Thank you,
Larry

I say “contrarian” because several weeks ago they were, but maybe not so now.

Then again, I’m sure there are many out there who feel inflation and the ever increasing (or should I say “forever increasing”) government debt will continue to put pressure on the U.S. Dollar.

This post, along with the recent one’s, concentrate on a potential move lower in Gold and higher in the U.S. Dollar, some of which are:

• U.S. Dollar Update 12/02/2009
• U.S. Dollar Update 12/06/2009
• Gold Update 12/07/2009
• U.S. Dollar Update 12/29/2009

You can see on the first chart below of DZZ (Double Short Gold ETN) has made 2 attempts to move higher that coincide with the 50 day Moving average near the end of December, 2009.

Since then, prices have pulled back a bit. For any swing traders who believe Gold has further to decline in the coming weeks/months, this pullback may be just what you have been waiting for.

If in fact the downtrend in DZZ has reversed and an uptrend has begun, the current levels could provide a low risk entry while being able to keep a relatively close stop loss in place in case the downtrend has not reversed.

The next chart is of UUP (U.S. Dollar Index Bullish Fund) and shows a similar situation:

You can see that after the recent run up towards the end of December, 2009, prices have pulled back and recently bounced off the 50 day moving average.

Whether this initial test of the average holds or not, and if you haven’t caught this already over the last few days, now would be a good time to consider potential long entry points. That is of course, if you feel the U.S. Dollar has more room to go on the upside, against the mainstream.

Just as in DZZ above, UUP has pulled back nicely which is what a swing trader would want to look for when considering entry points.

Please do your own research and make your own decision on these potential securities. My comments above are based on my observations and I do not have a position in either of them at this time. I do on occasion use DZZ as an intraday and/or multi-day trade.

Feel free to add your thoughts on potential price movements from here on either of these below in the comments section.

I posted a few charts in early December to consider as contrarian plays because at the time, everyone was short the U.S. Dollar and long Gold.

Everywhere you turned, people were talking about how high Gold could go, inflation and how low the U.S. Dollar would go.

For contrarian traders, that early December post proved to be the turning point. Here is a link to that original post: U.S. Dollar Trade Update 12-02-2009 and a few follow up posts I’ve added since then: U.S. Dollar Trade Update 12-06-2009 and Gold Trade Update 12-07-2009.

The first chart below is of the U.S. Dollar Index. You can see the nice reversal from the multi month decline that has occurred since the early December post I alerted readers. Prices have moved strongly higher, through the 50 Day MA. The RSI has since become a bit over bought and prices appear to be in a normal pullback from the recent run. Also notice the 50 Day MA has now turned up for the first time in several months.

The next chart is of GLD. After a near vertical hyped ascent, Gold, and GLD, appear to have come back to earth so to speak. Prices here have also breached the 50 Day MA, but lower in this case.

Prices do not appear to be near term oversold yet, but with the recent decline, there is room to go either way in the short term. Any upward move in the near term may provide additional short entry levels for those who missed the potential first leg down here. This is of course, if you feel contrarian in that Gold has lower to go.

The next chart is of DZZ, which is a possible security to trade taking advantage of a decline in Gold.

This chart also has provided a nice monthly return for those who took advantage of the early December post. A 20-27% move higher has occurred since then in DZZ.

You can see prices have moved up to the 50 Day MA, which is also near the Gap that was left on the recent decline in November. What would be nice to see here is a normal type of pullback, and then a continuation move higher. If this appears to be happening, a large leg upwards could be underway bringing prices much higher from here.

The final chart below is of UUP for those who like a little less risk. It has made a respectable 5+% move higher since the early December post. Not too bad for less than a month’s return.

Same situation here following the others above- a normal pullback could be in order, potentially moving to the 50 Day MA as a support level, which is now turning upward.

That’s about it for now. Please note that a “pullback” as I have mentioned above is not necessary to occur at this point. There is always the possibility that prices will continue in their current trend, especially since they appear to be coming off a multi-month trend reversal.

