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Gold got as high as $1,656 overnight but has since slipped back…as of 8:30 am Pacific, the yellow metal is unchanged at $1,643…Silver is 91 cents higher at $31.42…Copper is up 11 cents at $3.23…Crude Oil is up 44 cents at $80.12 while the U.S. Dollar Index is off one-fifth of a point at 78.79…John’s latest Gold chart, posted earlier this morning, shows selling pressure has abated while RSI and Stochastics point to increased momentum as Gold bases in a channel between $1,600 and $1,680…

The CDNX is up another 48 points at 1461…however, before investors get too excited, what we’re seeing is typical of the bear market trading pattern that has been in place since the spring…the CDNX will face stiff resistance around its 10-day moving average (SMA), currently at 1470…this is a rally in our view that cannot be trusted…the CDNX is the best leading indicator there is, and it continues to tell us the global economy and the broader markets have entered a very difficult phase with some negative surprises likely during the fourth quarter…

An interesting chart is the single-leveraged HIX (TSX), the Horizons BetaPro S&P/TSX Inverse ETF…it got as high as $12.66 during Tuesday’s plunge and is currently at $11.75…this chart is showing some textbook bullish patterns and while the HIX will drop a little lower if the market extends its rally, there is plenty of support between $11.40, just below the rising 50-day moving average (SMA), and $11.70…that equates to resistance on the TSX between roughly 11,750 (the top of a resistance band) and 12,000 (another resistance area)…inverse ETF’s aren’t for everyone but they can be an excellent hedging tool to protect against downside risk…more sophisticated and risk-oriented investors may wish to look at double-leveraged reverse ETF’s…below is an HIX chart completed by John during yesterday’s trading but it gives a clear big picture view…below that, John updates the TSX, showing the 11,500-11,750 resistance band and additional resistance at 12,000…

On the economic front, U.S. weekly jobless claims gained less than expected last week, climbing 6,000 to a seasonally adjusted 401,000, according to the Labor Department, from a revised 395,000 in the prior week…economists had forecast claims rising to 410,000, according to a Reuters poll…the jobless claims news comes ahead of the important government jobs report tomorrow…non-farm payrolls are expected to have increased 60,000 in September, according to a Reuters poll, after being flat in the month prior…meanwhile, in an encouraging sign, most U.S. retailers have posted solid chain-store sales results for September as consumers remained resilient despite weakening consumer confidence…

The European Central Bank sees “intensified” threats to the euro zone economy and will provide struggling banks with longer-term liquidity to ward off a new credit crunch, President Jean-Claude Trichet said today…the ECB kept rates unchanged at 1.5% at its meeting in Berlin, the last for Trichet before he hands over the reigns to Mario Draghi, currently Italy’s Central Bank Governor…”The economic outlook remains subject to particularly high uncertainty and intensified downside risks,” Trichet told a news conference, offering a more gloomy prognosis than last month when he merely talked of downside risks…that shift in rhetoric will encourage investors to believe a rate cut is not far away…”Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of the year,” he stated..

The Financial Times reported last night that fears of an economic slowdown in China have fueled a trading surge in instruments that insure investors against sovereign bond defaults, making the country a new focal point for the widely used financial products…the net value of outstanding credit default swaps on Chinese sovereign debt has soared, according to data released this week by The Depository Trust and Clearing Corporation….the market for China CDS is now the world’s 10th largest (two years ago it was the 227th largest), bigger than those for Portugal and Bank of America…“Clearly there is increasing market concern about China and a few cracks are starting to appear in its economic growth,” said Ann Wyman, head of emerging market research at Nomura…”A ‘hard landing’ still isn’t our house base case scenario, but we’re more concerned about this than we have been in the past.”