By Jon Nadler
We can dwell on yesterday's happenings after we take a quick scan of the markets as they stand on this crisp Tuesday morning. Gold, still nervous, and still trading at under the $1040 level (namely, at $1038.00) - trying really to get up off the floor and dust itself off. Silver, down another 10 cents, breaking the $17 level, also still hoping for a recovery, following its worst drop in a month. Platinum and palladium, down a bit more. The former, at $1325, the latter at $327. The dollar, off a tiny fraction, but still orbiting very near the 76-mark on the index. Oil, up a third of a dollar, but not looking very strong.

At the end of the day, it will be concluded that trying to assign yesterday's turn in the markets to one single factor is an exercise in futility. However, if we allow for a combination of developments as having played a parallel role in what took place, we have a realistic chance of coming up with an explanation. That said, the markets (i.e. the players within them) have to yet convince us that this tectonic shift in sentiment is genuine, and that it is sustainable. A correction, this appears to be. Not a very significant one, as yet. If a trend reversal, then we could have locomotives followed by freight trains, coming full speed at various (dollar) shorts as well as (gold) longs in these markets. Now, then:

On the very day when Marc Faber was heard on Bloomberg radio pontificating about the target towards which the world's numeraire currency for trade is headed (zero!) in his opinion of course, something went wrong. Very wrong. Around the midday hour, the Dow transports broke, the S&P broke, the dollar-euro broke, and commodities broke.

If we can find the straw that broke you-know-what in the market haystack, well, that might very well be the announcement by ING to sell its insurance unit, pay back rescue funds, and get back to the business...of banking, as separate from 'other' activities. In so many words, you are witnessing the beginning of the resurrection of the essence of the Glass-Steagall Act.

The dismantling of ING- according to the FT- is one of the toughest interventions yet by Europe’s competition authorities, which waved through state aid to financial groups during the crisis but made clear these would be subject to scrutiny if they later appeared too generous. It is expected that the forced divestments will have repercussions for state-aided banks in Europe and the US as well as in the UK.

If the financial world needed a signal that the way forward will indeed be different, well, it appears to have received it yesterday. On that signal, many a market undertook a one-eighty on Monday.

Whether or not we will find out later if any central bank was out there with a fishing net, scooping up some very soggy dollars, that remains to yet be learned. We actually think the dollar has some more trials and tribulations to overcome near that 75 mark before the all-clear signal sounds. But, the end of the world as we know it, that, will not be. And, yesterday could indeed mark the pivot point from which we go forth.

We also think Gold could still make some quick repairs here, especially if the news that Russia is scrapping its planned gold sales for 2009 due to the very news being leaked, is seen as another opportunity to pump up the metal by momentum funds. Guess Russia will just have to surprise the markets when that 'magic' level is once again reached - in its calculations.

Russia had planned to sell the gold to plug its budgetary deficit, but has had to postpone plans indefinitely due to leaked information about the sale affecting the price of gold.

"Due to the leak of the information the sale in the reported period and in the reported form will not take place," said the government agent for precious metals sales.

The sale, had it gone ahead, would have been Russia's first major bullion sale since the fall of the Soviet Union.

The sale of 50 tonnes would have represented as much as 1.25 per cent of annual global Gold consumption and could have raised up to $1.7 billion (£1 billion) at current gold prices.

ALSO READ: Russia to sell two-thirds of its gold holdings

At this point, let us can turn it over to others who are in possession of clean magnifying glasses and sharp scalpels, and let them speak for what happened -any may yet happen- from their own unique angles.

We start off with a gold bug. Ned Schmidt. As previously stated, we will not see eye to eye with him on long-range targets, but is take on where things stand right now is well worth your scan:

"October 2009 has developed into a truly glorious month. For the first time in history the average monthly price for US$ Gold will exceed $1,000. Certainly all are celebrating such a wonderful event. Perhaps the most important aspect of this remarkable event is that the purveyors of price suppression and manipulation theories can now turn off the lights in their caves. Reality has crushed their misconceptions. If an $800 bull market is price suppression, give me some more!

The most glorious aspect of this breakout is the spawning of all sorts of fantasy calculations. The move of $Gold to a new high for some reason has revealed until now hidden relationships that justify any number for the future price of $Gold. These till now undiscovered relationships are allowing the creation of forecasts for Gold of more than $5,000, and even some in $6,000 range. Such forecasts can be verified by multiplying the price of $Gold on your birthday by the ratio of the length of your femur to the length of your largest toe."

Over to Elliott Wave, and their diagnosis (complete with the usual abundance of geometry) of the greenback and gold following yesterday's pyrotechnics:

"Let the “fireworks” begin. The initial move up from the bottom should be sharp, as over-leveraged dollar bears, and they are legion, scramble to cover their positions.

Initial resistance surrounds 77.50, the former “breakdown” level, but if there is strong enough short-covering, prices could vault through this area. The other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency.

The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets. The U.S. Dollar Index has no business being near the overnight low of 75.20 again if prices have indeed made a major bottom.

We’re starting to see a little “action” in the precious metals sector. Today’s [Gold] decline to $1037.30 eliminates the fourth-wave triangle pattern in the manner that we were originally counting. The break first of $1046.50, wave (c), then $1042.10, wave (a), increases the odds that gold has topped and started a significant down phase.

In order to confirm this assessment of gold’s new downtrend, prices should come under $1011.30, the previous wave i (circle) high registered on the night of September 30. Any break there will allow us to eliminate the alternate potential, shown on the second 240-minute chart above, which has prices ending wave iv (circle) after tracing out an “(a)-triangle (b)-(c)” pattern.

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