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Calculated Potential Top: GEOs Prices for March

By Claude Biava

March 4, 2008

Before covering the above topic a little confession is in order. We must say that we don't really like the concept of The GEOs introduced yesterday, We still find it difficult to take seriously, as it seems a bit quixotic and it rather tickles our sense of the ridicule, but it was forced on us by the evidence of the charts and so had to adopt it. At this point, we don't know whether or not it will last and, if so, for how long. For the time being, however, it seems valid and so we'll have to live with it.

With the heart somewhat lighter after this confession, it is time to proceed with the subject of this report. As we enter a new month, it was thought worthwhile engaging in some fun calculations to identify potential top GEOs prices that could be seen in March under the limits and assumptions described in The GEOs page. The actual March price action could then be followed for each of the GEOs with reference to the calculated top limit prices. The main purpose of the exercise then is NOT to make predictions but to provide a framework of possible price targets based on the limits suggested by historical experience for the choseb parameters. For ease of visualization, top limit prices for each GEOs will be also be presented in their corresponding Charts.

1. Gold
For Gold the parameter chosen is percentage of price above the 40 week mavg. The historical price limit of 39.2%, reached at the top of the 2006 price spike, was selected as the potential top limit price. Gokd ended the week at $974.3 or about 27% above the 40 wks mavg, almost exactly were it was the week before the top of the 2006 spike (see Chart 1).
The potential top limit prices for the 1st, 2nd, 3rd and 4th week of March range from $1,080 to $1,124. As seen in Chart 2, the $1.080 price for the 1st week of March would reproduce exactly the price action seen in the last week of the 2006 spike. It would also fit best within the uptrend channel identified in the Chart. Top limit prices for subsequent weeks are slightly higher due to the rising 40 wks mavg and tend to go above the top line of the channel.

2. OIL
For Oil (Chart 3), the top price limit is 80 % above the 48 months mavg. Oil ended the month of February at $102 or about 64% above that mavg. The top price limit for March is $114.9.

3. EURO
For the Euro the top monthly price limit is 32% above PPP (Purchasing Power Parity). The Euro ended February at EU/USD of 1.52 or 26.6% above PPP (Chart 4). The top limit price for March is EU/USD 1.5840 (Chart 5).

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