You all know the portfolio is very lightly positioned right now, as it should be. There’s still too much dust swirling in the markets and not enough clarity.
That’s ok. It’s tough to be patient, we all like action. But there are times to be aggressively invested, times to be completely out, and times to just be getting your toes wet.
Today though, I want to show you three of what I consider the most important, just updated AI Neural Net forecast charts that I have: For gold, the Dollar Index, and the Dow Industrials.
Gold first: It’s still showing the potential for a smart rally heading into early January. From there (not shown) there should then be another pullback and then a renewed leg up thereafter, mostly for the rest of 2017.
Now, the Dollar Index: Here you can see the current pullback in the dollar. It should be followed by another run higher into late January 2017, then a pullback and then (not shown) further strength in the second quarter of 2017 and on.
Lastly, the Dow Industrials. I find this AI forecast fascinating. It is showing the Dow very overextended and subject to a mini-bear move heading into late February 2017, and starting almost immediately, in fact, somewhat past due.
This is not really surprising. The Dow is extremely overbought, the most in over 20 years.
In addition, 60% of the recent gains to new highs are due to just five big-cap stocks: Goldman Sachs Group Inc. (GS), UnitedHealth Group Inc. (UNH), JP Morgan Chase & Co. (JPM), Caterpillar Inc. (CAT), and Boeing Co. (BA).
Meanwhile, thousands of publicly traded stocks are floundering … or in outright bear markets.
Yes, the Dow has indeed confirmed a long-term buy signal when it closed above 18,500 on the last trading day of November.
But as I have previously warned, that is not a trading buy signal, but simply a macro-trend signal confirming my long-term forecast of at least Dow 31,000 …
And potentially as high as Dow 45,000 by 2020/2021.
Before it all comes crashing down. Quite possibly, even sooner than that, around 2018.
As the Dow rises (after the upcoming cycle low) – gold, silver and miners will all also take flight with that next big leg up …
And so, believe it or not, will the dollar. There are simply too many dollar liabilities in the world that have to be liquidated …
And too many problems in Europe and Japan that will drive money into the dollar to be parked in the U.S. … which – despite all our problems – is still the world’s bastion of capitalism and entrepreneurism, compared to the rest of the world.
Hard to believe for many. But all you have to do is go back and learn about what happened between 1932 and 1937 in the U.S. during the Great Depression …
The part of the story I keep repeating over and over again because no one else seems to care …
And you will see that all I speak of above has happened before.
Best wishes, stay patient and safe …
Larry
P.S. My respect and hat goes off to John Glenn and his family. John was one of my heroes at a very early age. I can still remember him orbiting the earth for the first time in 1962, like it was yesterday. Also a pre-eminent Senator later in life and one heck of a family man. Well done John!
P.P.S. This weekend I write the December edition of my Real Wealth Report, a gala issue detailing my forecasts and investment themes for 2017. Be sure not to miss it!
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