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
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
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

Market Oracle FREE Newsletter

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

Stock Markets to Recover as Gold Bull takes a Breather

Stock-Markets / Financial Markets 2009 Feb 26, 2009 - 07:21 AM GMT

By: Jordan_Roy_Byrne

Stock-Markets Diamond Rated - Best Financial Markets Analysis ArticleMy previous editorial showed the super-bullish intermediate term (12 to 18 month) outlook for Gold. My technical work called for a correction that would lead to a massive surge beyond $1,000 and to $2,000. It now appears that the gold correction is here. More importantly, the near term peak in Gold is coinciding with what will be the first major tradeable rally in stocks during this historic bear market.


Below is a long-term monthly chart of the S&P 500. All of the gauges show an oversold condition. Keep in mind this is a monthly chart so oversold signals have greater importance. That being said, we expect the market to bottom out in the mid 600s. The market already fell through the super long-term 50% retracement (in the low 800s) and looks headed to the 62% retracement. (Weather you measure from the 1974 low or 1982 low, the retracement is in the mid 600s). Even though the market broke the key 2002-2003 and 2008 support level, it did so in an already oversold state and major support lies not too far below.

Our next chart is a daily chart of the S&P 500. The market has traced out a clear Elliot Wave formation, including a third wave extension and a triangle in the fourth wave. The new lows in the market will be short lived. Be advised though that we are anticipating a 15% drop before the rebound. While sentiment is bearish it is nowhere near a bearish extreme. The put-call ratios indicate way too much complacency. Look for further lows to spark capitulation and force sentiment to bearish extremes.

Now let's get back to Gold. Below we show a weekly chart with a long-term channel (dating back to 2000) as well as the 60, 80 and 160-week moving averages.

At this point it is very difficult to forecast the bottom. There is a lot of support from $800 to $900 in the form of trendlines, moving averages and Fibonacci retracements. It is difficult to find a single confluence of support. I can narrow the range down to $825 to $885. At this point, there just isn't enough evidence for us to hazard a guess. Certainly sentiment data (which we track in our newsletter) will play a vital role.

Conclusion

We are looking for stocks to make a key bottom in the next four to eight weeks. We think the rally will last months and stocks will rebound significantly in percentage terms. In addition to the technical evidence, we should mention that both the Yen and Treasuries, which turned up prior to the peak in stocks, have peaked ahead of the bottom in stocks. Furthermore, the bank stocks may be ready to rebound. In the meantime we are looking for a pause or correction in the Gold market, which is gearing up for a vertical advance.

That's all for now. Good luck!

By Jordan Roy-Byrne
trendsman@trendsman.com
Editor of Trendsman Newsletter
http://trendsman.com

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.

Jordan Roy-Byrne Archive

© 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