Robert, we are in a Bear Market in Equities in the USA Now. I went heavily short the S@P and NDX on Friday at the close. Bull Market manias end slowly and gradually. The Polyannas are very tough and they will continue to buy every dip until they are wiped out.
I know your a HM fan and so am I. All my gold stock holdings went to the moon a few weeks ago except HM. HM will have its day. You can bet on that. Just don't expect it to move up when you want it too.
Although I would never subscribe to any financial publication or newsletter because I love to think for myself, I do read this gentleman's market analysis for free. He has been on the money since the middle of July:
Wave Signals Newsletter
By Mike Drakulich 10-22-99
SOME LIKE IT HOT!
STOCK MARKET
If you like wild swings from day to day and week to week, simply
follow the stock market. And expect this volatility to continue as the
market continues to face huge cross currents into year end. Interest rates continue to rise as 30-year bond yields made a new weekly closing high at 6.36%, and yet earnings have been very good overall. But then there are negative earnings bombshells all over the place, as stocks like IBM and others have had negative announcements and those stocks get killed on that
news. What is an investor or trader to do?
As a trader the huge swings provide good opportunities if one has the intestinal fortitude to take positions at the near term extremes. The best case I see for the stock market here is a wide trading range between Dow 10,000-11,000. The worst case appears to be a decline to at least 9500 and perhaps even below Dow 9000. Even with the strong rally late in the week the markets internal technical action is absolutely horrible. The advance/decline like is acting terribly, and new 52 week lows continue to swamp new 52 week highs. Also Trading Index(Trin or ARMS) readings which measure overbought/oversold levels, are again registering VERY overbought
readings, telling me that this most recent rally is likely very close to being over. Also we saw absolutely no climactic or panic action at recent lows just below Dow 10,000, and it is highly likely we will see that before any important bottom is seen. Also, call option buyers have been going berserk buying calls all week, and this does NOT bode well for a continuation of this rally. Look for a downside reversal early next week.
So sentiment and technical barometers suggest this latest rally is likely very close to ending, and that another swing down below Dow 10,000 is likely in the weeks ahead. Bigger picture, I see the upside as limited and still believe there is substantial downside risk, and we ultimately could see the major averages decline as much as 30% before a final bottom is seen. Risk/reward parameters in my opinion are currently NOT attractive for owning stocks at this time.
GOLD SECTOR
Subscribers spent the past several days accumulating the gold stocks that we took huge profits on at recent trading highs at the 90 level in the XAU, which is a North American gold stock mining index. I believe this recent decline in the gold stocks represents another excellent entry on the long side as gold itself approaches downside correction targets at the $290-300 level. As I have forecast since early summer, gold has VERY likely ended a 20 year Bear market and now has begun a Bull Market. I liken gold and gold stocks to where the stock market was in the Fall of 1982!
Not only do the technicals look very good in this sector, but
fundamentals have improved dramatically. Demand for gold is increasing
dramatically and supply is actually decreasing. Signs of increasing
inflation are everywhere, from commodity prices(oil especially) and wage inflation as well. And the vast majority could still care less about this sector, which is how Bull Markets begin and continue. If there is one area that I think the risk/reward parameters are about as good as they get, it is here in gold and the gold stocks.
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