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Markets sold off across the board this morning but have started to stabilize…as of 9:30 am Pacific, Gold is down $24 an ounce to $1,407…Silver is off $1.25 to $34.88…even crude oil is down today…the Dow is off 175 points, the TSX has declined 224 points while the CDNX has broken key support and is off 91 points to 2235…the CDNX has broken important patterns in place since last summer, suggesting that the sell-off in the markets this morning is likely not a single-day event…in general, the trend has temporarily reversed in our view…there will be bounces to the upside and a level that could hold for now at least on the CDNX is 2200…the action we’re seeing in the CDNX at the moment looks very similar to that which occurred around this same time in 2005 when, in the midst of an overall uptrend, the Index pulled back approximately 20%…we have two CDNX charts this morning that will hopefully put everything into perspective…the first chart below is a weekly chart going back to 2000 and is self-explanatory…

John’s second chart is also quite revealing and shows how the CDNX’s 1100-point run since last July seems to have exhausted itself…a correction is expected to lay the groundwork for an expected major new upside move that should take the Index to at least the Fibonacci 2790 level that John has previously targeted for the CDNX…

Is there a possibility that today could in fact be the climax of a sell-off?…while that is possible, clearly the risks have increased…the important thing to keep in mind here is that what we are now seeing is a correction within the context of an ongoing CDNX bull market – this is not the end of the bull market, just another pullback within it – similar perhaps to what occurred through May, June and early July last year…throwing good quality stocks overboard right now in a panic is not a wise strategy, and hopefully investors will have built up cash positions in order to take advantage of some of the opportunities that will arise…if 2005 is any guide, this market should roar back strongly by late spring/early summer, and before then we’ll also see some good trading opportunities…the 2008 meltdown was a gift for many investors who were able to pick up stocks at fire sale prices…last summer’s correction was also a gift…this pullback will be no different in that respect, though a 2008 meltdown is simply not in the cards because of the overall positive technical health of the CDNX…this correction appears to have been triggered by concerns over the situation in Libya which continues to worsen, and the belief that the rise in oil prices is indeed not temporary and could force a slowdown in the global economy…if the United Nations imposes a “no-fly” zone over Libya, this essentially means war as critical military infrastructure on the ground will have to be taken out…so the situation there could get even uglier in the days ahead…markets do have a tendency to over-react, but that’s just the nature of the beast…the significant decline in copper prices in recent days suggests traders are expecting a slowdown in the global economy…another interesting note is that the “bond king” PIMCO fund is in the process of dumping all of its U.S. government debt…geopolitical issues, worldwide debt issues, and the possibility of an economic slowdown due in part to rising oil prices will likely pressure markets over the next two or three months – at least that’s the message the market seems to be sending this morning… we’ll look at individual issues in some detail tomorrow…this sell-off has already opened up some potential opportunities…GoldQuest (GQC, TSX-V) fell as low as 29.5 cents this morning but has since recovered to 34.5 cents…Cadillac Mining (CQX, TSX-V) fell to 22 cents for a market cap of only $5.5 million…Gold Bullion Development (GBB, TSX-V) dropped to 40 cents while Greencastle Resources got as low as 19.5 cents ($9 million market cap, $6 million in cash) even though rising oil prices will have a positive impact on this company’s monthly cash flow…Visible Gold Mines (VGD, TSX-V) has $9 million in cash and is quickly becoming one of the most aggressive Gold exploration and development companies along the Cadillac Trend…it’s trading at 40 cents this morning for a market cap of only $19 million…these are all quality companies that will recover strongly in the not-too-distant future, and there are others of course that we follow that will become more attractive than ever…