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StockTock.com discusses the bear market and our cautious outlook. For long-term/value investors, there is no rush to get long this market. I expect more downside in the months ahead, and 768 looks like it will be tested in short order. For short-term traders, this market is ripe with opportunity as we saw on Friday. I believe this is a day-trader’s market because overnight positions are susceptible to unpredictable news events. As tempting as it may be to play the long side, the trend remains lower and counter-trends moves will be quick and more difficult to capture. I like gold very much after Friday’s pullback. I like the Japanese Yen (FXY) as a flight to safety. We look at the S&P, QQQQ, AAPL, IWM, USO, GLD, GS, MS, US dollar, euro, and Japanese yen. These are unprecedented times. The VIX is at levels not seen since the 1987 crash. I don’t mean to be an alarmist, but I would not underestimate the fragility of the global economy. If significant and fast gov’t action is not taken, last week’s fall may look small compared to what’s ahead. Check out StockTock Social to view and share charts, analysis, videos and more.
I don’t like Gold. Here we are in the worst of all possible financial situations in the world fiat monetray systems yet gold sits 10% of its highs from earlier in the year.
It is bearish divergeance if I ever saw.
Deflation is killing even gold. Cash is needed, gold positions are unwound
As much as the financial system is going to hell in a handbasket, gold will not be the replacement anytime soon, particularly paper gold.
Waves point down for gold.
I see gold heading back to its original trendline. $600 oz within 12 months.
Also Vix has finished its wave 3 up move it appears. Wave 4 correction will coincide with market wave iv correction. Then a spike to a new high is likely with new market low withing 2 weeks. Then a nice rally….
October 12th, 2008 at 1:52 am
Daneric, I keep posting the same thing. Not sure why Craig is so bullish on Gold. IMO it has downside risk to 3-400 an oz easy. How do you value an asset that provides no cash flows and has a holding cost (security)? Answer – you can’t. Gold, will revert to its mean at some point, and like I have posted before, where are the new highs during this historic market panic? Answer — smart money has bought (the end of the world) rumor and is now selling the news and buying stocks as people panic out of them.
Fear and volume reached historic highs on Friday but the prices moved little, to me that means there were some very serious buyers getting in. The whole LEH CDS auction nightmare turned out to be pretty orderly didn’t it? Interest rates got cut. A leading indicator of home sales went up. panic selling leads to panic buying – a rally from here could be enormous, while we know what the downside could look like because we have been watching it every day. If we have another big move down monday just sell and take the hit, but when the real rally comes it will be so violent that one will be unable to even get a fill.
October 12th, 2008 at 3:19 am
Another point. Ge mentioned it is starting to see some signs of life in the commercial paper market.
And another risk to a long gold position: how much of the demand for gold is related to declining industrial uses and consumer demand for jewlry and other products that will be curtailed with tighter credit?
Remember folks the world used to be on the gold standard. If the fiat system fails the only trading currency would be gold. It would be the world currency with countries paper becoming worthless. Just a possibility but if the world financial system fails please name a better candidate.
Good Luck to us all
Dave
October 12th, 2008 at 11:14 am
My bullishness of gold is based largely on the technicals. It is the only commodity that has held its long-term uptrend (correct me if I’m wrong). I am not one of those doom and gloom guys that thinks we will actually go back to the gold standard. But I keep an open mind.
October 12th, 2008 at 2:31 pm
Why are the technicals great on gold? Just bouncing off a trendline, doesn’t indicate we are due for an iteration in the channel. It could very well break down tomorrow.
Also the long-term uptrend you are referring to is from 2006 or so, The “true” uptrend started in 2000 or thereof. That uptrend line is still around 600.
October 12th, 2008 at 4:25 pm
Gold is in a screaming bull market. Not everyone has recognized it yet. Most of you are looking at gold in USD terms.
Why don’t you just pull up a chart of gold against EUR or AUD or even CAD.
Gold will go higher against all currencies including the USD.
Pete
October 12th, 2008 at 5:40 pm
sure it will, but just not yet
October 12th, 2008 at 7:56 pm
Can you offer some insight on the recent weakness in gold during this historic panic? Also, my concerns about a decrease in industrial and consumer demand for the metal?
October 12th, 2008 at 11:08 pm
Dan,
Gold has been selling off recently due to central banks around the world selling their gold holdings.
I can’t speak in regards to industrial or consumer demands for the metal. I do believe the worst of this historic panic is not offer. As more banks and other global corporations go bankrupt, I expect gold to go even higher. Investors will dump stocks and buy gold. If you chart gold against any currency, stock index or commmodity (i.e. crude, copper, S&P 500, etc) it’s held up very well.
I’m not a gold bug but the technicals are very strong.
Pete