The article touches on a few important facts that are often overlooked when everything seems to be going smoothly.

There’s nothing wrong with things going smoothly of course, but people should be aware of what could be building behind the scenes during these times, rather than waiting until it’s too late. Enjoy the article.

Individual Investors Have Jumped Into Another Fire
December 18, 2009

By Robert Prechter, CMT

The following article is an excerpt from Robert Prechter’s Elliott Wave Theorist.

First they bought into the “stocks for the long run” case and got killed. Then they jumped on the commodity bandwagon and got killed. Many investors are buying back into these very same markets, but others are running to what they perceive as safe “yields” in the municipal bond market. So far this year, individual investors have “poured a record $55 billion” (Bloomberg, 11/12) into muni bond funds, with the pace running $2b. per week in August and September; many other investors are buying munis outright. These must be the people who tell us that they can’t live without “yield” and also cannot imagine their city, county or state government going bust. But as Conquer the Crash warned and as The Elliott Wave Theorist has reiterated, the muni bond market is heading for disaster.

Municipalities have borrowed more than they can repay, they have pension liabilities that they cannot meet (up to a trillion dollars’ worth, according to Moody’s), and tax receipts are falling. The only reason that states haven’t failed yet is the so-called “stimulus package,” which took money from savers, investors and taxpayers—thereby impoverishing the people who live in the various states—and gave it to state governments to spend so they would not have to cease their profligate spending. But political pressures will eventually cut off this gravy train. In the 2010-2017 period, the muni bond market will become awash in defaults. The leap in optimism since March, which has shown up in every financial market, has fueled a retreat in muni bond yields to their lowest level since 1967 and narrowed the spread between muni bond yields and Treasuries.

This rush to buy municipal bonds is occurring right on the cusp of a dramatic decline in their values. While many individuals are loading up right at the peak so they can participate in the next major market disaster, smarter investors, such as insurance companies Allstate and Guardian Life, are getting out. Subscribers to our services, we trust, own not a single municipal IOU. Our recommendation for investors is 100 percent safety, and such a program does not include muni bonds. If you are a recent subscriber, please read the second half of Conquer the Crash as a manual on how to get your finances safe.

Get Your FREE 8-Lesson "Conquer the Crash Collection" Now! You’ll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more. Learn more and get your free 8 lessons here.

Robert Prechter, Chartered Market Technician, is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

This is another post adding to my recent articles on Using An Intraday Breakout Strategy.

On the chart below, you can see a couple of the same characteristics that I frequently mention in my articles. The first is that between 9:30 and 10:00, there were higher lows being made which was forming an Ascending Triangle.

I just so happened to be watching as the stock was forming this pattern, and in anticipation of the pattern completing, I was able to enter a long position at $5.33 at the bottom of the trend line prior to the pattern being complete. Unfortunately for me, I sold as prices approached the upper resistance level at $5.40.

Still, this is a classic example to learn from. Higher lows were being made and once a breakout from the triangle pattern occurred, volume began to increase. Then, as momentum continued, prices again made a second intraday breakout. This time moving 4-5% higher within minutes.

Shortly after 11:30 you can see the heavy volume increase and spike in prices. I’m not sure what happened here but for the purpose of this post, I am mainly concerned with the morning pattern. The only way to catch the 11:30 spike would be if you started at your computer screen for several hours at a time. It can be done, just not when you have other things going on.

If you happened to have seen a spike like this occurring, a nice breakout entry point may have been at $5.65 upon reaching new highs for the day on strength. Of course the best entry here would have been near $5.40 prior to the spike. This was the previous resistance level from the early morning so it could have been anticipated with a low risk entry point as well. That’s for another post though.

With the major market indices basically wandering in a narrow channel for the last month, is it finally time for a trend change?

In the video below you’ll be able to see how prices have moved in this channel and which key levels to watch for a potential breakout of the pattern. So far today, prices have rebounded from recent lows and and once again at the top of the channel.

