Financial market turmoil does not guarantee a rally in gold.
THE NASDAQ
Those of you who have been reading these emails
for more than a few months will know that we warned
of an impending Nasdaq correction before the correction
began in March. You will also remember that we
said that 3149 was important weekly support on the
Nasdaq June contract.
In fact the 3149 weekly bearish reversal gave precise
support for the first leg down. What you need to know
now is that the Nasdaq 100 June contract is now
threatening even more important support, which if
it gives way will portend yet another sharp slide of
See our daily report on the Nasdaq 100 futures to
get all the levels you need to trade this market. Even
if you are not an active trader, it makes sense to pull
down a report from time to time, especially when you
are on the verge of an important investment decision.
Our original forecast for this correction of a slide
to 2281-1846 area is beginning to look quite accurate.
Take advantage of any reaction rallies that develop
to lesson your exposure to tech stocks....in case you
didn't already do so, when we first advised. To know
when to get back into tech stocks, pull down our daily
report on the Nasdaq from time to time.
The Nasdaq will not stay down forever, but you will
need a very strong stomach if you plan to ride this
one out.
Don't expect the DOW and S&P to go unscathed if
the Nasdaq continues a FreeFall. They will also
sell off. Again, see our daily reports on these
markets for key support levels to monitor. We
do not feel the S&P and the DOW will suffer the
same percentage decline as the Nasdaq, but
they will share some the pain of tech stocks.
So many people have been blinded by greed that
they overlook the obvious. People continue to ask
where they should put their money. We have
repeatedly warned that you should carry higher
levels of cash. This is not the advice a broker
will give you....which perhaps means that it is
pretty good advice.
There will come a time when you can put your
cash to good work, but you have to practice a
bit of patience.
Again we do not advise you to run out and buy
gold stocks or gold just because stocks are heading
south. Financial market turmoil does not guarantee
a rally in gold. And even if a short-term rally in
gold does materialize, it should be viewed as
a reaction rally to a longerterm downtrend. The
election of a monthly bearish reversal at 278.0
and the election of a key weekly bearish reversal
at 277.1, confirms that gold has not yet seen its lows.
Getting into gold too early can be just as bad as
getting out of tech stocks too late. Out of the frying
pan into the fire.
When the EURO begins its next aggressive move
down, I believe GOLD will go with it. Forget all
the conspiracy theories, the reality of gold and
the Euro are quite simple. As the Euro slides it
puts upward pressure on the Swiss Franc. The
Swiss cannot afford to be priced out of Europe.
A strong Swiss Franc will make it impossible for
Swiss companies to do business in Europe.
The Swiss National Bank has given the BIS
discretion to sell 120 tonnes of Swiss gold between
now and the end of September.
Do you really believe the Swiss will sell gold in an
orderly fashion if the Euro begins yet another slide????
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