Judging by the emails that are coming in since last week’s webinar – which I am working my way through with my responses – it seems all of you want to know what gold’s next move will be.
So in a minute, I’ll show you an extensive, updated gold forecast chart, generated from the neural net models I use.
But first, let’s talk about the markets, and late last week’s trading action.
No, The Stock Market Has NOT Bottomed.
Yes, we saw one heck of a snap-back rally in stocks on Friday, and the Dow Industrials did manage to avoid a sell signal. But does that mean the correction I’ve been forecasting is over, and that stocks are going to now start soaring again?
No, it doesn’t. There are myriad reasons why.
First, short-term cycles point lower into mid to late October.
Second, as I showed you in last week’s webinar, the Dow Industrials have already broken down, smashing initial support levels.
Third is the condition of other sectors of the market. The Dow Transports are now down over 15%. The Dow Utilities are down over 18%.
There is simply no way, in my opinion, the Dow Industrials, the S&P 500 or the Nasdaq can hold up when the troops (the Transports and Utilities) are cratering. Not to mention the more than 50% of all publicly traded U.S. stocks that are now down over 20%.
Right now, all my indicators suggest that Friday’s bounce will soon end, and another wave down will unfold, possibly very violently. Ditto for European stocks.
Bottom line: Hold your equity related positions, specifically ProShares UltraShort QQQ (QID) … ProShares Ultra VIX Short-Term (UVXY) and ProShares UltraShort FTSE Europe (EPV) – with good-till-cancelled protective sell stops at $31.71 … $34.10 … and $56.29, respectively.
Note: If you do not own any of the above positions, for whatever reason, buy them now at the market by allocating 5% of your trading funds to each position. Be sure to simultaneously place the above mentioned protective sell stops, on a good-till-cancelled basis.
What about Friday’s unemployment data, which showed only 142,000 jobs created in September?
Yes, it will probably delay a Fed rate hike. But does that mean stocks are headed higher? Why? If the economy is slowing – and it is – why would stocks rally?
Lesson: Ignore the Fed. It has zero influence on the markets. No matter what the Fed says or does, it can only cause short-term volatility. The trend is the trend and it is your friend too, and stocks are headed lower, with or without the Fed.
No, the Dollar Is Not in Trouble.
The U.S dollar weakened a tad on Thursday and Friday of last week. But why does that mean the dollar is in trouble?
After all, if you read the media reports, they say the dollar is set to fall because of Friday’s lousy jobs data, the thinking the Fed won’t raise rates therefore the dollar must fall.
That’s pure baloney! Did the dollar fall all last year when the Fed didn’t raise rates? No. In fact, the dollar put in one of its strongest performances ever, even as rates stayed low.
In the environment we are in now, where great supercycles are converging, interest rates have ZERO influence on the value of the dollar.
The dollar’s value is being determined instead by …
A. Geopolitical factors. As I have said all along since late 2012, geopolitical forces will be amongst the most potent drivers of economies and markets in the years ahead – namely, driving flight capital into the open arms of the very deep and liquid U.S. dollar.
Savvy money is fleeing Europe and its crisis, going into the dollar. Other savvy money from the Middle East is fleeing local currencies due to geopolitical conflict there, heading right into the safety of the U.S. dollar.
Asian capital is moving into the dollar, as their currencies depreciate.
And perhaps most important of all, the massive mountain of debt enveloping the world in sovereign governments from Europe to Japan are beginning to crack. By default, that will benefit the dollar also (until the debt crisis hits Washington, which is not likely to hit full steam until 2017).
So no, the dollar is not in trouble. To the contrary, it is poised to start soaring again.
Bottom line: Hold your shares in ProShares DB US Dollar Bull ETF (UUP) with a good-till-cancelled protective sell stop at $23.74.
Also hold your ProShares UltraShort Euro January 2016 call options with a strike price of $25 (EUO160115C00025000). The euro is merely buying some time right now, but remains on the cusp of a massive decline.
If you opted for the ETF instead of the call options, hold ProShares UltraShort Euro (EUO) with a good-till-cancelled protective sell stop at $21.56.
Note: If you do not own ProShares DB US Dollar Bull ETF (UUP), for whatever reason, buy it now at the market using 5% of your trading funds allocated to this service and place a protective sell stop, good-till-cancelled, at $23.74.
Same for the ProShares UltraShort Euro January 2016 call options with a strike price of $25 (EUO160115C00025000). If you do not yet own these calls, buy at the market using 5% of your trading funds allocated to this service. Do not use a stop for the call options. I will monitor the position and advise accordingly.
If not trading options, buy ProShares UltraShort Euro (EUO) using 5% of your trading funds allocated to this service and place a good-till-cancelled protective sell stop at $21.56.
No, Gold Has Not Bottomed Either.
I love it when the gold pundits come out every time gold and silver tick up a tad. They claim the end of the world is coming. Or that the Fed is going to start printing money again.
Well, if the world is truly coming to an end, then gold isn’t going to do you any good. Only food and water will.
And if Fed money printing was bullish for gold, then why did gold peak one week after former Fed Chairman Ben Bernanke announced QEIII and unlimited money printing?
The fact of the matter is this: Gold’s bear market is not over. It will end when it ends. The Fed has nothing to do with it. Nor does money printing.
And gold is not being manipulated lower. If it were being manipulated lower, then why are all commodities in a severe downtrend?
In the end, it’s very simple. Gold went up for 12 years straight, from 1999 to 2011. It needed a pullback to restore bullish energy. That’s it. That’s how markets work. Period.
Same for silver. For Platinum. For palladium. They are all in bear markets which are not yet complete.
That said, what about Friday’s strong rally? My answer: It was exactly what I was expecting and told you to get ready for.
Gold (and other precious metals) have one more rally in them – before they crater again.
Here’s my latest chart for gold. But before I discuss it, I want to address something: Many of you have asked that I publish these types of charts more frequently.
My answer is simply this: I will do so when they offer a clear cut forecast.
But I will not willy-nilly publish them. Why?
Because as great as these cyclic artificial intelligence forecast charts are, unless you are an experienced cycles analyst, technician and trader – they will do more harm than good.
They cannot be used alone for forecasts, or for buy and sell signals. They must be verified by other models I use, and the forecasts they generate can be influenced at times by the cycles unfolding in other markets, not to mention macro-economic cycles.
For instance, in gold’s case, I have opted to stay long gold, even though the forecast chart above shows a decline into October 9, before the rally resumes. Why? Simple: Other models I use show that any decline in gold will be limited. So there is no sense trying to get out for a very short-term move.
In addition, this chart shows that a high due October 13 will likely be below the September 24 high. But other models I use show the coming high due October 13 to likely be even higher than the high on September 24, which was $1,156.40.
In short, I will publish these charts for various markets when I have a high degree of confidence in them and more importantly, have the time to address the nuances that are developing. Otherwise, willy-nilly publishing them may only confuse you. Or worse, if you use them to act on your own, cause unnecessary losses.
Right now, gold is basing, down a tad this morning. But another leg up should soon begin. Hold your VelocityShares 3X Long Gold ETN (UGLD) with a good-till-cancelled protective sell stop at $8.22.
If not on board UGLD, you may purchase it now at the market using 5% of your trading funds allocated to this service. Place a stop, good till cancelled, at $8.22.
Best wishes and stay tuned …
Larry