The video also introduces you to some of the things available to you as a Market Club subscriber. Various chart tools are shown and used in the analysis as examples. In addition, some basic information is given on their Trade Triangle Technology and brief details on how to use it for your own trading.

I’ve included a chart below with a few Elliott Wave interpretations identified on the chart.

Keep in mind that these are my interpretations only. To keep up to date on a more regular basis and receive expert Elliott Wave forecasting, I highly suggest to consider a premium service like the Elliott Wave Financial Forecast Service.

If instead you want to learn more on your own for now, that’s great. There’s nothing wrong with that also. In fact, I always encourage any type of learning. I have a lot of free articles and resources on my site to help you out. You can find some here: Elliott Wave Information and Resources or do a quick search on this site using my search box located in the top right of any web page on the site.

There’s also a great introductory set of free video lessons on Elliott Wave accessible in the right column.

Looking at the chart below, you can see that I added a few labels as I mentioned above.

I’ve added what looks to me to be a clear minute 5 wave decline identified by circle i, ii, iii, iv and iv and within the minute iii wave, a minuette 5 wave decline identified by (i)(ii)(iii)(iv)(v).

The appearance of five waves display the direction of the trend to one larger degree. This clear chart pattern increases the potential for a major trend reversal to be in place for Gold. For this to hold true, prices should now rise, not necessarily in a straight line of course, but should rise no further then the recent highs set last week. If the prior highs do hold, then yesterdays low should be considered a 1 of many more lows to come in the months ahead.

A few weeks ago she was on CNBC also, and gave her outlook at that time as well. You can read more about her position then as well as watch a video of her interview from that time here: Meredith Whitney Turns Bearish Again.

This morning she made some interesting comments, some of which have been bothering me and I’m sure many other people for quite some time. One of which being that she thinks the government is “out of bullets”.

Her main concern that she sees a cause for concern is the lack of credit that is available for consumers. She said consumers are “getting kicked out of the financial system.”

I have to agree with her. In my own experience, my Home Equity Line was canceled with my bank, Bank of America within the last 3 months. The letter I received said that it was canceled and my new limit was zero dollars, due to the fact that the value of my home had decreased below my HELOC.

First of all, the value of my home has decreased….. from the peak of the market, not from when I purchased my home, which was when I opened my HELOC. On top of that, I don’t have a mortgage, my home is paid off. So why was my HELOC canceled to zero?

As soon as I received the notice I immediately knew it was the banking industry conducting business without any concern for their customers, especially those customers who have made them money over the years. Instead of trying to operate a business with the intention of making money with good customers, they are now blocking the majority of people out completely, good customers and bad. After all, they received money from the government to get them through the hard times, why do they need any more money form good customers?

In years past, banks obviously lent money too easily to people at extreme degrees, who shouldn’t have been given loans in the first place. This was one of the, if not the main cause for the economic downturn that we have all been experiencing to date. Now, they are restricting credit to the opposite extreme, cutting off access to credit almost completely to all consumers.

Someone needs to tell the banking industry that there is a middle ground, where banks can provide credit to creditworthy customers and operate as a successful business. In other words, there is a middle ground. Instead, they previously had swung too high to the upside and are now swing too far to the downside. It’s a shame they don’t see their mistakes at the expense of the entire economy.

Ok, enough of my story, here’s a video from this mornings show with Meredith Whitney on CNBC:

In the previous post I was writing about potential contrarian trades if the U.S. Dollar was possibly making major or minor lows.

For Gold trades, I had a chart of GLD and showed how prices had broken out of two pattern formations within the last several months, and that if the U.S. Dollar was over-extended to the downside, and Gold was over extended to the upside, looking at these with contrarian views were compelling.

Here’s the updated chart of GLD. I’ve added a Fibonacci retracement grid overlaid on the chart. You can see that the initial move lower Thursday and Friday from last week, declined to the first 38.2% Fibonacci price level and bounced a bit higher before ending the week.

