Stock, Bond and Silver Year-End Targets To Watch
Stock-Markets / Financial Markets 2010 Nov 29, 2010 - 10:49 AMBy: Larry_Edelson
I hope you had a wonderful Thanksgiving holiday and weekend! But now I want to turn our attention back to the markets. Judging by the positive response to last Monday’s column, I want to give you more year-end signals to watch for key markets.
Remember, this is the first time ever that I’ve released such signals. They are based on a proprietary trading model I developed in the early 1980s, and are a unique combination of cyclical and technical analysis.
Each year, as we head into year-end, they are the most important indicators I watch. So you should be aware of them and watching them too!
They are extremely reliable guides to the future of each market. Just as I mentioned last week, I suggest you also print out this week’s column, and keep the printout by your side as we head into the end of the year.
Keep in mind, these figures are applicable only for the last day of trading in 2010, which is December 31. But they must be gauged now, and followed into the end of the year. So let’s get started …
For the S&P 500, as we head into year-end, watch …
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— Very possible: If the S&P 500 manages to rally into year-end and close 2010 above 1277.50, it will 100% confirm that the March 2009 low in the S&P 500 was a major low — and that the S&P 500 would then be in a new long-term bull market, headed to a new record high by late 2015, early 2016. Naturally, there might still be a pullback in early 2011 if this signal were to be hit at year-end, but it would be a very BULLISH indication for the market.
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— Probable: Technically, if the S&P 500 closes the year between these two figures, which I deem probable, this would set up a “neutral” momentum and trend indication for the index for 2011.
It would mean that the S&P 500 will experience extreme swings next year, occurring between 804.60 on the low side, worst case, to 1457.00 on the high side. In other words, a near 600-point trading range!
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— Not likely: But if the S&P 500 Index were to crash now and close 2010 below 925.80, it would be a signal that that the March 2009 low would be in danger of being broken, and that the S&P 500 is back in a bear market for 2011. As noted, I rate this as not likely.
For the very important U.S. 30-year bond, watch …
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— Not likely: If the U.S. 30-year bond manages to stage a year-end rally and prices climb to above 134.03125 (and interest rates decline) it would mean that long-term interest rates are likely headed even lower next year.
I do not expect this to happen even though the Federal Reserve will be purchasing U.S. long bonds with printed money.
The number of foreign investors getting worried over the U.S. economy, budget deficits and more will likely be aggressive sellers of our long-term bonds, keeping downward pressure on bond prices (and conversely, upward pressure on the long-term U.S. interest rates).
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— Probable: A year-end closing in the 30-year bond between 116.9375 and 134.0125 would turn the bond market’s long-term trend neutral, indicating 2011 would be a wide ranging affair for bonds, with wild swings in prices and interest rates.
Importantly, this type of year-end closing for bonds would also indicate that the bond market bubble has NOT burst, and will likely NOT burst until the following year, 2012.
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— Not likely: A year-end closing in bonds below this level would indicate that long-term interest rates have bottomed, and bond prices have indeed peaked.
Moreover, it would suggest that the bond market bubble will fully burst in 2011. You would not want to be anywhere near the bond market in 2011 when it collapses.
As you already know, I am expecting the bond bubble to burst. I also have been recommending that you stay away from the long bond market, except for hedged strategies.
I will maintain my view on the bond market even if we do not get the above mentioned outright bearish sell signal — as it’s merely a matter of time before bonds crash and all of my work suggests that long-term interest rates have bottomed.
Now let’s look at a market a lot of people are invested in, silver!
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— Possible: A year-end closing above $23.75 in silver would confirm that silver is back in a long-term bull market, with much higher prices to come.
So far, silver is above that level. But, I am concerned that silver is very overbought — not to mention that it’s a very manipulated market. So I rate this type of bullish year-end closing as possible, but NOT probable. Instead …
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— Probable: A year-end closing in silver between $15.58 an ounce and $23.75 would indicate silver is going to swing wildly in 2011, between extreme technical support at the $11 level, and the recent high near $29.
The bias however, would be to the downside, shaking out a lot of weak silver long positions. I will keep you fully posted here as silver would be very problematic for a lot of investors in 2011.
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— Not likely: A year-end closing in silver below $15.58 would indicate that silver’s bull market is over, for now, and that silver could crash all the way back to below $9 an ounce before recovering.
I repeat, keep the above year-end numbers by your side as we head into the end of 2010. I will be referring to them often!
Best wishes,
Larry
P.S. If you’re a Real Wealth Report member, naturally I monitor all these signals and more for you. And of course, you get all my recommendations. If you’re not a Real Wealth member, it’s simple to join. To find out how, click here now.
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