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PART 2
 
The XAU has been consolidating for
12 weeks near the bottom of its range, but within the
up-trend. As long as the up-trend remains intact, we have no
reason to turn bearish.The US dollar is up against its 50 day EMA
within a down -trend (which means, it will be a tough resistance
to overcome. Furthermore, it appears to have formed a
"fan" pattern. In that case, we should see a bottom
around 107-107.5
 
The CRB Index shows very clearly the lack of demand in
commodities -due to global economic weakness with no end in
sight. It is remarkable, that in spite the possibility of
renewed hostilities in the Middle East, oil has plunged to
levels not seen in over a year! The market is saying very
loudly, that the we are facing a level of global economic
weakness, not seen since the 70s. We are expecting oil to fall
below $20 dollars per barrel. However, having said all
that about oil, we would like to make two additional points a)
if the U.S. decides for whatever reasons to attack Iraq, oil
prices will skyrocket. B) One of the two goals that the
terrorist attack was supposed to accomplish was the collapse of
the U.S. and Western economies. That goal can be
accomplished without another attack on U.S. soil, it can much
easier be accomplished by blowing up oil pipelines in Kuwait,
and Saudi Arabia, thus disrupting the oil flow to the Western
world and causing oil prices to sky rocket. At the present time,
Islamic fanatics have plenty of admirers and supporters in Saudi
Arabia, which makes it a not so difficult task. That is
something investors should keep in mind.
 
We continue to believe that the
Utilities will ultimately fall to 275, which will make them a
good buy. Take a look at the utility stocks in the
"trading ideas" part of this report.
World markets are making new lows,
indicating the widespread global economic weakness. Just
remember this: if all our major trading partners are
experiencing recessions -Japan, Mexico, Germany- isn't
possible that maybe we will not see a "second half
recovery?"
Click here for PART
2a
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