As I mentioned in the U.S. Dollar Trade Update 12-06-2009 yesterday, a bounce higher before moving any further lower is possible. Although as I’m writing this, Gold is trading lower after rising briefly in the overnight session.

I still feel that with all of the people short the U.S. Dollar and long Gold, and continued pressure against these positions make cause a panic, or rush, to continue to reverse these same positions.

For stock traders, I included a chart of DZZ in previous posts, which can be traded easily in the typical stock traders brokerage account. Here’s the updated chart which shows the nice 10% – 15% move higher in less than two days since I posted last Wednesday evening about using this as a possible contrarian play:

Those of you that know a little bit about me, know that I am primarily a very short term trader. Having a 10% – 15% gain in two trading days would probably make me take my gains and wait for another entry point, or possibly be willing to raise a stop loss to break even here with such quick gains.

At the very least, raising a stop loss to break even after a 10% – 15% gain in two days would be wise.

While I can’t and don’t, recommend any stocks or specific trades, I do try and post my trading ideas on this website even if I don’t have any position in the trade mentioned. I usually get too tied up with other things and writing. I don’t have any position in any of the stocks mentioned in this post, nor have I over the last few days.

The previous post was here: U.S. Dollar Trade Update 12-02-2009, and worked out to be perfectly timed.

The last post showed how prices have been reacting and moving lower as well as the addition of support levels which I added to the charts.

Following up now, the first chart below is a current chart of the U.S. Dollar Index over a 3 month period, displaying daily price candles. You can see the index made a large move higher just up through the 50 day moving average line.

This was the biggest one day range in several months. From here, with so many traders short the U.S. Dollar, any continued move higher will likely cause a panic of shorts covering their positions. This should cause additional big range days ahead if the rally continues.

After the big range day Friday though, a pullback should be expected of some sort. While it’s not necessary for the rally to continue, having a pullback would be normal and not at all change the fact that a longer term trend change may indeed have begun.

The next chart is of UUP, the U.S. Dollar Bull Fund I displayed on the last update. I displayed this for any stock traders out there who wanted to trade something in correlation with a move in the U.S. Dollar as a contrarian play, but in their stock trading account.

You can see here the nice move higher since my last update as well. About a 1-1/2% move in 2 days without any draw down so far. Prices here are also at the 50 Day Moving Average line, which may coincide with a brief pullback before attempting another move higher.

In case a bottom is not in, a potential area for a stop loss would be just below the previous low set a few days ago. If that low is breached, the potential odds for another leg down would increase. Make sure you use some type of stop loss with your trading plan.

The big winner since the last update was the contrarian play against Gold. I had a chart displaying a potential trade using DZZ which worked out great. It moved up between 10% and 15% in the same 2 short days. I’ll be adding an update for that on a separate post shortly.

Prior to the last update I had written about a potential bullish move the dollar, with trading possibilities such as in DZZ and UUP. This was short lived.

Afterward, I posted the 08-23-2009 update with new levels to watch for a potential move either way.

I’ll post the updated charts in the same order in this post, along with the previous support and resistance lines I had drawn on them to watch for potential breakouts.

The first chart below is of the U.S. Dollar Index itself. The previous support level I had drawn was near $77.50. I mentioned to watch this level for any significant breach for a move lower.

You can see that the $77.50 level was in fact breached and also became resistance later in early October. Also notice how the price action has been contained by the 50 Day Moving Average (or at least it appears that way on the chart. In reality, the moving average itself cannot contain prices as it is a calculation based on past prices). The 50 Day Moving Average line can be a psychological level though. Causing reversals or breakthroughs to occur more violently in many cases.

The current level is a major support level going back to late 2007/early 2008. If this level is breached, the next lower support level is around $71.50. A contrarian view would be to be on alert NOW, not waiting to see if lower prices are ahead.

