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
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Somewhere Between Now and May We’re Going to Have a Real Stock Market Rollover

Stock-Markets / Stock Markets 2010 Apr 13, 2010 - 10:11 AM GMT

By: Mac_Slavo

Stock-Markets

Well known market analyst Robert Prechter, who strongly favored stocks in March of 2009, says it’s time to get out:


I think this is the third best selling opportunity in the last 10 years. The first one was in 2000, the next one was in October ‘07, the third one is somewhere between now and a few weeks from now. I am very negative again. Just to set the record straight, a year ago I was very very bullish on the market looking for 10,000 on the Dow. So, we’ve got there, we’ve exceeded and there are all kinds of reasons why I think this is a selling opportunity.

The market is overvalued, overbought, it’s losing upside momentum, there are too many optimists in the market by several measures - this is the complete opposite of the environment a year ago in early March.

I think you can short just about everything, somewhere between now and May we’re going to have a real rollover. Think about this progression. In October the bond market topped out. In November the Dollar bottomed. In December Gold and Silver and the utilities average, go figure that one, topped out. In January the CRB Index of commodities topped out. The stock market is the last domino holding up.

We’re heading into another deflationary bout just as we had in 2008.

[source: Bloomberg Video]
[Hat tip: Distressed Volatility]

The stock market is a disaster waiting to happen, and as Prechter says, the US Dollar may be the only safe asset when it turns. Prechter did not mention gold as an investment to be holding when the turn happens, and this is likely because he sees a similar situation as in 2008, when precious metals, along with the broader markets, got hammered in a downward spiral. In a stock market collapse, the short-term move in gold could mirror equities, especially if paper gold holders, such as those who hold shares of ETF’s like GLD or SLV, start running for the exists.

However, we will suggest to our readers that even in a deflationary spiral gold may still perform or at least drop less than other assets, especially because international buyers like the Chinese central bank may be interested if gold hits that $950 - $1050 support area. During the 1930’s, which was a deflationary environment, gold followed the stock market for a while, but eventually decoupled and went in the opposite directions, to new highs, with gold mining companies experiencing massive gains, as depicted in the following chart:

Of course, some deflationists like Harry Dent have suggested that we could see gold go as low as $250 per ounce if deflation were to take hold. But, as Dr. Marc Faber suggested in a recent interview, if we get to $250 gold, we are going to have some very serious problems elsewhere. Howard Katz, an SHTF Plan weekly contributor, suggests that we may not see a similar move in gold in the event of a stock market down-turn.

Any short term trading of gold instruments could be dangerous, thus, we are taking the approach of long-term investment. Regardless of what gold does in the near-term, we are holding. Our guiding principle for this is something Martin Armstrong has suggested about gold, which is that gold is not an inflation hedge, but rather, a hedge against government instability. If there is one trend that you can bank on, it’s that government will continue to make bad decisions which will ultimately lead to a debt crisis and loss of confidence in the United States by not just foreign investors, but American citizens as well. This is when gold will really make its move.

Going back to Mr. Prechter’s current assessment of the markets, whether you are holding gold or not, if you have any stocks, especially here in the US, it may be time to get out and enjoy the profits, as many a signal (technical, fundamental, psychological) is suggesting the rally driven by money printing and headlies is over.

By Mac Slavo
http://www.shtfplan.com/

Mac Slavo is a small business owner and independent investor focusing on global strategies to protect, preserve and increase wealth during times of economic distress and uncertainty. To read our commentary, news reports and strategies, please visit www.SHTFplan.com

© 2010 Copyright Mac Slavo - 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