Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

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

6 Critical Money Making Rules