Don’t Sweat the Correction in Gold
By Jeff Clark, BIG GOLD
I’ve told more than one concerned investor that when the gold price falls, they should “come back in three months” and see if they’re still worried. The idea is that the daily and monthly gyrations are nothing to fret over, that the price will recover and, in time, fetch new highs.
That advice has worked every time gold underwent any significant correction (except in late 2008, when one had to take a longer view than three months). Here’s proof.
I’ve traded emails regularly with Brent Johnson ever since meeting him at an investor event I spoke at a couple years ago. He’s the managing director of Baker Avenue Asset Management, a wealth management firm with over $700 million in assets. He forwarded some charts he’d prepared for his clients that put gold’s September decline into perspective; it’s a good visualization of my standing advice to worriers.
The following charts document corrections in the gold price of 8% or more – first measured with daily prices, then monthly, quarterly, and finally annually. See if this doesn’t put things into perspective. Continue reading
3 Bears for the Markets
These days there doesn’t seem to be much in the way of good news out there anymore. What with Greece, the looming recession and all the market technicals looking negative we have three big bears (at least) roaring in our faces. In todays commentary Chris Ciovacco Chief Investment Officer of Ciovacco Capital Management tells us how these bears are lined up and what to expect next. Tim McMahon, editor.
Greece, Recession Odds, & Technicals All Bearish
While inspectors from the International Monetary Fund, EU and European Central Bank, known as the troika, are in Athens to review the books, Reuters reported Sunday:
Greece will miss deficit targets set just months ago in a massive bailout package, sources said citing a budget draft being adopted by the cabinet on Sunday, in a setback in Europe’s efforts to stave off the country’s bankruptcy.
Two sources confirmed the new budget numbers, which predict a budget deficit of 8.5 percent of gross domestic product (GDP) for this year and 6.8 percent next year, compared with targets of 7.6 percent for this year and 6.5 percent for 2012.
With Germany hinting last week the terms of the bailouts may need to be revisited, these latest developments may put more pressure on financial markets as we enter October. Back in the United States, more economists and economic forecasters are migrating to the recession camp. From the Economic Cycle Research Institute’s (ECRI) website (9/30/2011) :
Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off. ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down – before the Arab Spring and Japanese earthquake – to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”
From a technical perspective, September closed out with numerous long-term bearish signals present on weekly and monthly charts (see table below). The signals below tell us the odds favor bearish outcomes in October. Could stocks rally instead? Sure they could, but it is the lower probability outcome given the fundamental and technical backdrop. The downside potential of stocks and the euro we outlined on September 23 remains in play as we head into the typically volatile month of October.
See the full article here
Crashing Markets, Credit Downgrades- What Comes Next?
Tragic news about the United States economic atmosphere has been inescapable throughout the country and world for quite some time now. With constant debate over raising the debt ceiling, shocking losses in the stock market, devastating unemployment rates, and a downgraded national credit rating, it’s no wonder the country’s economic health has been in question. After a series of blows to the U.S.’s economic wellbeing, things don’t seem to be getting much better. The country’s credit rate fall has been of great discussion ever since Standard and Poor’s downgraded it by a full point on Monday, August 8th 2011. To add to the blow, the U.S. stock exchange ended the day that Monday down more than 600 points. Continue reading
Six Straight Weeks of Decline Take DJIA Below 12,000: What Now?
Before blaming falling stocks on the most recent weak economic reports, let’s check some dates.
As of June 10, the Dow has suffered the “longest losing streak since the fall of 2002. The market’s last seven-week stretch of losses began in May 2001, as the dot-com bubble deflated,” reports The Associated Press.
As for why stocks are falling, most observers agree: Blame “weaker hiring, industrial output, and a moribund housing market.” The economic reports from the past two weeks made that clear.
But wait a minute. The DJIA didn’t top in the past two weeks — Continue reading
A Word on the Silver Correction
By David Galland, Managing Director, Casey Research
Today I’d like to share a couple of thoughts on the matter of the correction in commodities about which we have been so vocally warning, and which has now occurred.
