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
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Sell Signal as Oversold Stock Markets Turn Bullish

Stock-Markets / Financial Markets Nov 01, 2008 - 05:09 PM GMT

By: Brian_Bloom

Stock-Markets Best Financial Markets Analysis ArticleDon’t trust the Text Books - On reflection, there may be more to what is happening on the markets than meets the eye. For one thing, the gold price – the ultimate harbinger of fear in the economy – is stubbornly refusing to rise to new heights, and its oscillator has given a sell signal.


The oscillators on the short term charts of the $SPX are severely oversold and, interestingly, the oscillator on the monthly chart is approaching the zero line.

Technically (from a contrarian perspective) if the world is “universally” bearish the equity markets may still hold some surprises on the upside. Despite what Dow Theory may or may not say, a long term oscillator above the zero line is evidence of a market that has not yet entered long term bear territory. This is not theory. This is fact. (Of course it may still go into negative territory, but as of this writing it has not)

It is clear to anyone with a pulse that the banking industry is in trouble; its equity decimated – but the charts are giving buy signals, as can be seen from the P&F below. Is this just a technical bounce or could there be more to what is actually happening than meets the eye?

The chart below is a 5% X 3 box reversal charts which filters out all the trading noise.

What it shows is strong consolidation at around the 824-908 level. If the markets break below 824, the entire system will be at risk – because a 50% fall to around 450 will be called for.

The implications of a fall to 450 can be seen from the chart below. This will result in a downside penetration of an 80 year trend line.

The 450 target would be a conservative number. Based on the vertical downside count that will manifest, we may as well slit our wrists right now.  But before you do that …..

Just look at that consolidation on the 5% X 3 box reversal chart! Ignoring the spike from 968 to 1550 and back again, there are nine blocks in the horizontal measurement at the consolidation level!

Something is happening out there which is unprecedented in my experience.

So let's get back to the insolvent banks (and the real estate industry that is clearly underwater; and the quadrillion dollar derivatives exposure which everyone now understands is a disaster waiting to happen). One thing is clear: The whole (investment) world is aware of these problems. There are no “shocks” left to be felt – other than a systemic collapse.

And yet, the markets are bouncing up. Is the entire system really about to collapse?

Here are two articles which explain the impact that the hedge funds have been having on the world markets (9000 odd of them) (Thanks Steve)

http://ragingbull.quote.com/ mboard/boards.cgi?board=JAGH& read=110912

http://www.kitco.com/ind/ GoldReport/oct272008.html

Could it be that the Fed and other Central Banks pumped money into the economy; the spare money went into the hedge funds; at the margin, the hedge funds ramped the equity and commodity markets; and then lost the money on the way down? Could we be watching a rich man's bear market – given that the Hedge Funds typically play with rich men's money? Of course, the 401k people will have been hurt along the way, but they were not speculating. They were investing – slowly and deliberately; like dripping water. Of course, there were a whole lot of baby boomers and out of workers who were playing with their charts – and that will have cost them dearly – but were there enough of them to destabilize the world economy?

9000 Hedge Funds have a lot of money under management- arguably, most of the spare cash that the Central Banks pumped into the economy. Let's make a wild assumption (unsubstantiated). Assume each fund, on average, had $250 million under management. That's $2.25 Trillion. That's around one third of the entire world's foreign exchange reserves. That is a lot of money.

Last night a friend who does business in China told me that the Chinese have raised their prices to him up to 45% in US$; and that the A$ has fallen around 30% relative to the US$.

But, if the commodity prices have tanked, and the US$ has risen, is there not now room for one of two things to happen?

  1. China can once again drop prices – should they so choose.
  2. If they choose not to, non US countries can get their manufacturing industries going again and become competitive with the Chinese. Jobs can be created outside China.

My bet is that the Chinese will choose not to cut prices. They have $1 trillion in US Dollar denominated foreign exchange reserves. They cannot afford to risk losing that by “forcing” a dollar collapse. I would bet that the tide is about to turn inside China and that life is going to become harder – but no harder than before all this started less than 30 years ago when Trick Dick Nixon opened the door to China's entry into the world markets.

And within the USA, there is Section B of HR1424 – which will clearly stimulate the US economy at domestic level (as will the collapse in the oil price). For those who are not familiar with Section B of HR1424, it contains a raft of concessions to the industries which ultimately drive the world economy – the alternative energy industries - and it seems to take away concessions from the oil and coal industries. Section B of HR1424 provides hard evidence of a shift towards a problem solving attitude on the part of our political leaders. The guys are starting to close ranks and get their act together.

The more I think about this, the more it impinges itself on my brain that the text books don't have a “canned” answer for what's happening here.

I think we may be witnessing a world economy in transition – as opposed to a world economy that is about to collapse. Based on the evidence, what seems to be about to happen is a market driven leveling of the financial playing field. The rich will get less rich, the middle class will become more relationship oriented and the entrepreneurs will roll up their sleeves. And yes, the food stamp lines will grow – but life will carry on. The sun will very likely keep rising in the mornings.

By Brian Bloom

www.beyondneanderthal.com

Beyond Neanderthal is a novel with a light hearted and entertaining fictional storyline; and with carefully researched, fact based themes. In Chapter 1 (written over a year ago) the current financial turmoil is anticipated. The rest of the 430 page novel focuses on the probable causes of this turmoil and what we might do to dig ourselves out of the quagmire we now find ourselves in. The core issue is “energy”, and the story leads the reader step-by-step on one possible path which might point a way forward.  Gold plays a pivotal role in our future – not as a currency, but as a commodity with unique physical characteristics that can be harnessed to humanity's benefit. Until the current market collapse, there would have been many who questioned the validity of the arguments in Beyond Neanderthal. Now the evidence is too stark to ignore.  This is a book that needs to be read by large numbers of people to make a difference. It can be ordered over the internet via www.beyondneanderthal.com

Copyright © 2008 Brian Bloom - 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.

Brian Bloom 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