The next chart shows GLD. In the previous chart from 08-23-2009 I had a Symmetrical Triangle drawn on the chart and mentioned to watch for a potential breakout, either to the upside, or downside out of this pattern. I’ve drawn the same Symmetrical Triangle on the current chart below to show what happened.

You’ll notice at point 1), that prices broke out up out of the Symmetrical Triangle for a good momentum trade entry signal, at the beginning of September, 2009. Also, in early October, 2009 at point 2), you can see that prices broke out up thru previous highs, another momentum trade entry signal.

Now. For any contrarian traders out there:

The next chart is of DZZ- a double short Gold ETN. I’m not advocating the use of ETN’s of ETF’s, or any of these trades for that matter, only providing some idea’s. Leveraged ETF’s and ETN’s have been in the news over the last several months, in a negative way, so be sure to do your own research and keep an eye on them if you decide to use any of them.

Previously I had drawn a similar Symmetrical triangle pattern on the chart and I have included the same pattern drawn on this chart to show what has happened here also.

You can see once again, only the inverse of the GLD chart, that prices broke out of the Symmetrical Triangle pattern. This time to the downside as this is an inverse fund. This breakout point, along with the breakout point below previous support (the dotted line) both allowed for potential tradeable short entries.

With prices at new lows, corresponding with new highs in Gold, any reversal would provide an excellent entry point. Possibly for a long term contrarian trade.

Moving on, the next chart is of UUP, a U.S. Dollar Bullish Fund.

You can see that I added the support level at $23.00 my previous chart. Prices gapped down through this level in early September and it has pretty much been a significant resistance level so far.

You can see that prices broke up through the 50 Day Moving Average briefly in early November, but have since reversed and are near new lows. The next lower major support level is $21.50-$21.75 so we are very close to this at the current price level.

Using previous support and resistance levels for potential area’s for stop loss positions, the Risk:Reward ratio for some contrarian trades here, look pretty compelling.

The video shows what price levels they are watching and which may signal a major trend reversal if it reached.

Market Club does a good job of releasing new educational videos in a timely fashion to help stay on top of the market.

If you pay attention to the videos, you’ll also see how some of their charting functions work.

Enjoy the video:

Well here we are in the month of December and things can get pretty tricky this month. For this reason, I wanted to produce a video that I thought would be helpful to you during this time.

In my new video I show you the exact points that we’re looking at for a major trend change in the S&P 500. I also point out the exact number that will show an exit point, but not a major trend change, in this same index.

As always our videos are free to watch and there is no need to register and we look forward to your comments in our Trader’s Blog.

Adam Hewison
President, INO.com
Co-creator, MarketClub

Over the last two weeks the S&P 500 has been moving in a sideways channel, showing a lack of real direction and lack of conviction in either direction.

So far this week, the upper area of resistance just above 1110 has held but as I mentioned above, the lack of volume makes it hard to determine whether another leg higher is in store or not.

The other possibility of course is that the lack of volume this week is also contributing to a lack of sellers which would push the market lower. We’ll have to wait until next week to get a better idea of the next move.

Until then, have a Happy Thanksgiving.

I must be thinking in sync with other people today because I just finished adding a page to the main site section on technical analysis called Identifying Support and Resistance Levels.

Learning to use Fibonacci while performing your Technical analysis will provide you with another great tool at your disposal.

Once you read through the ebook, you’ll be able to help identify potential turning points, which many times just so happen to coincide with the support and resistance levels you’ll recognize on your charts.

Free 42-Page eBook: Find Trading Opportunities With Fibonacci

Elliott Wave International has just released a free 42-Page eBook, How You Can Identify Turning Points Using Fibonacci. Created from the $129 two-volume set of the same name, it’s available free until November 30, 2009. Learn more.

Greetings reader,

You may be missing trading opportunities staring you in the face. The charts you look at every day could reveal high-confidence trade setups and market turning points. You can learn how, today.
 

Elliott Wave International (EWI), the world’s largest market forecasting firm, has just released a free eBook, How You Can
Identify Turning Points Using Fibonacci.

