11/19/06 Market Update

Stocks:

On Friday, the Dow Jones Industrials achieved my primary octave price objective. The twelve thousand level was an important media benchmark, but the tri-octave level closest to this mark is 12,351. The Dow closed at 12,342 and change after exceeding the octave combination mark on an intra-day basis. The major octave is 12,500; but the tri-octave mark represents the 12,000 target plus an intermediate octave (2500/8 = 312) and a minor octave (312/8=39). Okay, but so what? I have found that the market finds support and resistance at these intermediate plus minor octave levels. It does not mean that I will bet the farm on a reversal; but it causes alarms to go off when they are reached especially in conjunction with other indications straining against support, resistance or in this case divergence.

As of the update a few weeks ago, we have met the first time target which extends from Oct. 26th to Nov. 27th. Now, we have met the first price target. We have met the optimal levels for a reversal, now we will await the catalyst that sparks the event. We are close, dangerously close to a reversal and the first move should be quite an event. Hold on tight or preferably get out of the way.

Dow Jones Industrial -- Daily

Bonds:

The 113 area has proven to be formidable resistance in the past. It is the 61.8% retracement of the 2005 – 2006 decline. The 113 level is also the first or minimum Wave Five objective on the current rally (115.9 optimal and 119.6 maximum). The market has again turned back at the 113 level this week. The divergence between both the RSI, Stochastic oscillator and the price suggest that it may again prove to be a formidable level once again.

30-Year U.S. Treasury Bond Price -- Daily

Gold:

Thursday’s decline or avalanche brought the XAU’s price down to the Wave 4 target in one day. If this can hold, the Wave 5 minimum target is at the 159-160 level. This is a speculative idea. The price will have to surmount the declining tops line that turned back the price perfectly on 11/9/06. A thrust through this line will be no easy task and it is more likely for the trend to hold and the decline to continue. It is still important to be aware of the potential. If the market can start up at this time, the first move should be back to the declining tops line, now at 140 and declining .2 to .21 per day. If this line is exceeded then the Wave pattern and the price objectives would be validated.

XAU – Daily

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