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
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
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
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
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

Sometimes Doing Nothing is Doing Something, How to Find the Stock Market Bottom

Stock-Markets / Stock Markets 2011 Aug 09, 2011 - 12:55 PM GMT

By: George_Maniere


Yesterday I had a dozen readers write to me asking if we should we be buying into the market now or commenting on what great bargain prices these stocks are selling for. I have written many times that "sometimes doing nothing is doing something". I told them that the hardest thing to do when the market sells off 634 points is to do nothing. I will explain why.

In every market there is one stock or sector that is an indicator. I feel that in this market that indicator is Gold. Yes I do own GLD. But I will not buy into this market sell off until gold sells off. Why? The answer is because right now Gold is perceived to be the ultimate safe haven. Well what it is the safe haven from? The answer is the continued debasement of currencies and the fear that is being shown in the equities market. Yesterday it was clear that people had lost all appetite for owning stocks and were content to park their money in safe havens like gold and even US Treasuries. While yesterday was a record volume day, I read a statistic that really floored me. While there were approximately 4.5 billion shares traded there were only 25 million shares traded to the upside. The selling we saw yesterday was either short covering or people selling to get out. Either way it felt like capitulation.

The VIX hit an intraday high of 50 which was a rise of 35% in one day. These stocks that are being dumped will not feel like they were great bargains if we go back and test the 2009 lows. Do I know where this market will bottom? NO! What I do know is that I will watch gold like a hawk and when it finally capitulates then I will know that the market is putting in a level of support. Until that happens I will not participate into buying this market and I urge all my readers to do the same.  As I write, the VIX looks like its signaling we’re almost done with the selling and we could get a short covering rally but the futures are signaling a further selloff in the markets and gold is also showing another strong rise of $48.00 an ounce so I expect another day of sitting on my hands.  

It has been the relentless stream of bad news that has turned what could have been a short-term market dip into what now looks like a prolonged selloff with no bottom in sight. While the Standard & Poor's downgrade of U.S. debt was in itself a needle moving event, it has rightfully served also to amplify the problems both domestically and elsewhere in the world. The lowering of the rating gave everyone an entire weekend to worry. We still have a long way to go as Europe is a complete mess. Our economic woes are as much Europe as they are in the United States and I have serious doubts that politicians in Washington and in Europe have the gravitas to navigate their way out of the crisis. There are so many issues to deal with that it's hard to see how we're going to work our way out of them.

My experience in the market has taught me that the market is going to correct the way it should. Because it takes a little longer just makes it more pronounced. Memories are short but let’s not forget that it was just two and a half short years ago there was total capitulation in the market. I remember that a copy of the New York Times Sunday edition (maybe rightfully so) cost more than a share of the stock. There is going to be a point where stocks are a giveaway and that is when people will begin to step in and start buying. How will we know that moment? The answer is to watch gold.  It will tell the story. When it sells off you will have your chance to buy in at the real bottom.

So in conclusion I want all of my readers to realize that this is one of those defining moments in time. The best thing to do today is to do what you did yesterday, nothing. While all of the charts are signaling very oversold conditions in the futures gold is up again and looks to be ready to set another new record high. What does this tell us about the market? It tells us that we are not yet close to a bottom. Keep doing three things. Keep sitting on your hands, keep watching gold because it will tell the story and keep the lessons we learned in 2009 firmly in your mind. What looks like a bargain today will look quite different if we are retesting the lows of 2009.

One last thought. For all of my silver bug friends I must tell you that I have been watching silver for a week and I do not like the way it is acting. There is an old stock market axiom. "The market only discounts a stock once." That means you only get one swing at the ball and we may well have had our turn at bat with silver last April. Gold is certainly the flavor of the week and I still feel we will see silver at $55.00 by year’s end but I am beginning to feel that we may well go back and retest the $32.50 level before we reach the $55.00 level. I know many of you are very enamored with AGQ but I want you to be very careful. If my suspicions are correct make sure you have stops in place so you are not hurt. 

Remember, “Sometimes Doing Nothing is Doing Something.”

By George Maniere

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at I will respond.

© 2011 Copyright George Maniere - 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 - 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