Transcendental Market Truths:
The Market:
The stock market continues to flutter at resistance, but signs of internal breakdown are appearing now. The Advance-Decline Line continues to fail to make new recovery highs while the NYSE Composite index does so, constituting a bearish divergence of the first order.
Most are looking for the market to rally following the early November elections in the US. The mid-October to late-October (or early-November) high may be a result of anticipation of a good outcome (stalemate), while the post election slump may be the smart money dumping stocks while they can get out of them. I'm looking for the bottom to fall out of both the stock market and the gold market during this mid-November to late-December period. In any case, the bargain-hunters will get their heads handed to them. Following a mid-October trading low and rally into November, they will be full of confidence and giddiness. Then, when the market starts dropping hard in November, they will be buying all the way down into the end of the year, at which time they will be likely to disgorge their severely-underwater positions.
This slide into the middle of October is likely to be very orderly, which should increase confidence levels of the bulls. So, let's see what can happen on the downside here. I don't have sell signals on my daily indicators just yet, of course, but they're moving up and getting positioned for sells.
Gold:
This "one-sided" trade will be profitable until it isn't. After that, it may be impossible to take profits on the long side. That's okay because Gold bugs will hold forever, or so they say.
The bottoming dollar should lead to a topping gold price and the downside is likely to eliminate the bullish majority from the gold market for some time to come.
I'm looking for a massive correction in the Gold Market starting second week of November.
Should be fun and very profitable. |