It features 42 chart-filled pages of actionable Fibonacci techniques that you can add to your trading arsenal right away. You’ll never look at charts the same way again!

Created from the $129 two-volume set of the same name, this valuable eBook is offered free until December 7, 2009  

Don’t miss out on this rare opportunity to change the way you trade forever.

Go here to download your free eBook.

About the Publisher, Elliott Wave International

Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around the world.

The recent posts about the banking sector will hopefully stir some interest in those of you reading and just maybe save you some of your hard earned money over the long haul.

Getting to know the process that foes on behind the scenes between the banks and the FDIC will help you understand what has happened, and what could still happen.

Here’s another great guest post on the topic along with access to their current free Bank Safety Report, which is available for a limited time.

The FDIC Anesthesia Is Wearing Off
November 20, 2009

By Robert Prechter

The following article is an excerpt from Robert Prechter’s Elliott Wave Theorist. For more information from Robert Prechter on bank safety, download his free report, Discover the Top 100 Safest U.S. Banks.

Perhaps the single greatest reason for the unbridled expansion of credit over the past 50 years is the existence of the Federal Deposit Insurance Corporation, another government-sponsored enterprise created by Congress. The coming rush of bank failures is an outcome made inevitable the very day that Congress created the FDIC. The reason is that the creation of the FDIC allowed savers to believe that their deposits at banks are “insured” against loss.

But the FDIC is not really an insurance company. No enterprise, absent fraud, could possibly insure all the banking deposits in a nation. Nor does the FDIC do so, despite its claims. The FDIC is like AIG, the company that sold too many credit-default swaps. It contracted for more insurance than it could pay upon. Because depositors believe the sticker on the door of the bank, they have abdicated their responsibility to make sure that their banks’ officers handle their deposits prudently. This abdication allowed banks to lend with impunity for decades until they became saturated with unpayable debts.

Today, most banks are insolvent, and the FDIC is broke. This condition is deflationary for three reasons: (1) Banks are coming to realize that the FDIC cannot bail them out in a systemic crisis, so they have become highly conservative in their lending policies, as described above. (2) The main way that the FDIC gets its money is to dun marginally healthy banks for more “premiums” (meaning transfer payments) to bail out their disastrously run competitors. The more money the FDIC sucks out of marginally healthy banks, the less money those banks have on hand to lend, which is deflationary. (3) The banks that have to cough up all this money will become more impoverished at the margin, so banks that otherwise might have survived a credit crunch will be thrown even closer to the brink of failure. This is another deflationary risk.

A friend of mine whose family owns a bank told me that the FDIC recently raised its 6-month assessment from $17,000 to $600,000. In the FDIC’s latest announcement, it is considering requiring banks to pre-pay three years’ worth of “premiums,” i.e. triple the normal annual fee in a single year. It will be a miracle if the money lasts through 2010. When these funds are gone, the FDIC will have two more options: to issue its own bonds and pressure banks to buy them; and to tap its “credit line” of up to half a trillion dollars with the U.S. Treasury. It’s the same old solution: take on more new debt to back up failing old debt. More debt will not cure the debt crisis.

Meanwhile, the FDIC is contributing to the deflationary trend. It has “tightened rules on required capital levels,” which forces banks’ loan ratios to fall; and it has “extended its extra monitoring of new banks from the first three years of operation to seven years” (AJC, 11/19), meaning that banks will now have to wait four additional years before they can go crazy with loans.

For more information from Robert Prechter on bank safety, download his free report, Discover the Top 100 Safest U.S. Banks. You’ll learn how to find a safe bank, the critical difference between lending and banking,
tips on international banking, and more.

Robert Prechter, Chartered Market Technician, is the world’s foremost expert on and proponent of the deflationary scenario. Prechter is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

The article below has some information on Bank safety from the authors perspective and gives some information about the condition of the FDIC.

For further reading and information, along with a special report with a listing of potentially the safest banks around, take advantage of access to your free report indicated in the article.

