Gold’s correction already near our next target!
Thursday, February 21, 9:25 a.m. Our initial target at our October 16 sell signal on gold was $1,650 an ounce. The potential support there held for awhile, looking like gold might be building a base. But our technical indicators remained on the sell signal, and gold has now broken to the downside from the symmetrical [...]

Thursday, February 21, 9:25 a.m.

Our initial target at our October 16 sell signal on gold was $1,650 an ounce. The potential support there held for awhile, looking like gold might be building a base.

But our technical indicators remained on the sell signal, and gold has now broken to the downside from the symmetrical triangle formation within which it had been confined. As we have been noting the direction of such a breakout usually indicates the direction for awhile.

With the target of $1,650 having been reached and breached we told subscribers the next potential support is at $1,550, the level of its lows in December 2011, and June of last year.

Obviously many technicians were watching for the direction of the breakout from the triangle formation and jumped to the sell side with the breakout. Gold’s plunge has accelerated.

But it is already approaching our next target. It is again short-term oversold beneath its 30-day m.a., which will probably bring some buying from those again trying to catch the bottom.

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We will just continue to follow our indicators and wait for their signal.

If the next potential support level does not hold, at some point it will have to be considered whether this is just a prolonged correction, or if gold’s long bull market is coming to an end.

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To read my weekend newspaper column click here: Gold’s Correction Is Not Over!

Subscribers to Street Smart Report: There is a hotline from last evening as well as an in-depth mid-week update on the U.S. market, gold, and bonds in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

A quite negative day on a pick-up in trading volume. The Dow closed just about on its low of the day after an afternoon acceleration to the downside. The rest of the market was considerably weaker than the Dow. Trading volume on the NYSE was 0.8 billion shares traded.

The Dow closed down 108 points, or 0.8%. The S&P 500 closed down 1.2%. The NYSE Composite closed down 1.3%. The Nasdaq closed down 1.5%. The Nasdaq 100 closed down 1.5%. The Russell 2000 closed down 2.0%. The DJ Transportation Avg. closed down 1.7%. The DJ Utilities Avg closed down 0.3%.

Gold plunged another $30 an ounce at $1,573.

Oil plunged $2.13 a barrel at $94.97.

The U.S. dollar etf UUP closed up 0.7%.

The U.S. Treasury bond etf TLT closed down 0.3%.

Yesterday in European Markets.

European markets mostly closed down yesterday. The overall Europe Dow closed down 0.5%. Among individual countries, the London FTSE closed up 0.3%. The German DAX closed down 0.3%. France’s CAC closed down 0.7%. Greece closed up 0.2%. Ireland closed down 0.2%. Italy closed down 0.8%. Spain closed down 0.8%. Russia closed down 0.4%.

Asian Markets plunged sharply last night.

The Asia Dow plunged 1.6%.

Among individual markets:

Australia closed down 2.3%. China closed down 3.0%. Hong Kong closed down 1.7%. India closed down 1.6%. Indonesia closed down 0.1%. Japan closed down 1.4%. Malaysia closed down 0.1%. New Zealand closed down 1.0%. Korea closed down 0.5%. Taiwan closed down 0.9%. Thailand closed down 1.2%.

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Markets This Morning:

European markets are plunging sharply this morning. The Europe Dow is down 2.5%. Among individual countries": The London FTSE is down 1.6%. The German DAX is down 1.7%. France’s CAC is down 1.8%. Norway is down 1.4%. Portugal is down 1.0%. Spain is down 1.6%. Switzerland is down 1.3%. Italy is down 2.6%. Russia is down 1.0%.

Oil is down $1.35 a barrel at $93.87.

Gold is down $2 an ounce at $1,571.

This Morning in the U.S. Market:

This week is a fairly heavy week for potential market-moving economic reports, most of them being released yesterday and tomorrow, including Existing Home Sales Housing Starts, Producer Price Index, minutes of Fed’s last FOMC meeting, etc. To see the full list click here, and look at the left side of the page it takes you to.

There were no reports on the holiday Monday. Tuesday’s only report was that the Housing Market Index, which measures the sentiment of the nation’s home-builders, ticked down in February for the first time since last April.

Yesterday’s reports were that the Producer Price Index was up 0.2% in January, the first increase in four months. The core rate, excluding the cost of food and energy, also rose 0.2%. And U.S. Housing Starts declined 8.5% in January, but building permits for future starts were up 1.8%. And the Fed released the minutes of its last FOMC meeting, which revealed

This morning’s reports are that new weekly unemployment claims were up by 20,000 last week to 362,000. The four-week moving average was up 8,000 to 360,750. Both numbers remain well below the 400,000 level considered to be a problem for the jobs picture. It was also reported that the Consumer Price Index were unchanged in January for the second straight month. But the core rate, with the cost of food and energy removed, was up 0.3%. And the U.S. PMI Index of manufacturing activity declined from 55.8 in January to 55.2 in February, somewhat worse than the consensus forecast of a decline to 55.5.

Still to come are Existing Home Sales, the Philadelphia Fed Index, and Leading Economic Indicators, all of which will be released at 10 a.m.

Our pre-open indicators remain somewhat negative as they have been all morning.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 20 points or so in the early going this morning, meaningless as to direction later.

To read my weekend newspaper column click here: Gold’s Correction Is Not Over!

Subscribers to Street Smart Report: There is a hotline from last evening and an in-depth mid-week update on the U.S. market, gold, and bonds in your secure area of the Street Smart Report website.

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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