Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
Google Panics and KILLS YouTube to Appease Mainstream Media and Corporate Advertisers - 25th Apr 17
Gold Price Is 1% Shy of Ripping Higher - 25th Apr 17
Exchange-Traded Funds Make Decisions Easy - 25th Apr 17
Trump Is Among The Institutionally Weakest National Leaders In The World - 25th Apr 17
3 Maps That Explain the Geopolitics of Nuclear Weapons - 25th Apr 17
Risk on Stock Market French Election Euphoria - 24th Apr 17
Fear Campaign Against Americans Continues Nuclear Attack Drills in New York City - 24th Apr 17
Is the Stock Market Bounce Over? - 24th Apr 17
This Could Be One Of the Biggest Winners Of The Electric Car Boom - 24th Apr 17
Le Pen Shifts Political Landscape- The Rise of New French Gaullism  - 24th Apr 17
IMF Says Austerity Is Over - Surplus or Stimulus - 24th Apr 17
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17
Can Marine Le Pen Win? French Presidential Election Forecast 2017 - 21st Apr 17
Why Stock Market Investors May Soon Be In For A Rude Awakening - 21st Apr 17
Median US Household’s Wealth Has Declined by 40% Since 2007 - 21st Apr 17
Silver, Platinum and Palladium as Investments – Research Shows Diversification Benefit - 21st Apr 17
U.S. Stock Market and Gold, Post Tomahawks and MOAB - 21st Apr 17
An In Depth Look at the Precious Metals Complex - 20th Apr 17
The Real Story of China’s Strong First-Quarter Growth - 20th Apr 17
3 Types Of Life-Changing Crisis That Make You Wish You Had Some Gold - 20th Apr 17
The Truth is a Dangerous Thing - 20th Apr 17
2 Choke Points That Threaten Oil Trade Between Persian Gulf And East Asia - 20th Apr 17
Gold’s Next Downside Target Is Around $700… Even if It Breaks Up First - 19th Apr 17
SPX May be Completing its Corrective Pattern - 19th Apr 17
Silver Production Has “Huge Decline” In 2nd Largest Producer Peru - 19th Apr 17
Soothing East Asia's Nerves as Trump's Administration Reaffirms US Power in Asia-Pacific - 19th Apr 17
The Brexit War - Article 50 Triggered, General Election 2017 Called - Let the Games Begin! - 19th Apr 17

Market Oracle FREE Newsletter

Why 95% of Traders Fail

Stock Market Outlook 2013, Gold Relative Strength

Stock-Markets / Financial Markets 2013 Nov 21, 2012 - 02:29 AM GMT

By: Clif_Droke

Stock-Markets

In this commentary we'll survey the intermediate-term to longer-term market terrain. This is especially important since we're about to enter a new year, which the Kress cycle outlook describes as potentially dangerous from a financial market and economic perspective.


Investors have had no shortage of worries in November, including uncertainty surrounding the presidential race earlier this month, the upcoming "fiscal cliff" on Dec. 31, troubles in the Middle East, and the ongoing euro zone debt crisis. On the European front, Spain has still not asked for the European Central Bank (ECB) to purchase its bonds, while the Euro area finance ministers will not likely to make a final decision to release the Euro 31.5 billion of aid to Greece until Nov. 26.

In a bull market investors tend to ignore worries and focus on the positive news, namely expanding corporate profits. Bull markets on average tend to run about 3-4 years before becoming exhausted. The bull market which began in March 2009 was accompanied by a major recovery in corporate profits, which was part of a feedback loop that propelled equity prices higher in the last 3+ years. Corporate profit momentum is in the process of revering now, which means investors have one less positive to consider when evaluating equities.

From an investor psychology perspective, what does it mean when fear and worry feeds on itself and creates downside momentum? It means we're entering a bear market, which was fated to happen at some point after the 4-year cycle peaked in October. On an interim basis it was confirmed when the NYSE Composite Index (NYA) decisively broke below its 60-day moving average.

NYA Daily Chart

Another indication that conditions have turned bearish on an intermediate-term basis is seen in the series of internal momentum indicators known as HILMO (Hi-Lo Momentum). As the name implies, HILMO is based on the rate of change in the daily 52-week highs and lows on the NYSE. Whenever all the main components of HILMO (short-, intermediate-, and longer-term) are in synch to the downside it shows that conditions have turned decisively bearish.

Of course this negative internal condition can, and most likely will, be reversed on a short-term basis. We're entering a favorable timeframe for equities seasonally (December-January) and a year-end rally isn't out of the question. The investor sentiment poll released last Thursday by the American Association of Individual Investors (AAII) showed the percentage of their members who are bullish were only 29 percent, while 49 percent were bearish. This net bearish reading is one of the highest in two years and suggests, from a contrarian standpoint, a short-term market bottom.

AAII Investor Sentiment

But what separates a normal, healthy market from the environment we're now entering on a longer term basis is that the rallies will likely not be sustainable beyond a few weeks. The main trend for 2013, in contrast to the past year, will likely be down. This is especially true with the final "hard down" phase of the 40-year and 60-year Kress cycles upon us in 2013 and 2014.

Gold ETF

Our preferred gold ETF, the iShares Gold Trust (IAU), hasn't yet confirmed a buy signal according to the rules of our trading discipline, but it has begun to show significant relative strength. Consider the following graph which shows the meaningful spike in the gold ETF's relative strength in just the last few days. In most cases, a spike in the relative strength line precedes an upside move in the IAU. Accordingly we should soon have a confirmed immediate-term buy signal for the gold ETF.

Gold Relative Strength

2014: America's Date With Destiny

Take a journey into the future with me as we discover what the future may unfold in the fateful period leading up to - and following - the 120-year cycle bottom in late 2014.

Picking up where I left off in my previous work, The Stock Market Cycles, I expand on the Kress cycle narrative and explain how the 120-year Mega cycle influences the market, the economy and other aspects of American life and culture. My latest book, 2014: America's Date With Destiny, examines the most vital issues facing America and the global economy in the 2-3 years ahead.

The new book explains that the credit crisis of 2008 was merely the prelude in an intensifying global credit storm. If the basis for my prediction continue true to form - namely the long-term Kress cycles - the worst part of the crisis lies ahead in the years 2013-2014. The book is now available for sale at: http://www.clifdroke.com/books/destiny.html

Order today to receive your autographed copy and a FREE 1-month trial subscription to the Gold & Silver Stock Report newsletter. Published twice each week, the newsletter uses the method described in this book for making profitable trades among the actively traded gold mining shares.

By Clif Droke
www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2016 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

Catching a Falling Financial Knife