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0920 EST Monday January 23 2006

Good Morning: Unfortunately, with so much going on towards the end of last week and with some of the biggest positions MODAR has ever carried, due to the very large component of Gold, Silver and Energy issues, we had severe time constraints going into Friday and so we were unable to comment as much as we would have liked to, especially in regards to the Equities market's increasing vulnerabilities we outlined rather dramatically, earlier in the week and the ominous consequences that any really serious breakdown might bring, which we did describe, might be a potentially devastating downmove. In addition, following our short sell recommendation on Google GOOG last Tuesday, we began to notice a developing exceptionally bearish negative setup in Google, that could well be characterized technically, as a "Double Island Top" formation, an extremely reliable, but albeit very rare occurrence. The resulting downward pressure and power of this unusually classic technical formation was demonstrated manifestly, by Friday's record multi-billion, point and percentage loss down day.

Friday also turned out to be one of our more active sessions ever. Although our one day record stands at 160, the 115 recommendations we promulgated live in real-time Friday, gives some idea of the scope and coverage of Modar's daily activities and is one reason why we have managed to capture some of the most stunning gains possible over the past 200 trading days, as Modar and over the previous year in total have included numerous hundred percenters, multi-hundred percent moves, three 900% percenters, one fifteen hundred percenter and yes even one fluke 12,400 percenter that we have thus far booked still only around a third or so to Modar's equity performance ledger.

We have chosen today to add some new features to this report that will elect to highlight some of Modar's more outstanding trades of the day and to also announce that we will gradually be expanding our coverage to include more and more Nasdaq, Amex and NYSE issues.

As a consequence of the downside break in the markets Friday, forecasting how Monday might play out could be treacherous although in a more normal World, one might expect a bounce of sorts to occur in the early going, but depending upon the price of Crude Oil and other Energy components Monday and also depending upon Geopolitical considerations, stocks could again be under pressure or could just as easily rally unexpectedly. We did suggest in our commentary that the S&P 500 might want to come back and test at least the 1250 level and that now looks increasingly likely and that would equate to the Nasdaq testing 2200 and commensurate levels in the Dow Industrials.

Once again we will have to take this day by day, but the uncanny resemblance to January 1973 we outlined ahead of these events, does serve as a strong reminder as to what could eventuate, in particular as January 1973 was just the beginning of a series of drastically large increases in Energy prices and was also the beginning of meteoric increases in Gold on its way to 20 fold plus gains for the entire decade.

Once again on Friday, the CRB Reuters Inflation Index closed at a new all time record high for the day and week and Sugar was also a standout on Friday, closing at its highest level in 25 years too. Sugar has a habit of emulating Gold prices as a leading indicator of major inflation and judging by the way Sugar rose and closed Friday, some kind of explosive upmove may be pending in Gold, especially now that Gold has established what may be the last major resistance point to be overcome at Friday's highs of $568 per ounce. If last week's highs in Gold are taken out or exceeded anytime soon, it could result in a very swift $100 or so move past $600 towards the $660 area.

Perhaps one of the most bullish aspects currently going for Gold is that none of the really major analysts can truly explain why it's solid upmoves have been happening so fast of late and how its dynamism and volatility has been increasing so dramatically: That is generally acknowledged as being especially bullish for Gold. Having learned from some of the best of best and most successful traders of all time, the one overriding lesson is "Beware of markets that are moving on no news" or with little explanation... A la Gold, Silver and Sugar today!

Just as the Oil markets confounded the best of the best in the early going, the market was tending to use every piece of news both good and bad as having a bullish impact on rising prices and the Energy markets reacted incredibly strongly to both traders talking up the price on TV just as they are now starting to do with Gold. And, also to the seemingly outlandish at the time upgrades and upside targets that went as high as $105 for Oil and today, by an increasing chorus of World renowned analysts calling for at least $1,000 per ounce in Gold.

Many investors do not have the discipline to ride a big trend such as this and many others fight it, just as occurred with the Energy boom.

This time the dynamics dictate that this is one trend you have to stay with as you may not only be hedging your future on it but building it also. The fact is the US Dollar looks extremely vulnerable to some kind of major incident or series of events over the next few years. It is already in a down cycle that is virtually irreversible, as these trends are very strong and sustained and even though interest rates may have been subdued and could remain so a while longer, the fact is that we are potentially emerging into a long term trend of rising rates that could last as long as 35 years or more and the last time this happened Gold and Silver rose exponentially over time. While rates fell over the last 20 years up to the end of the Century, Gold and Silver prices also fell and were totally subdued for virtually the entire period.

In Conclusion

Gold now has resistance at $568 ~ $570 and Silver at $930 ~ $935. While these levels may or may not contain advances depending on what transpires in the coming weeks and months, it seems reasonable to assume that a breakout above these levels could have Silver on its way through $10 relatively swiftly and this could open the way up for a move to at least the $11 ~ $12 range, with a possible run to as high as $15, which like the $730 level in Gold, after $10 is exceed, would likely be the next significant resistance level for Silver. In other commentary, we also mentioned that 2005 was one of the tightest trading range years in Stockmarket history. Often this is a harbinger of an exceptionally volatile year or series of years that follows, therefore we see many dynamic trading opportunities will likely unfold soon.

Trade Well
From the Desk of Savant








A new report is available on CFRN regarding our Gold strategy. The report is in PDF Format. We will also continue to update you via - "Trading Markets" - the one stop shop for savvy investors.

Trade Safe
From the Desk of CT

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