Is Your Bank Safe? More than 130 banks will have failed by the end of 2009.

What if your bank fails? Did you know you could be left in the lurch for days, weeks, even months before you get your money back from the FDIC? What happens if the FDIC can’t cover your funds? How do you find a safe bank to protect your deposits right now?

Find answers to these questions and more in the original "Safe Banks" report from Elliott Wave International. Learn more and download your free report now..

Greetings reader,

Please read the following Bloomberg news item carefully. It has a direct impact on the safety of your money.

Sept. 24 (Bloomberg) — In May, the FDIC said it was projecting $70 billion of losses during the next five years due to bank failures. The agency said it expects most of those collapses to occur in 2009 and 2010.

The FDIC’s problem is that it didn’t collect enough revenue over the years to cover today’s losses. The blame lies partly with Congress. Until the law was changed in 2006, the FDIC was barred from charging premiums to banks that it classified as well-capitalized and well-managed. Consequently, the vast majority of banks weren’t paying anything for deposit insurance.

Of course, we now know it means nothing when the FDIC or any other regulator labels a bank “well-capitalized.” Most banks that failed during this crisis were considered well-capitalized just before their failure.

By the end of 2009, more than 130 banks will have failed. Most depositors will have little clue their bank was even at risk. Worse yet, the string-pullers in Washington are doing everything in their power to hide information about the safety of your bank from you.

So far, the FDIC has had enough money to cover insured depositors. But that money is quickly running out.

Just last week, the FDIC voted to mandate early payment of insurance premiums to help cover at-risk banks. Here’s what the Associated Press reported on Thursday, Nov. 12:

WASHINGTON (AP) — U.S. banks will prepay about $45 billion in premiums to replenish a federal deposit insurance fund now in the red, under a plan adopted Thursday by federal regulators.

The Federal Deposit Insurance Corp. board voted to mandate the early payments of premiums for 2010 through 2012. Amid the struggling economy and rising loan defaults, 120 banks have failed so far this year, costing the insurance fund more than $28 billion.

Worse yet, three more banks failed the very next day, Friday, Nov. 13.

This is a very real problem and a direct threat to your money. It’s more important now than ever to personally ensure the safety of your bank. The free 10-page "Safe Banks" report from our friends at Elliott Wave International can help.

Inside EWI’s revealing free report, you’ll discover:

• The 100 Safest U.S. Banks (2 for each state)
• Where your money goes after you make a deposit
• How your fractional-reserve bank works
• What risks you might be taking by relying on the FDIC’s guarantee

Please protect your money. Download the free 10-page "Safe Banks" report now.

Learn more and download the "Safe Banks" report now.

About the Publisher, Elliott Wave International

Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around the world.

After reaching a new high yesterday of $1153.90, the precious metal has pulled back some, albeit slightly so far.

The last few days have basically been in a sideways trading channel but prior to this, has been on such an optimistic rise that sooner or later a decline will ensue. Right?

If you took a look at a gold chart without knowing it was gold, it would look similar to previous market tops that were followed by a crash. Take a look at a housing price index chart, the 1999-200 Tech Bubble, the recent financial bubble or even an Oil chart when it was at $140.00 not too long ago.

I know what others are saying, that as long as the U.S. Fed keeps printing money, the value of the U.S. dollar will keep going down and people will continue to buy Gold. That may be, but I’m adding this post for those of you thinking things may just be getting to overly optimistic right now in Gold.

Just imagine looking at charts in a few months only to see that the U.S Dollar made a major bottom which just happened to coincide with a major S&P 500, DJIA and NASDAQ top, and Gold and other commodities made major tops as well.

