Gold Sector: We have been looking for a correction in gold's dollar price to run to late in the month. The January 13 Chartworks determined that there were two paths to the next intermediate rally. One would end at a moderately low price and the other path would find support at the 20 week moving average. Today's low of 1088 compares to the ma at 1090, and a rebound of some weeks duration seems likely. Ross will provide some details.

Of course the guide for investors in the sector has been gold's real price, which reflects profitability for the industry.

With the Dubai World default, our Gold/Commodities Index rallied to 400 at the first of December and with the revival in financial markets it declined to 341 on December 30.

It has since increased to 360 and we remain aware that when it rises it can indicate growing credit concerns. This was the case when it reversed off the low at 134 in May 2007. It turned up as the credit markets turned down, then, after reaching 519 in February the turn down anticipated the financial rebound that began in early March.

If the current rise continues it will again signal credit troubles, and let's face it there still is a huge amount of unserviceable credit out there.

In the meantime, the gold sector is expected to perform well through this post-bubble contraction. Our view is that the seniors have yet to fully discount almost two years of improving conditions as indicated by the real price.

However, the play has turned to the exploration juniors and while the action for many has been good it is not yet an encompassing phenomenon. For those familiar with this sector the advice has been to be aggressively long.

The gold/silver ratio declined with the December party to the close of 60.7 on Tuesday. The rebound to today's 63 with the selloff in popular asset plays is appropriate and if it rises through 65 it would indicate the financial storm is back.

COMMENTS FOR ENERGY AND METAL PRODUCERS Energy Prices have ended the strong weather rally. Crude reached 84 last Friday and has

slumped to 77 (76 on the March contract).

With the exceptional cold easing, crude's decline would likely complete in January. So far so good, and we are watching the technicals for an oversold condition.

Natural gas will likely remain in a tight supply condition and a narrow trading range for some weeks.

Last week we noted that the rally to 1129 for oil stocks (XOI) was a test of the 1133 high set in October. In noting the loss of momentum indicated by the set of declining RSIs we concluded that the sector needed significant correction. The drop to 1084 was quick and it was concluded that going through 1080 would take the oil patch down to support at 1040.

Today's low has been 1057.

Gas stocks (XNG) soared to 568 with the chill and have been trading between 550 and 565 since. This range could prevail until tight supplies ease.

Base Metal Prices: A couple of weeks ago we thought that the GYX (metal prices) would reach an RSI of 75, which would limit the rally. The buying surge drove the RSI to 77, which was sufficient for us to conclude that an intermediate decline was possible.

PIVOTAL EVENTS – JANUARY 21, 20104The index reached 417 on January 7 and the decline has been to 390 yesterday which is the latest posting. LME prices slipped 1.5% today and taking out 380 would set the downtrend.

Base Metal producers (SPTMN) were also likely to stall out at an RSI of 75 and it reached 77 on January 12, which seems enough to force an intermediate decline. This index just does not "do" Upside Exhaustions so we are using what worked for us at the last big peak.