Second Step Finished, One More To Go – 07/12/11 © ™

I hope nothing of consequence happens over the next couple of days because I will be kinda out of the loop.

We have apparently finished 2nd step down and should have only 1 more step down.  The chart below has some stopping points for the rally to restart, provided the world isn’t ending.  The first line is the 38% retracement line and could be a possibility because it coincides with a prior small top.  The last line (before 100%) is 62% and that’s a perfect lineup with a previous high of consequence.

07/12/12 DJ INDUSTRIALS 5 MINUTE BARS

Hopefully this will be a good guide for a bottom over the next couple of days.  Watching for the third step finish is not difficult if you check the following link over the next couple of days.  At this time it doesn’t appear that this is going to escalate because the decline has been very well contained, emotional but contained.

5 Minute Bar Charts

I had heard one theory that if August 2nd comes and we have no deal on the debt ceiling, there will be no default.  The government can  (“executive order” ???) revalue the government’s holdings of gold at current market price.  This would provide almost 1/2 trillion dollars that would instantly appear on the ledgers.  Presently government gold is valued at $42 per ounce.  President Nixon revalued gold from $35 to $42 in 1973.  So it’s not without precedent.

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