I wonder what all those Meredith Whitney bashers would say then? Probably nothing at all. You wouldn’t hear a word from them then. Read more about what Meredith Whitney thinks here: Meredith Whitney Turns Bearish Again

For those who think a pullback of a considerable degree may be coming, or underway, here’s a way to try and take advantage of this using DZZ for a trading vehicle in a stock trading account. Here’s a chart to look over:

Looking at the chart of DZZ above, you can see several observations I noted: 1) the RSI above the main cahrt area has been oversold for about a week now and appears to be turning up. 2) The MACD on the bottom of the chart is in the perfect position to begin a reversal move higher. 3) The share price itself has dropped below the recent confining channel and has the potential to move back into this channel up towards the 50 day MA as it has on prior moves off the lower channel trend line.

What made me take a look at a potential trade to profit from a decline in Gold was that earlier this week Bob Pisani was shown on CNBC with a single Gold Bar that I believe was mentioned to be worth about $450,000. When something like this appears on mainstream television my friends, the end is quite possibly in sight.

This is not always the case though. The last time I mentioned I was concerned about any further upside in Gold was when I read that Gold was appearing in Vending Machines in Europe. That was back in June and we had a trade-able decline following that, but then Gold resumed its ascent. At the least, some sort of pullback may be in the cards near term.

Post your comments below to share what you think may be in store over the coming days and weeks ahead:

Actually, she said she “hasn’t been this bearish in a year”.

I ran across several forums and articles with comments where the commentors were bashing Meredith Whitney, saying that she has been bearish all along the recent rise since March, and a bunch of other to be expected types of comments.

In my opinion, when Meredith Whitney says something, it’s time to wake up and start listening. I’ve been listening to her comments for over a year now and she has been right many more times than not. (Yes, I’m a Meredith Whitney Fan)

Obviously I’m not alone as the market, in particular the banking/financial sector, sold off pretty hard after her comments yesterday.

Back on October 13, 2009 she came out and downgraded GS from “Buy” to “Neutral”, just as many other analysts were upgrading GS. Here’s how that call worked out since then:

And here’s the KBW Banking Index ETF since then:

By looking at the two charts above, you can judge for yourself whether you want to listen to her or not. If you do, here’s the Meredith Whitney interview from yesterday to listen what she has to say now. After listening, let me know what you think by commenting below:

But is this really the case?

For many years I have seen people, and done so myself, “follow the herd mentality”. When it comes to Gold, that would be when people panic, Gold should soar.

The free ebook below will help you see things in a different way. Instead of being sucked up in the momentum and draft of the herd, you may just be able to take a step back next time and see what’s causing the move first.

The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial wisdom, download EWI’s free 118-page Independent Investor eBook.

Large banks and more recently pension funds have suddenly become infatuated with gold.  They chant the mantras that gold bugs have known for years: gold is a store of value; owning gold is financial insurance; an ounce of gold will always buy a good suit.  The idea is that if the economy continues to weaken and share prices decline, a strategic allocation of the precious metal will hedge and offset some of the losses in the financial sector.

On the surface it seems to make sense and it’s hard to argue with the logic.  Even so, logic can sometimes get twisted, whereas facts cannot.  The evidence is found in the chart we describe as “All the Same Market.” Gold, stocks, currencies (versus the dollar), oil, grains, meats, softs, all decline in a deflationary environment.  As liquidity dries up and credit contracts, people, businesses, and institutions sell everything to get dollars.  Cash is once again king.  This is bearish for gold.

Looked at another way:  as the dollar advances from its lows, things denominated in dollars lose value against the dollar.  As long as the dollar remains the global senior currency, assets will depreciate:  not just stocks and commodities but residential and commercial property, works of art, collectible cars, pretty much everything.  Of course, this outlook presumes a deflationary environment and that’s been our view for quite some time.  But that’s another conversation.  The topic here is stocks down/gold up – or not.

The long-time editor of the Elliott Wave Financial Forecast Short Term Update, Steven Hochberg summed it up succinctly in a recent issue:

“The other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency. The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets.”

Don’t fall into the trap of group-think.  If investing was that easy we’d all have (insert your own private fantasy).

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For more information, download Robert Prechter’s free Independent Investor eBook. The 118-page resource teaches investors to think independently by challenging conventional financial market assumptions.