Gold's Momentous Rally from 2000 Compared to SPY and QQQ - Part I

My research team and I went off on a wild tangent trying to identify how the markets could react to the recent spike in price activity on Monday, November 9, 2020. This is the day that Pfizer announced a 90% effective rate with its new COVID-19 vaccine, causing the US stock market to skyrocket higher before the opening bell in New York. As with most pop and drops, this incredible upside spike trailed lower for the remainder of the trading day. My research team was curious if this type of setup presented any real future outcome or trends. To this end, we focused on the QQQ and the SPY in relationship to Gold.

9 to 9 1/2 Year Gold Depreciation Cycle Ended in 2018 – What’s Next? 

Gold has been and continues to be a store of value for many around the world. At some times in history, Gold becomes undervalued in comparison to other assets (like stocks, real estate, and other tangible assets). At other times, Gold becomes more highly valued in comparison to other assets. This cycle has taken place throughout hundreds of years of history, and is rooted in the changing perceptions of market participants regarding “what/where is true value in the markets”.

When other assets are skyrocketing higher, Gold is out of favor in terms of real demand. It may still be moving higher in value, but as long as other assets seem to be increasing in value faster than Gold, demand for Gold will diminish. When most other assets enter a time of great concern or devaluation, Gold and Precious Metals usually begin to see stronger demand as the ratio between Gold prices and more traditional investment assets may be near extremes....Continue Reading Here.

Marc Faber: Don’t Keep Your Gold and Silver in the U.S.

Gloom, Boom and Doom Report publisher Marc Faber discusses the fragile state of the U.S. and global financial systems. How rising inflation will affect the average American. How soon the bubble will burst and why gold and silver will triumph.  

 

Here are a few highlights:

 

“The U.S. is a country that likes to create trouble, but they don’t like to clean up things.”

“We’ve now been five years into the bull market and the U.S. economy bottomed out in June 2009. We already had a crack up boom—not in the economy of the typical household, but in the economy of the "super well to do people", whose asset prices rose dramatically and as a result created a huge wealth inequality.”

“My view would be that we have already printed so much money, and to accelerate it will be bringing about numerous other problems, so my time frame is that the [bubble], maximum, will burst in three years’ time.”

“Once the collapse happens, the power of central banks will be curtailed greatly because people will realize who brought along first the Nasdaq bubble in 1999: The Federal Reserve. Who brought about the housing bubble between 2001 and 2007? The Federal Reserve. And who is bringing now along another great credit bubble and asset bubble? The Federal Reserve.”

“I don’t think that anything is very cheap, but if I have to compare different asset prices, say real estate, stocks, bonds, commodities, gold, art, and so forth—and old cars—then I think that gold and silver [are] relatively inexpensive because they have had big corrections already, and you should not forget that the global bond market now is over $100 trillion.”

The article Don’t Keep Your Gold and Silver in the US, Says Marc Faber was originally published at Casey Research

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Don’t Underestimate Yesterday’s Market Action

Yesterday’s action in the equity markets is a grim reminder of just how fragile the economic and financial system is globally. We would not dismiss the market action as just another pullback in the market.

The sharp down move should not be ignored, in my opinion. We are looking at a key support level on the S&P 500 at $1220. A close below that level will accelerate the decline to the next key level of support, which is $1180. That move may have to wait until Friday as traders jockey for positions today. For the year, the S&P at the moment is down, the NASDAQ is flat, and the DOW is barely higher with gain of 3%.

The copper market gave a pretty strong negative signal yesterday, as it moved below the $3.50 level. The copper market is telling us that demand is just not there for this industrial metal. For some time now, we have been discussing the trials and tribulations of Europe and all the drama that has become a Greek tragedy. The fact that they have a new prime minister in Greece does not change one thing, in my opinion.

Italy is now the star of the show, and we are not convinced that Prime Minister Berlusconi is going to step down off his pedestal anytime soon. Politicians still have a “quick fix” mentality and are counting on that to solve this mega financial mess. The reality is, there is no quick fix. It is going to take years for this mess to be cleaned up, and in all likelihood it will get ugly.

The best thing a trader can do at the present time is to watch the market action, as it will tell you exactly what to do. We believe the rest of this week is going to be a very important one, particularly where we close tomorrow. If we have a negative close on Friday below $1220 on the S&P 500, we would then expect to see this index move lower for the balance of November.

Now let's take a look at our trend analysis for gold........

Today’s move in the gold market push gold to its lowest levels in five days before recovering. We expect gold to begin to consolidate around the $1,750 area, give or take $10 – $15 either way. Our Chart Analysis Score remains intact, with a positive +75 reading indicating that this market is in strong hands. With gold moving higher it indicates to us to be very concerned about what is happening in Europe and the financial markets. Long term, intermediate term and short term trends remain positive for this precious metal. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.


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How to Gauge the Equities Market so You Don’t Buy to Early!

From Chris Vermeulen at The Gold and Oil Guy......

Over the years I have found an indicator/trading tool which I find help spot intermediate trend reversals. I am going to quickly cover in this report. As most of you know the 20 simple moving average is a great gauge for telling you if you should be looking to buy the dips or sell the bounces. It’s an indicator I keep on the broad market charts like the SP500, Dow and NASDAQ.

The chart below shows the percentage of stocks trading above the 20 moving average. When this indicator falls below 20%, I make sure I start to protect my short positions with more aggressive protective stops and keep an eye on short term sentiment, volume ratios, options and price action as a bottom can take place at any time and very quickly. Bottoms tend to be more of an event happening quickly with a washout/panic selling day followed by a sharp rally, while intermediate market tops drag out taking weeks if not months to roll over and are very difficult to trade which is what we have been experiencing so far this year.

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As you can see this indicator is currently trading in the lower reversal zone and I feel a bottom will form before March is over.

SP500 Daily Chart
The SP500 continued lower today, which is what I mentioned, would most likely take place in my pre market video this morning. The trading session was a roller coaster with news on Japans reactors causing large waves of buy and selling throughout the day. I have not seen traders follow the news so close like this in some time… Everyone has their fingers hovering over the buy and sell button these days.

Looking at the bottom indicator which is my gauge of panic selling within the market, it has yet to close above 15 which is the minimum number I typically look for before I start zooming into the intraday charts for a long entry (market bottom). We still could see much lower prices before we see that.

Gold 4 Hour Chart
This chart is the same one I showed in my Sunday night report, which explained why gold should test the $1380-1390 level in the coming days. We did see that unfold this week but now the chart is pointing to possibly even lower prices with a support range between $1360-1380 taking place this week. Keep an eye on it as it should be swift if it does occur.

Mid-Week Trend Report:
In short, we are finally getting the correction everyone has been waiting for and now that it’s started and we are short, we must start watching closely for a bottom because they can take place very quickly.

My focus is still on playing the short side but I have my antennas up just in case signs of a bottom start showing up.

If you would like to get my free weekly reports just Click Here to visit The Gold and Oil Guy.Com


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