J. Taylor's GOLD &
Technology Stocks
Financial
Markets
Jay Taylor
July 26, 2004
Trader Roger's Corner
From time to time I have published some of Roger Wiegand's
e-mail messages in our weekly Hotline because I have found his
insights into markets very useful to me, personally. One area
in which Roger also has some skills that I do not have is that
of technical analysis. Roger has agreed to write a summary column,
which we are going to call "Trader Roger's Corner,"
in our weekly Hotline message. Essentially, his weekly column
will provide a brief technical analysis of the major markets
we play (either from the long or short side) in our Model Portfolio.
Those markets are: stocks, bonds, U.S. treasury markets, the
dollar (vis-à-vis foreign currencies), energy (oil and
gas), and, of course, gold.
Once we get a little better organized, in the next week or so,
Roger will provide some charts along with his
commentary. This week, however, he is providing the following
commentary, without the benefit of charts, on the following key
markets that we follow:
Indicators as of Friday July 23, 2004, are showing:
FLASH
BULLETIN !!!!!!! TRADER ROG SEES DOW TANKING VERY SOON!
1. The Dow
is rolling over and headed for 9750. A full downdraft will
take us to 8044.93 by late fall if
geopolitical conditions do not enter the economic picture. If
it's worse, look for 6412.54.
I put Roger Weigand in touch with www.decisionpoint.com. He called
me today shortly before press time so I could pass along
to you a very alarming view he picked up from a monthly chart
of the Dow. In short Roger believes the Dow and presumably stocks
in general are about ready to "fall off the table."
Well that is the way I wish to characterize Roger's words.
In fact, here is a direct quote from Roger:
"Jay:
I just finished an analysis on the DJIA Monthly chart from 1982
to 2004. My four major indicators are all showing NEGATIVE TO
DOWN. The 200-day moving average is showing a wave three bottom
of 6,869.61. My wave three analysis shows the bottom of the next
big wave three down is BELOW 7,000. The way this thing is rolling
over, the time cycle looks like September-October for below 7,000.
There is always the possibility it could take longer, but all
the indicators are saying we drop over 2,000 points by November
1, 2004 -Roger"
2. The Nasdaq
will drop to at least 1,570.52 by late fall if the geopolitical
conditions stay the same. If it gets worse, the next stop is
1,270.40.
3. The 90-day moving averages on the Dow, Nasdaq, S&P
500, and Russell 2,000, are all under water and
getting worse. We are headed into the worst part of the calendar
stock year-September and October.
4. Gold will fulfill its "C" wave down within the
next 1-2 weeks. Then, gold begins the one wave of five in
a
march toward 502 December gold. In metals, bullion spikes first,
followed by gold stocks within two weeks.
Silver follows gold by about two weeks. Look for silver stocks
to move two weeks after gold stocks.
5. T-Bonds were blindsided by Greenspan's speeches this
week and dropped. They will hang on for a while,
then begin a rapid decline in anticipation of rate increases
by the Fed after the election. Remember, futures precede the
movements in cash.
6. Crude oil is holding fast to the $40 area. Traders
expect it to sell off, but there is fear to go short because
of feared delivery problems and violence. Crude oil is headed
for $50 next year. Some less conservative are saying $50 to $70
price range with $55 the range number. Those who say we have
no inflation are not telling the truth.
-Trader Rog.
GOLD
Chart 1- Gold-EMA-20
398.67 and EMA-50 396.46
Published
with permission of www.decisionpoint.com
The large double
top is prominent and indicates a drop. From the second double
top down, = an A wave. Next wave, group of lines up =B wave.
We are now in a C wave down and settled at 389.90 on 7-23-2004.
This wave down is not completed. I expect chop between 385 and
393.50 for the next 10-14 days. As the C wave completes, it will
turn up into a new series of five bull waves. The first turn
up is a wave one. We need to be in the trade at the beginning.
Go in now, and it might drop as low as 375, but this is doubtful.
Probably 385 is the worst we see. If you wait until Wave one
shows itself, you might miss most of it, as I expect it to move
rather quickly. Our August to November time period will be the
best gold rally of 2004, with an expected top of 502.3 by December
1.
Chart 2--Gold-EMA 41-91.03 XAU
 Published
with permission of www.decisionpoint.com
The two support
lines project to the present. The dotted line just above recent
market activity shows resistance. Notice the last few weeks'
action has formed a bull flag up. The XAU is a valuable tool
as it homogenizes silver and gold into a one metal average pronouncing
a firmer trend for both. Individually, gold and silver might
show something slightly different. Notice on chart one we are
below support.
On chart 2, we are above support. This shows gold and silver
turning up as a leading indicator for the C wave, beginning in
just a few days. I expect this new wave 1 will hit resistance
at either 418 or 429, depending upon the velocity of the rally.
The U.S. Dollar must fall a corresponding amount to drive gold
up, and it shall.
THE DOLLAR
Chart 3--U.S.
Dollar Index
 Published with permission of www.decisionpoint.com
The longer
a trend continues, as in the dollar chart, showing the dollar
continuing down, the more power behind the move, and the more
likely it is to continue in the same direction. Notice the EMA
10 line at the bottom. It supported in summer last year and spring
this year. Yet, in spite of a little recent recovery above the
down trend, the dollar is rolling over, and will continue down.
Note the recent bars above the down trend line heading down
in a bear flag formation.
In my opinion, the best the dollar can achieve next, is a
91 top; but it's more likely it is on its way down to 87, then
85, then 80 by December. If we break dollar support below 80,
some very serious problems will arise. Next stop down is 77.74
and 74.74. Let's hope we don't get there at all; and if we do,
it's a gentle slide not an abrupt one.
SILVER
Silver is usually
about two weeks behind gold activity on the charts.When you compare
the progress of gold
relative to silver, you will notice this. Silver has moved
through its A wave down, and its B wave up. It is now
topping on the way down in its coming C wave. Gold is already
ahead, in that it's C wave down has progressed further. Silver
will follow gold down to a main support range of $6.00 to $6.25
and base and chop for awhile.
An estimated 10 to 14 days after gold begins its wave one rally
up next month, silver will do the same and
follow gold up. Understand that silver is a very thin market
and quite prone to much more volatility. As such, silver can
slam higher and lower in its wave one up trend as it follows
gold. This volatility confuses investors, and they should be
wary of trading too much. For silver, use December or March options.
If the price is too rich, buy silver stocks of high quality for
buy and hold, and/or invest in physical, or flyer juniors knowing
full well these move both ways very quickly. Senior call options
in good, large public mining companies for December, and January
are good investments with a proposed exit no later than 11-1-2004.
"Trader Rog"
Silver: EMA (20) 6.32 and EMA (50) 6.21
Published
with permission of www.decisionpoint.com
 July 23, 2004
Jay Taylor
Email: jtaylor9@ix.netcom.com
www.miningstocks.com
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