After having written in early April about the possible market response to the end of QE2, specifically about it knocking the legs out from under the overbought precious metals and other commodities, the metals continued higher, causing some readers to express concern that we had led them astray. And any number of analysts opined that the market had already priced in the end of QE2 and thus, even after Bernanke’s press conference, had decided it was go, go, go for higher commodity prices.
Yet, I think it is always a mistake to credit “the market” with any real predictive value. Reactive, yes. Predictive, no. Benjamin Graham had it right when he first penned the profile of Mr. Market as being a maniac, as likely to overpay for an asset as he is to sell too soon. Continue reading
Bubbles, Bubbles Everywhere- Video
Video (Part 1): Prechter On Market Rally
(Note: This interview was originally recorded on September 20, 2010)
In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about extreme readings in various indicators that confirm his bear-market forecast.
3 Reasons Now is Not the Time to Speculate in Stocks
After the investment winter of 2008, in 2009 as stocks began showing some “green shoots” and looked a bit like spring, 2010 has looked a bit like Summer or Autumn with prices flattening out and going nowhere. Does that mean that investment Winter is just around the corner again? Here is Robert Prechter’s take on the situation. ~editor
Sometimes the investment weather forces you to ‘buy a coat,’ says Robert Prechter
By Elliott Wave International
When it’s sunny, you head outside without a thought, but when it’s rainy, you look for your umbrella.
When the markets are trending up, you don’t worry about your investments much, but when the markets turn bearish … what do you do? Continue reading
What Is a Double Dip Recession and Will We Have One?
Investing For The Rest Of Us: What Exactly Is a Double Dip Recession and What Are The Odds Of Having One?
Treasury Secretary Timothy Geitner thinks that the United States will not experience one, President Obama warned way back in November of 2009 that we could head into one, and some economic pundits believe we’re already in one. Everyone seems to have their opinion as to whether our fragile economy will experience a “double dip” recession or not.
Opinions are good. They form the basis for most discussions taking place today – from economics, to politics, and beyond. For those of us who make our livelihood giving financial advice, a well formulated opinion may well determine whether we can pay our mortgages or not.
First, let’s define a double-dip recession. In simple terms – and according to the website Investopedia, a double dip recession occurs when gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession. Got all that? Continue reading
Bigger Than 10% Correction Ahead
The date was March of 2009, the mood was decidedly bearish, Robert Prechter seemed like the lone Bull calling for a rally from that point. And that is precisely what we got.
In April 2010 the mood had changed, the media was Bullish but Bob turned Bearish. In his issue of his Elliott Wave Theorist he says conditions have changed and he is once again sounding prophetic. This is extremely important, the media would have you believe that this is an ordinary 10% correction. Prechter says it is imperative that you act now to protect yourself.
Because of the critical importance of this prediction, for a limited time, you can also visit Elliott Wave International to download the full 10-page April issue, free.
The following article is courtesy of Elliott Wave International. Tim McMahon, Editor
Bigger Than A “10% Correction”?
Every Big Bear Grew From a Cub
May 19, 2010
The famous “10% correction” that market pundits talk about sounds so nice and tidy, so predictable and tolerable. It’s as if this “cute little correction” came neatly wrapped, looked like an M&M candy character, and smiled at you and your family after you open the box.
What is the “Elliott Wave Principle”?
In the 1930s, Ralph Nelson Elliott, a corporate accountant by profession, studied price movements in the financial markets and observed that certain patterns repeat themselves. He offered proof of his discovery by making astonishingly accurate stock market forecasts. What appears random and unrelated, Elliott said, will actually trace out a recognizable pattern once you learn what to look for. Elliott called his discovery “The Elliott Wave Principle,” and its implications were huge. He had identified the common link that drives the trends in human affairs, from financial markets to fashion, from politics to popular culture. Continue reading
