John Lounsbury's  Instablog

The Daily Reckoning has an informative chart today, although I do not agree with the conclusion they emphasize.

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It is true that 1,550 is a strong support level for gold. But it is not the last defense. There are support levels at 1,480 and in the 1,300s.

Some time ago I looked at long-term uptrend support lines for gold.

Taking a longer view, let's look at a 20-year perspective with a graph presented last year:

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You must extrapolate almost two years to the right to get to today. If you eyeball that extrapolation the five-year trend line support is in the vicinity of 1,100-1,120 and the ten-year trend line support is around 1,020-1,140.

Now those levels are 30% to 35% below the current price, but that is where you have to go to say the long-term uptrend for gold is over.

However, if gold does go back to test long-term trend lines, and you hold all the way to that test, you certainly will not feel like you may still be in a long-term bull market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Is the headline correct or would "Oil Fakes a Move" be more correct?

Here is a chart from Friday morning (01 March 2013) shown in an article by Anthony Lazarra (Futures Magazine).

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In the early afternoon on the same day the chart has moved even lower, down to 90.50.

Lazarra shows his downside targets around 87 and then 82.

Other analysts have suggested the low for oil in 2013 could be much below these near-term targets. Dian Chu has predicted $65 (05 December 2012) and Andrew Butter has suggested (in July 2012) even lower ($60). Butter's analysis predicted a price of oil around $100 before mid-year 2013 to precede the drop all the way to $60.

In October (2012) Goldman Sachs predicted a longer term downtrend in oil. Two months ago Deutsche Bank forecast $70 oil by year end. And Bank of America has predicted $50 sometime in the next two years. The same report (11 December 2012) also predicted an average price of $90 over the same time span.

The International Energy Agency (IEA) has issued an update today (01 March 2013) that takes a more bullish longer-term view:

The IEA significantly increased its projections of future oil costs in this year's report due to the changing outlook for demand and production costs. It now expects crude oil to average $100 per barrel over the next two decades and more than $200 per barrel in 2030, in nominal terms. Last year's forecast estimated that a 2030 barrel would amount to only $108.

The IEA has increased the long-range price outlook by almost 100% over the past year.

However, the economic impact of energy costs has been continually reduced and that is projected to improve further. The U.S. Energy Information Administration (EIA) reports that the efficiency of energy utilization has reduced the energy cost per real dollar of GDP by half over the past 30 years and projects that same rate to continue over the next 30 years. A GEI News report is scheduled on this later today.

So, are we seeing oil making a move or faking a move? It could be both, depending on your time frame.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

An interesting graphic at 5 Min. Forecast today:

So can we put it on auto pilot?

I'll ask three questions:

1. So far the rebound from the dip is a lot less robust than the two previous cases. Is this a matter of concern?

2. What would an Elliot Wave analyst say the pattern is? Is it a-b-c-d so far with a final "e" awaiting for a peak?

3. And how many people see a half of a head and shoulders pattern emerging?

There really should be a fourth question:

How many time have you seen someone mention the potential for a head and shoulder pattern over the years that didn't ever complete?

Finally, back to auto pilot: A fool and his boat are soon parted on auto pilot.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.