Don: here is the latest from the wizzards at Princeton Economics. I've included the entire update so that those with an interest in things other than the S&P can read up. This group called the 20 July top to the day but they have been off in theit timing of late.
Princeton NY Spot Gold Report for Wednesday 09-30-1998
SHORT-TERM
Gold recovered off its support and elected another daily bullish reversal at 293.9. Monday's close over this level further
improves the short-term outlook and signals another challenge of the 300.0 area. Major resistance continues to stand at the
314.0-316.0 area. Timing wise, Gold may rally into the week of Oct 5. Thereafter, another serious leg to the downside could
follow. Additional resistance starts at 296.0 and 298.6. Support now begins at 289.5-288.0.
LONG-TERM
Our yearly bearish reversals in Gold remain at 293.5 followed by 129.4 and 128.7. Clearly, a year-end closing beneath 293.5
for 1998 will point to a dramatic decline into early 2000. We cannot rule out a drop to 129.0. However, the only fundamentals
we can see that would cause such a move appears to be a liquidation of the IMF reserves perhaps if they are shut down due to
their role in causing the current emergency market meltdown. We realize that this projection appears extreme. We do have
some support at our quarterly bearish reversals to be found at 229.5, 193.6 and 113.6. We also have a 279.2 quarterly and
monthly bearish reversal. If this is elected, we can see little hope of Gold holding and a drop to 229.0 becomes inevitable. A
closing at year-end below 229.5 will confirm the worst case scenario for not only gold, but the world economy as well.
Princeton NY Spot Silver Report for Wednesday 09-30-1998
SHORT-TERM
Silver rallied sharply to close over its 516.0 and 523.0 daily bullish reversals, further improving the short-term outlook. A
weekly bullish reversal rests at 528.5. If we close above this level on Friday, we could see a move toward 547.0. Major
resistance begins at 583.3. Support begins at 512.2 and 488.3.
LONG-TERM
Our yearly bearish reversals in Silver reside at 547.0, 429.7 followed by 350.8 and 327.2. Our timing models clearly warn that
on a global correlation basis, Silver and Gold should move into a low for early 2000. While a year-end closing below 547.0
will confirm a bear market, a closing below 429.7 will confirm a projected low at least in the 275.0-325.0 zone. Only an annual
closing below 327.2 would imply a complete retracement down to $1.63-$2. This type of collapse becomes possible only if
we see the Dow drop 40% this October. Such a move in a short period of time would warn of a global deflation extreme.
Princeton T Bonds CBT Report for Wednesday 09-30-1998
SHORT-TERM
Bonds closed strongly on Tuesday after a 1/4 point cut in rates from the Fed. However, to eliminate a potential top for a
correction will require a decisive move through 13010. Support lies at 12831-12821. Any close under this area could spark a
sharp correction.
LONG-TERM
We have been warning that our long-term models on the US 30-year bonds are still indicating that we could see new highs
extend into as late as 1999 before a bear market emerges. One last blow-off to the upside would be indicated by a year-end
1998 closing above 12827, which would then point to extreme target objectives at 13200, 15618 or 16917. Technical
resistance for 2000 stands at 17500, which would take US long rates back to the 1966 level! These types of extreme targets
are possible given the phase II of Japanese Big Bang, continued destabilization in emerging markets and the question about the
success of the Euro in the face of Russian turmoil. While a year-end closing above 12827 will warn of a very sharp breakout to
the upside raising the possibility of a 1999 high, a more modest closing simply above 12210 would point to perhaps a more
sustainable rally into 2000.
Princeton S&P 500 Index Report for Wednesday 09-30-1998
SHORT-TERM
S&P's have managed to hold 1050.00 for the past 5 days. Despite holding above initial support, the current chart pattern has
bearish implications. A close under 1044.00-1042.00 would signal a drop to our first system support at 1025.00-1015.00 at
the very least. Any failure to hold 1015.00 could result in another sustainable move lower. To negate the bearish implications of
the current chart pattern will require a decisive close over 1080.00 technical resistance. We would then prefer to see some
follow through above our 1097.70 and 1098.40 minor daily bullish reversals. Oct 1 is a panic cycle target.
LONG-TERM
The July 20th turning point has not only marked the peak in US and European share markets, it has also marked the peak in the
economy and the collapse of emerging markets. Key support actually is defined by our monthly bearish reversals at 844.00 and
839.40. A Sept closing below 891.50 will warn that a drop to at least 610.00 will come next year. Overall, we see a decline
ahead into next year with a potential drop into early 2000. A 23% correction is likely by October. However, if this decline
keeps pace with 1929, then we would see a 49% correction by Oct(610.00). The 1987 crash would produce a 40% drop by
Oct(719.00). Therefore, if we only see a 23% decline, then the major low may form between 40-49%. However,a drop of
40% by Oct warns of a 60% drop by 2000.
Princeton NY Crude Oil Report for Wednesday 09-30-1998
SHORT-TERM
Crude's outside day on Tuesday tested the 16.04 level and closed near the high of the day. This is technically bullish short-term
and Crude could attempt a weekly close over 16.04. If this level is not closed over by Friday, Crude could put in a temporary
top. Nonetheless this market is still strong short-term and will remain so as long as 15.01 is held on weakness. System
resistance stands at 16.20 and 16.84. Support lies at 15.01 and 14.80. Timing models warn, however, that Sept could
produce a cycle high. If support starts to give way after this month, an important temporary high may be in place.
LONG-TERM
Crude oil made another nosedive dropping to 11.51 in June. We still see that a potential decline just below 10.00 is still
possible before this bear cycle is complete. At this time, only a monthly closing above 18.06 will suggest that a major low is in
place. A failure to establish a low under 10.00 by Jan/Feb of 1999 could result in an extended decline into April/May of 2000.
We do see that 1999 will mark the beginning of a new cycle in volatility that should move into a major high culminating with a
panic cycle in 2002. If we do see a new low in early 1999, then there will be the potential for a sizeable rally thereafter perhaps
even producing an outside reversal to the upside on an annual basis. The major support for Crude lies at our yearly bearish
reversal at 9.81 and 9.55 followed by 8.80, 3.29, 3.14 and 2.90. Based upon our yearly models, we can see clearly that the
vital long-term support lies between 9.81 and 8.80. This warns that Crude is capable of penetrating the 1986 low of 9.75 yet
still holding on a broad long-term basis. Weekly models show major resistance at 18.70.
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