Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets to Recover as Gold Bull takes a Breather

Stock-Markets / Financial Markets 2009 Feb 26, 2009 - 07:21 AM GMT

By: Jordan_Roy_Byrne

Stock-Markets Diamond Rated - Best Financial Markets Analysis ArticleMy previous editorial showed the super-bullish intermediate term (12 to 18 month) outlook for Gold. My technical work called for a correction that would lead to a massive surge beyond $1,000 and to $2,000. It now appears that the gold correction is here. More importantly, the near term peak in Gold is coinciding with what will be the first major tradeable rally in stocks during this historic bear market.


Below is a long-term monthly chart of the S&P 500. All of the gauges show an oversold condition. Keep in mind this is a monthly chart so oversold signals have greater importance. That being said, we expect the market to bottom out in the mid 600s. The market already fell through the super long-term 50% retracement (in the low 800s) and looks headed to the 62% retracement. (Weather you measure from the 1974 low or 1982 low, the retracement is in the mid 600s). Even though the market broke the key 2002-2003 and 2008 support level, it did so in an already oversold state and major support lies not too far below.

Our next chart is a daily chart of the S&P 500. The market has traced out a clear Elliot Wave formation, including a third wave extension and a triangle in the fourth wave. The new lows in the market will be short lived. Be advised though that we are anticipating a 15% drop before the rebound. While sentiment is bearish it is nowhere near a bearish extreme. The put-call ratios indicate way too much complacency. Look for further lows to spark capitulation and force sentiment to bearish extremes.

Now let's get back to Gold. Below we show a weekly chart with a long-term channel (dating back to 2000) as well as the 60, 80 and 160-week moving averages.

At this point it is very difficult to forecast the bottom. There is a lot of support from $800 to $900 in the form of trendlines, moving averages and Fibonacci retracements. It is difficult to find a single confluence of support. I can narrow the range down to $825 to $885. At this point, there just isn't enough evidence for us to hazard a guess. Certainly sentiment data (which we track in our newsletter) will play a vital role.

Conclusion

We are looking for stocks to make a key bottom in the next four to eight weeks. We think the rally will last months and stocks will rebound significantly in percentage terms. In addition to the technical evidence, we should mention that both the Yen and Treasuries, which turned up prior to the peak in stocks, have peaked ahead of the bottom in stocks. Furthermore, the bank stocks may be ready to rebound. In the meantime we are looking for a pause or correction in the Gold market, which is gearing up for a vertical advance.

That's all for now. Good luck!

By Jordan Roy-Byrne
trendsman@trendsman.com
Editor of Trendsman Newsletter
http://trendsman.com

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.

Jordan Roy-Byrne Archive

© 2005-2022 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