Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21
Dell S3220DGF Price CRASH to £305! 32 Inch 165hz Curved Gaming Monitor Amazon Bargain - 16th Jul 21
Google, Amazon and Netflix are Scrambling For This Rare Gas - 16th Jul 21
Sheffield Millhouses Park New Children's Play Area July 2021 Vs Old Play Area - Better or Worse? - 16th Jul 21
Inflation Soars, Powell Remains Unmoved. What about Gold? - 16th Jul 21
Goldrunner: Gold Could Jump To $1,900-$2,100 In Next 30 days – Here’s Why - 15th Jul 21
Tips For Finding The Right Influencers - 15th Jul 21
ECB Changed Monetary Strategy. Will It Alter Gold’s Course? - 15th Jul 21
NASA And Big Tech Are Facing Off Over This Rare Gas - 15th Jul 21
Will the U.S. Dollar Lose Momentum In the Second Half of 2021? - 15th Jul 21
Bitcoin Stock to Flow Model Forecasts Infinity and Beyond! - 14th Jul 21
Proteomics: The Next Truly Massive Investing Opportunity - 14th Jul 21
Massive Solar Storm to Hit Earth 2025, Coronal Mass Ejection (CME) Danger and Protection Solutions - 14th Jul 21
Is This The Best Way To Play The Coming Helium Boom? - 14th Jul 21
Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown - 14th Jul 21
How NFTs Are Shaking Up Arts Trading - 14th Jul 21
Gold: High Time to Move Out of the Penthouse - 13th Jul 21
Climb Aboard! Silver Should Run Up To $38 In Next 30 Days - 13th Jul 21
How Will Remote Work Impact the U.K. economy? - 13th Jul 21
Why Helium Stocks Are Set To Soar in 2021 - 13th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Full Blown Correction Is Underway!

Stock-Markets / Stock Markets 2011 Aug 05, 2011 - 09:48 AM GMT

By: George_Maniere

Stock-Markets

Wow! What a ride yesterday! For those of you that read me on a regular basis know that I have been waiting for yesterday since the 1st of July. Let’s face it, “you don’t have to be a weatherman to know which way the wind is blowing.” The market has run up so far and so fast that these last few days were long overdue and I said so in July. I didn’t advise readers to take cash and hide it under their mattress but I did advise that they lithely move in and out of positions in an effort to make a few dollars and build up their cash position for the inevitable sell off. In Thursday’s post I conceded that I was wrong that the S&P would hit 30 as I had steadfastly predicted and told everyone to look to buy slowly into the market as it had breached the 200 day moving average on the Dow and on the S&P.


           Well I was wrong. I was a day early. Yesterday the market sold off with a vengeance. The DOW closed down 512 points or 609 points under the 200 day moving average at 11383. The S&P sold off 60 points or 86 points under the 200 day moving average at 1200. The S&P VIX which had baffled me for a month finally acted as scripted, closing at 31.63 and sold the market sold off with a vengeance. So this now begs the question where do we go from here?

           Let’s begin with the premise that most investors believed that Congress would extend the debt ceiling at the 11th hour and everything would be just fine. What I believe that most investors missed however is that everything is not fine. We are pressing the envelope and the patient is in intensive care. The fact is that as I have been encouraging my readers to move to the safe havens of Gold and Silver because Uncle Sam is dead broke.

           Forecasting the market by gut instinct is sheer folly because its great drawback is that we are all human and therefore we are susceptible to human frailties. The real money doesn’t want opinion or clairvoyance; they want cold hard facts. There are specific criteria or prices that must be met. Using the DOW as an example 12686 was the monthly closing resistance. Until that is broken and held there can be no breakout possible to the upside. In the opposite direction support lies at 11006. A monthly closing below that level focuses our attention on 10810 and a closing below that level warns of a retest of the 2009 6440 low. 

           Well panic is filling the financial streets. There are institutions so frightened that they are actually depositing cash in the Bank of New York Mellon. So much cash has been deposited that the bank sent out a press release yesterday that it would charge a fee for large deposits of cash fearing that interest rates could go negative. Amazingly, traders are trading on their concept of how things should move. They are buying bonds and moving to cash while they sell equities, yet buying government debt is the epicenter of all of the problems. Sadly this is normal. In times of fear and panic human beings will act in all too human a fashion.  To use an example from “The Great Crash of 1929” from 1932 until 1937 the DOW more than doubled as did unemployment. The markets taught us that it was government not corporations that were at risk.

           For now August and September look to be very volatile months. The big turning point appears to be next December and January. The trend should begin to change at that time. For now we are confronted by “Black Swans” on so many fronts.  If there is anything good about stock market correction it is that it gets Congress to pay attention. Certainly it is not because they care about the people. Rather it is because when they see their own portfolios start dropping they start asking about QE3! Until that happens, they couldn’t care less.

           For now it is correction time. It is not the end of the world. Indeed we may look back on this as an opportunity to pick up some names at great valuations. I warn all of my readers not to wade into the water too deeply because while this is the beginning of the correction I have been writing about – it is just the beginning. There may well be more 500 point drops ahead so if ones buying is disciplined and carefully planned I see this as an opportunity. In years to come, we or our children will see the DOW hit 50,000 but that comes with the caveat of continued debasement of currencies. So as I have written and will continue to write I see Gold and Silver as the safe ports in this storm. With the correction now in full blown mode I also see great opportunity to short this market in select areas. As I have written, corrections like this should not be feared but rather embraced. Be very patient and judicious in your buys because we could go lower. Today I plan on watching the parade march by and if there is another 500 point selloff on the DOW I will pick my spots and buy at the end.

           Have a great Trading Day!

By George Maniere

http://investingadvicebygeorge.blogspot.com/

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 maniereg@gmail.com. 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 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