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The State of the Trend

The FED has spoken and the verdict is a little taper and QE forever. As a result, the SPX seems unhappy to remain confined within the '09 uptrend channel, and is making valiant attempts to burst out of it:

S&P500 Weekly Chart
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Gold and silver are on track to finish the year the way they started it - as the worst performing industry groups. The Gold Miners ETF (GDX) is finishing the year below its 2008 mid-range, and is one support level away from retesting the 2008 low:

Market Vectors Gold Miners Weekly Chart
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We started the year with a brief forecast based on the decennial cycle which called for a binary outcome: either sharply up or down. 2013 didn't disappoint, and is finishing with a 20%+ gain which brings the bullish/bearish years ending in 3 score to 7:6.

Gann observed that a year ending in 4 is a bear year, but it ends a bear cycle and lays foundation for a bull market. We tend to agree with the second part of his observation, due to the fact that years ending in 5 are uniformly bullish. Looking back at 127 years of Dow history (courtesy of Gann 9) however, the record shows that during that period there was only one bearish year (1974), four bullish years, and the other eight have traded mostly sideways. In such a mixed environment, following the average for years ending in 4 may not prove to be very informative. For this reason, while keeping the 40-year cycle in mind (which, by the way, shares some common points of interest with the chart below), we will stick to the monthly chart and let it be our compass for the beginning of 2014:

S&P500 Monthly Chart
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