Market Environment
Market is Seeking Bottom
The stock market is seeking its bottom since the big sell off. The last bounce only lasted 5 days and the scale of the bounce is considered weak. While the main market is selling off, gold is headed to the opposite direction and this time is different from 2008 since USD is considered weak for the scale of market sell off.
Next Big Movement Forecast
Bonds reversal will be next in my cards but the timing is hard to predict. However our model will be able to keep track and confirm the trend change if that happens. USD will rally relatively if bonds become a sell off and that will bring both stock market and commodity (including gold) down temporary. The story here is perfect for gold to correct for multi months or even over a year similar to year 2008. However this time the main character will be the Treasury Bonds triggering a USD rally and the money will flee to emerging markets especially China in Asia with a small portion flowing back to US to sustain the stock market.
There are Always Better Assets
Before the stock market reverses back to upward again, there is little interest for smart money to invest in US stocks. As Jim Rogers always says commodities will be the best place to be during economy downturn and printing press. However with the bond prices heading higher and higher, this is a false rally given that fundamental is not aligned. The so called "Safe Haven" will become a "Hostile Coffin" while Gold will take over its role as the real "Safe Haven" in the global world.
My Watch List
Silver is the poor men's gold. The recent silver to gold ratio is over 40 to 1. If gold can stand the current price then silver will head towards at least this ratio. Another commodity we should keep an eye on is Grain and agriculture related commodities as there are more crisis' happening in the world. You can find my watch list on the right hand side of the front page.
Have a good weekend.
For my previous newsletters, please visit here.
Sincerely,
Nameless Hero
StockTrendCharts.com
"Buy in Green and Sell in Red"