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IS THE CORRECTION OVER?

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Last week's commodity market decline was the most severe since 1980; which of course begs the question "is the correction over"? We don't believe that to be the case, as follow on selling will materialize taking prices far lower than one can believe.

GOLD

In that vein, we think it wise to take a technical look at gold prices - ostensibly the leader of the bull market in commodities. From a longer-term perspective, we use the monthly chart, and we don't want to get to fancy with it. Right now, the 20-month moving average is rising sharply and crosses at $521; we think this level in combination with a normal 50%-62% "box retracement" of the entire bull since 1999 moves puts our comfortable buying zone between $520 to $550. Hence, another -10% to the downside will "clean the baffles" as late-long positions have been pushed harshly; thereby granting the gold market a healthy dose of skepticism as to whether the bull market is over. In our opinion at this point in time...it is not. Keep your eye on $520-to-$550 and prepare to buy.

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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