NEW

 The Van Tharp Institute Introduces the 2nd Edition of the Peak Performance Home Study Course!

It has been nearly fifteen years since I made any significant changes to the Peak Performance Home Study Course. During that time, I have researched and learned a lot more about important topics for trader peak performance, and I want to share this knowledge with you. I have spent much of last year working on a new edition of the course. Today, we are introducing the new 2nd Edition of the Peak Performance Course.

First and simply, everything has been modernized and updated. Market examples and real world references are from today rather than the early 1990s. 

Second, there are numerous new ideas, theories, and practical exercises to help you become a more successful trader. 

Third, I estimate that I revised more than 20% of the existing content of the five volumes. 

Of all the additions and revisions, I think these are the most noteworthy improvements:

• Four entirely new chapters.

• Major changes to other chapters amounting to about 16K words of additional, new material.

• Two new daily tasks of trading.

Feature

Gold Analysis & Strategy

July 4, 2009

By 

Florian Grummes

Hello. My name is Florian Grummes. I live in south Germany and am a self-employed independent professional trader & investor in the gold market. I started focusing on this market in 2003 after listening to Van talk about the DOW/Gold Ratio.

Today I am very happy to share with you my gold market update in Tharp’s Thoughts. I write this update every two weeks as part of my plan to guide my trading in the gold market. As I learned from Van, we trade our beliefs about the market. Therefore please be aware that this report represents my beliefs about the markets and gold. This analysis is meant to be an educational service for you and does not represent a recommendation for any kind of investment. If you have any questions feel free to send an email to florian.grummesATweb.de. Also, if you want to sign up for my free newsletter list just drop me an email. We will be publishing this monthly in Tharp’s Thoughts, but if you would like it twice a month, then please subscribe.

1. Gold Spot Price Analysis

1.1. Gold in USD (one ounce = US$931.50)

--

 • During the last two weeks the price of gold moved sideways between US$948 and US$913. It looks like the correction since early June took at least a break. Exactly at the 61.8% retracement of the last rally at US$912.70 the market found a short-term bottom and Gold went up to nearly US$950 pretty quickly. At this level resistance was too strong and selling started again. At the end of last week Gold was down already more than 15 dollars closing at US$931.

• In the bigger picture the correction since the all time high in March 2008 (US$1,037) is still in play. To end the correction a sustainable move above the US$1,000 mark is necessary.

• Already for more than three weeks Gold is still oscillating around the rising 50d MA (US$933.14) between US$ 940 – 925. A typical summer season! Both Bollinger Bands are contracting slowly and the 200d MA (actually US$876.67) is moving parallel to the 50d MA. Both important moving averages are rising. In the midterm this is a quite positive technical picture and indicates higher prices after the summer break. 

• Within the next weeks this non-volatile sideways market should continue. But expect a quick move below US$900 with a test of the 200d MA to shake out the weak hands. Probably around US$880-845 there will be a very good buying opportunity. 

• On the other side a clear buy signal would be a rise above US$965-970. In that case the level of US$1,000 should be taken out soon. I believe that scenario is quite unlikely at the moment. 

• The long term technical & fundamental perspective for gold is still super bullish. The next price targets for this long-term bull market are the Fibonacci Extensions of the correction since March 2008 at US$1,250 and US$1,600.

• The DowJones/Gold Ratio is now at 8.89 and improved slightly in favor of gold. The news about the stock market & the economy are getting worse again. During the coming summer weeks I do not expect a fast and heavy sell off here, but I do believe that a slow and steady decrease is the most probable scenario. I guess we will see another wave of deleveraging later this year in autumn before the inflation speculation including the CrackUpBoom that will finally start.

• Long term I expect the price of gold to move towards parity to the Dow Jones (=1:1). The next primary cyclical change is still years away. This means we are still in a long-term bull market in gold and in a secular bear market in the broad stock market. 

1.2. Gold in EUR (one ounce = 666.45€)

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• EUR the Price of Gold decreased again since the last issue. 

• The rising 200d MA (actually 656,00€) as the next important support is very close now.

• If this support fails, I expect weaker price down to the 625,00€ level.

• I see the current price levels under 670,00€ as a buying opportunity for EUR Investors. The bullion market (at least in Germany) is pretty quiet again and most of the standard products are available. That will change during the next bull move to the upside. 

1.3. Gold COT Situation

• Due to the holidays in US the COT data of last Tuesday is not yet available. But the data of the week before is quite informative as well. The basic conclusion here is to stay very cautious on the long side. 

• The well informed Commercials covered about 13.000 contracts of their short position so far. During last week they might have covered another few thousand. That is by far not enough for a sustainable long-term bottom. 

• I still believe that the next big sustainable up leg in the price of gold will only start if the commercials reduce their short positions to below or at least around 100,000 contracts. With prices below US$900 the commercials should start to cover much more of their shorts.

17.02.2009 = -196.360 ( PoG Low of the day = US$ 970 )
10.03.2009 = -172.851 ( PoG Low of the day = US$ 892 )
18.04.2009 = -153.419 ( PoG Low of the day = US$ 885 )
19.05.2009 = -183.065 ( PoG Low of the day = US$ 920 )
26.05.2009 = -208.136 ( PoG Low of the day = US$ 939 )
02.06.2009 = -226.521 ( PoG Low of the day = US$ 970 )
09.06.2009 = -225.047 ( PoG Low of the day = US$ 947 )
16.06.2009 = -207.368 ( PoG Low of the day = US$ 929 )
23.06.2009 = -194.430 ( PoG Low of the day = US$ 913 )

1.4. Gold Seasonality

• It’s July – the worst month for gold. The trading volume decreases and so do the prices of most of the markets. 

