally on heavy, over-done natural gas reserves. Nat gas is smothering green energy.

CRB: Closed at 311.96 +1.45 on toppy and flattening momentum. Price is trading in a choppy channel at 308 to 312. Resistance is the 200-day average at 319.99; say 320.00. Support is 310. We are sideways to lower through the end of January followed by three months of rallies.  -Traderrog

“Money managers expanded their combined net-long positions across 18 U.S. futures and options by 25% to 671,915 on higher cotton prices surged by 8,303 to 14,986 contracts, the CFTC data show. Cotton traded on ICE Futures U.S. in New York increased in seven of the past eight sessions. The Confederation of Indian Textiles Industry said January 5 that production in the country, the world’s largest exporter after the U.S., may be smaller than forecast. “It could be another year on for cotton in general,” said Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati who helps oversee $14.5 billion of assets. “Some of these things are definitely under-owned. Prices could see a spike on just shortfalls in supply.”

“A measure of 11 U.S. farm goods showed speculators raised bullish bets in agricultural commodities by +35% for a second consecutive week, reaching 368,783, the highest since the week ended November 15. Corn wagers rose +30% to 192,500, the biggest gain since the week ended July 13, 2010. Net-long positions in soybeans increased 39% to 33,020, the most bullish holding since early November.” ‘There was definitely a cleaning house of sorts in many commodities towards the end of the year, and that resulted in shorter-term oversold conditions in some commodities,’’ said Michael Cuggino, who helps manage about $15 billion of assets at Permanent Portfolio Funds in San Francisco. ‘‘It’s not surprising to me that buying has perked up a little bit early in the New Year. The global growth story is still there.’’ -Elizabeth Campbell 1-9-12 Bloomberg.net

This year we have to be careful of disasters in the 4th quarter of 2012. We could we correct on the trade and not make money if most markets go upside-down in the fall on fundamentals and Black Swans.

Also, China drives the cotton market and they are slipping faster across the board. They buy cotton for manufacture of clothing. If clothing exports from China fade, the cotton prices will skid.

“Speculators Raise Wagers on Price Gains by Most in 17 Months For Commodities.” “Hedge funds raised their wagers on higher commodity prices by the most since July 2010 after signs of accelerating U.S. growth bolstered optimism that demand for raw materials will strengthen.”

“Money managers expanded their combined net-long positions across 18 U.S. futures and options by +25% to 671,915 contracts in week ending January 3, Commodity Futures Trading Commission data show. Bullish cotton bets rose the most since April, 2009; those on coffee doubled. Crude-oil holdings reached a 3-week high.

“Prices for metals and bulk commodities such as coal rose at least +85% of the time since 2004 when global industrial production strengthened, Macquarie Group Ltd. estimates. Almost $253 billion was added to the value of global equities last week on speculation economies will skirt a slump as Europe’s debt crisis deepens.”

“You’ve been seeing a risk-on trade across the board, not just in commodities,” said John Bailey, the founder and chief executive officer of Stamford, Connecticut-based Spruce Private Investors LLC, which advises investors holding about $3 billion of assets. “Between a calming in Europe and better-than- expected numbers in the U.S., including employment and housing, that has led to a risk-on attitude among managers.”

“Cotton for March delivery rose +0.2% to 96.01 cents a pound on ICE Futures U.S. at 9:42 a.m. in New York. Investors pulled $689.4 million from commodity funds in the week ended January 4, according to data from Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Gold and precious-metals outflows totaled $193.4 million, said Brad Durham, the managing director of research. The outflows were smaller than the previous week, when investors withdrew $936 million from commodity funds, he said.” Editor: The CRB has based and is preparing for the next rally in 5-10 days. On Thursday, the USDA issued a bearish grain report.

“Gold Seen Extending Best Rally Since 1920 on Europe Crisis, Reliance Says.”

“Gold may extend its best rally since at least $1,920 as investors seek a store of wealth amid Europe’s debt crisis and expectations of slowing global growth and rising inflation, according to Reliance Management.”

“The current global macroeconomic environment is very conducive for higher gold prices,” said Sundeep Sikka, Mumbai- based chief executive officer of the money manager, which runs India’s second-biggest gold exchange-traded fund.”

“The fundamental outlook for gold remains extremely bullish and paints a rosy picture for gold bulls. Bullion reached a record $1,921.15 in September as investors sought to diversify away from equities and some currencies amid the European debt crisis and signs of slowing economic growth. The metal may average $1,766 an ounce this year and trade as high as $2,055, according to a London Bullion Market Association survey of traders and analysts.

“The rise in volatility across all assets makes investors jittery about their investments,” Sikka said in e-mailed responses. “We see gold continuing to attract interest even in 2012. Investors are looking for a haven to park their money as the market sentiment for equity is uncertain.”

“Bullion rose +10% in 2011 for an 11th year of gains, beating the -1.2% decline in the Standard & Poor’s GSCI Total Return Index of 24 commodities and the -9.4% retreat in the MSCI All-Country World Index of equities. Gold for immediate delivery fell -0.4% to $1,611.13 an ounce as of 11:24 a.m. in Mumbai (on Monday).”

“Prices may fall in the “near term” as some investors lock in gains, Sikka said. He didn’t give specific price forecasts.” -Madelene Pearson 1-9-12 Bloomberg.net