Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets Turning Lower

Stock-Markets / Financial Markets 2009 Sep 02, 2009 - 03:42 AM GMT

By: Frederic_Simons

Stock-Markets

Best Financial Markets Analysis ArticleIn our last newsletter, we have been reflecting about the possibility of a nearing turning point in the markets. Yesterday, the stock market declined on significant volume despite good economic news. This is definitely no good news for bulls. Having breached the red sell line on the longer term charts, stock markets tumbled lower. 


The following charts illustrate the present chart picture in the stock markets:

[Please click here for additional information about the trading system and how to read the charts]

These charts show that the ES and NQ are currently on a bearish sell signal, with the path of least resistance pointing to the downside.

We are well aware of the fact that the last sell signal proved to be a "bear trap" in hindsight, but this does not change our bearish view because of the current sell signal. In fact, a lot of analysts and traders have become overwhelmingly longterm bullish, saying that the "recession is over". Likewise, we would not be surprised if analysts would come out now and say that a "healthy pullback" was good for the stock market. We will not be buyers before the long term chart turns bullish again, it this would be the case only if NQ traded above 1654 and ES above 1035.

We actually see the danger that buying on a dip - a strategy that was profitable during the last 6 months - will not be profitable in the next 6 months (at least), as the downmove in the stockmarket that started yesterday might well turn out to be the next significant bear-market downleg. We are not afraid to "miss out" on another upmove, as we would be buyers again on significant strength near the recent highs, if and when prices trade above the green buy line again. But not earlier.

The longer term charts for US Treasury Bonds still show a bullish picture, similar to what we observed in our last update. Yesterday, the Bonds sold off briefly when economic data came out, be recovered their losses until the end of the day, closing about 0.2 per cent in positive territory.

Having said this, we are not particularly impressed by the performance in the treasury market, especially with regard to the long end of the curve. 5 year treasuries were much stronger yesterday in comparison. 

Looking at commodities and currencies, yesterday offered some interesting price action. While the US Dollar strenghtened significantly (we had noticed here the inability of EUR/USD to close above 1.44), commodities did not behave in exactly the same way one would ordinarily expect. Crude oil sold off significantly, trading at around 68 USD currently, and mirroring the activity in the declining EUR/USD exchange rate. 

In contrast, Gold futures - often considered to be an "anti-US Dollar trade" - remained remarkably resiliant, and Gold was actually able to rise despite the weak stock market, weak oil and a strong US Dollar. 

This should not be taken lightly. Instead, we might see early stages of a breakdown of the correlation between the US Dollar and Gold. This would not surprise us fundamentally as (i) the notion of gold being an "anti-US Dollar trade" has become so widespread that Mr. Market can hurt a lot of people with their pants down, and (ii) because the problems arising from debt-financed "stimulus" packages and fiat currencies are not limited to the United States, but can be attributed to all G 7 countries collectively. 

The current "decoupling" of Gold may be the first sign of a second wave up in Gold, that will mark an increase of its value in absolute terms, i.e. against all fiat currencies. Until our triangle formation in Gold is not broken to the upside however, this presumption will not be confirmed.

We have to confess we are a little concerned about the fact that even Bloomberg reports about this triangle formation in Gold. (click here for the analysis). Even though this pattern is not invalidated if more people are watching it, it is obvious that this might lead to more volatility and "false signals/breakouts" on the one hand, but lead to an even stronger trend on the other hand after a breakout has finally occured.

Currently, Gold is holding up remarkably, and we will see if any move in the metal has legs. We will certainly not argue with the trend, if it is up or eventually down.

If you have any questions, please do not hesitate to contact us by writing an email to

By Frederic Simons

http://www.crossroadsfx.hostoi.com

© 2009 Copyright Frederic Simons - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in