• Personally I am out of the market and do not hold any short-term trading positions. I am on holiday now. It is time to recharge soul, mind and body!

1.5. Gold Sentiment

• The sentiment cooled down already but I believe for gold to climb the wall of worry the weak hands have to be pushed out of the market once again. That should happen with a move below the US$900 level. 

1.6. Conclusion 

• As mentioned already the technical picture basically is quite positive. But the COT data as well as the seasonality do not support a new up move within the next couple of weeks. Instead I expect a test of the area between US$ 875 – 900. Even a quick test of the very important support at US$845 is quite possible. If in this case the commercials will cover more of their short positions we can expect a new and this time successful attack of the US$ 1,000 level in autumn or winter

2. Gold mining stocks Analysis

2.1 Goldbugs Index USD (342.72 points)

• Before the HUI started as expected to recover back up to the level of 360 another sell off took place down to 317 points. From here together with a recovery in the stock market and some short covering in the gold market the index went up again quickly to 360 point.

• But last week the HUI went down lower again. Last Thursday the index for the unhedged Gold mining shares lost more then 3.3%.

• Similar to gold I expect at least a sideways movement around the 50d MA (actually 346.63 points) during the coming summer weeks. 

• The flat 200d MA (actually 286.38) is still pretty far away and indicates further need for price correction. On the way down the lower Bollinger Band (actually 320.07) should be the first support.

• A look on the weekly chart shows that a correction can go down to an even 250 points over the next weeks and months. At 250 we can find the 61.8% Fibonacci Retracement of the complete rally since last November. Most importantly the PPO/MACD indicator on the weekly chart clearly shows that there will come much better entry points for buying the gold mining sector again. The level of 250 points is identical with US$845 in gold: an important old top which might be tested one more time - now as a support. 


3. Recommendations

• Always worth reading: GEAB N° 36 is available. Global systemic crisis in summer 2009: The cumulative impact of three «rogue waves»
http://www.leap2020.eu/GEAB-N-36-is-available!-Global-systemic-
crisis-in-summer-2009-The-cumulative-impact-of-three-rogue-waves_a3359.html

• I am always interested in Marc Faber’s opinion 
http://www.moneyshow.com/investing/global.asp?aid=GlobalQA-17102

• Gold: Are You Shooting Your Own Soldiers?
http://www.321gold.com/editorials/thomson_s/thomson_s_062609.html

About the Author: Florian Grummes (born 1975 in Munich) is studying and trading the Gold market since 2003. Beside a lot of self-development workshops and seminars he collected loads of experience in the gold market by trading and investing his own money to finally become a very successful self-employed precious metals trader & investor. Beside his trading business he is also a very creative & successful composer, songwriter and music producer.

Disclaimer

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Trading Tip

Macro Picture, Economic Numbers and Trading

by
D.R. Barton, Jr.

As we get ready for a G8 summit in Italy, government policies and the macroeconomic environment get much more attention in the press. For those who know how the publishing game is played, it’s easy to see how various interest groups try to persuade the world’s economic leaders by getting timely articles on unemployment figures and oil speculation published, just in time for the summit!

Traders and investors have always fallen into two camps – those that say that outside influences should be ignored and that one should trade only price and the derivatives of price (such as technical indicators, etc.).

The second group is “all others,” anyone who looks at outside influences and tries to “take the temperature” of the market and its response to events and economic trends.  This group can range from the technical traders who keep an eye on world events and economic news so they don’t step in front of freight trains, all the way to the fundamental players who try to position themselves for long term moves based solely on what’s happening in the bigger picture.

I won’t take sides in the debate, because as Van says, you have to trade or invest in a style that fits you.  But, almost all traders and investors will do well to understand the major outside forces that are influencing markets. And this is especially true for ones that have an immediate impact on price movement.

Economic Reports – Don’t Sleep on These Important Events

The government puts out many economic reports in varying frequencies (weekly, monthly, etc.).  These are issued under a strict protocol of secrecy so that no one can gain an advantage by knowing the results before the announcement.  (If anyone remembers the movie Trading Places with Dan Akroyd and Eddie Murphy, you’ll remember a compromised crop report was a central part of the plot.)

It’s very interesting (not to mention extremely useful) to follow what economic reports are moving the market at any given time.  The public in general and market participants in particular run through cycles of perception where one or more governmental economic reports take on a very high level of scrutiny, and therefore impact the markets, while others barely even register a tick or two of price movement.

The reports that have the biggest impact certainly vary over time.  What was important a couple of months ago, may have very little impact today.  Here are some examples from the past:

·  In the 1970s, the BIG number was the weekly money supply figure that came out on Thursday.  Legend has it that a six-figure betting pool was run each Thursday at Bear Stearns; unsubstantiated rumors have indicated that my business partner and market maven Christopher Castroviejo was in charge of the pool…

·  2007  and 2008 saw the housing numbers (new home sales & starts, existing home sales, etc.) as highly watched numbers; they still have a little market impact today, but much less so than in their prime.

·  During the spring and summer of 2008 the weekly oil inventory report was a major market mover. 

The current major movers are the employment reports.  Market players are currently giving high levels of scrutiny to both the weekly report (Initial Claims) that comes out on Thursdays and the monthly gaggle of numbers (Nonfarm Payroll, Hourly Earnings, Average Workweek, and Unemployment Rate)  that is reported on the first Friday every month.

Keeping abreast of what reports are really having an impact can help your trading efforts or at least keep you out of harm’s way during the announcement.

Great Trading!

D. R.

About D.R. Barton, Jr.:  A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena.  He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at  "drbarton" at "iitm.com".  

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