Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Financial and Commodity Markets Become Scary: Crash Point Or Turning Point?

Stock-Markets / Financial Markets 2015 Jul 05, 2015 - 04:56 PM GMT

By: GoldSilverWorlds

Stock-Markets

We cannot remember having seen so many markets at critical points simultaneously. It is truly astonishing. Scary movie or turning points? We do not know for sure, but let’s review the strategic assets in order to get an understanding of the likely scenarios going forward.

First and foremost, the TED spread is about to cross a critical resistance level. We look at the TED spread as a fear indicator, a signal that a correction is coming. The steady rise of the TED spread since last summer is not a healthy signal. The trillion dollar question is how far it will go, and which markets it will hit.


If anything, the stock market seems to be the best candidate for a severe correction. Purely from a trend perspective (without engaging in technical analysis), it seems that the broad markets have lost momentum, as evidenced by the S&P500 momentum (RSI) versus price divergence. For now, it seems that the path of least resistance will be lower.

There is more, much more in fact. The dollar is standing at a critical juncture which has been built since three decades. Again, we do not engage in technical analysis, but focus only on secular chart patterns. Those patterns reveal that the dollar is sitting right at a giga-trendline. If the dollar were to trend higher in the coming weeks and months, we would interepret it as strongly deflationary. On the other hand, we see a false breakout in the chart, indicated with the red circle, which could mean that the secular downward trend is still intact. One thing is clear: the dollar is at a gigantic make or break level.

Meantime, several key commodities have arrived at another structural decision point, particularly Dr. copper, gold and silver.

Dr. Copper, the indicator of the health of the global economy, is going to tell us shortly what to think of the state of the economy. As the next chart shows, we are right at the apex of a mega trend (triangle); its formation is 14 years in the making.

copper_2001_June_2015-590

Gold, the monetary commodity, has also arrived at a critical point. Although the triangle on its chart goes back to 2008, slightly less impressive than copper, it also tells us it is make or break time.

Unsurprisingly, silver has reached the last retracement level of it’s secular uptrend which started in 2004. It goes without saying that this is a critical oint.

Last but not least, the U.S. bond to stocks ratio is arriving at a decision level as well, although there is still some room within the ongoing pattern. A break outside this pattern could signal a similar situation as in 2008: stocks are about to undergo a (severe?) correction, while bonds would appreciate. The issue here is that there is not much room left for bonds to rise, given the multi-decade low yields. Let’s be clear: we will have one of the following three scenarios: either a crash in the bond market, or lower yields than we have today (in other words, negative yields across the board), or a severe correction in stocks.

It is truly exceptional to see so many strategic assets at critical junctures, simultaneously. It seems that a stock market correction is becoming clearer with the day. On the other hand, the commodities we discussed could go both directions: up or down. A declining stock market seems is likely to lead copper lower. Could gold and silver react as a safe haven, given the ultra low yields in bonds? Or will investors chose for bonds, driving yields even lower, and making the world we live in even more crazy than it is today?

From our point of view, in a world flooded by paper assets, it seems obvious that tangible assets should be watched closely. In case of a deflationary bust, real assets will preserve relatively more value than other assets, even as their prices decline because prices of paper assets will decline faster. In case our monetary masters will intervene with more stimulus programs, in their attempt to create inflation, we should see tangible assets rise as well. So in our view, commodities should be part of a diversified portfolio.

That is why we are focusing on stevia, nickel and uranium in the next Commodity Report.

Source - http://goldsilverworlds.com/

© 2015 Copyright goldsilverworlds - 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

6 Critical Money Making Rules