Update on Stock Market & Gold - Mike Swanson (12/05/2013)



Above is a video update on the stock market and gold.

Here is an example of the total BS "taper talk" in the media now. This junk article is one example from CNBC of course. They never talk about how you can invest and make money - its always some junk news story that often has nothing to do with reality.

Theoretically Bernanke could trim it by 5 or 10 billion and cut out the number of mortgages they are buying from Wall Street bankers, but the odds of that happening are about zero.

And is Bernanke going to do this just before he steps down?

You see the Fed can't stop QE because QE is funding the US federal deficit. But CNBC's Steve Liesman will never talk about that, because he is a mouthpiece for Wall Street - no different than this guy was for Saddam:


At least Ali had a sense of humor and was funny. Liesman isn't funny at all.

This is Steve Liesman acting in defense of Wall Street and the Fed as he always does:


This above is a clip of Liesman supporting and defending policies that have wrecked the American economy and annihilated the middle class. He says the Fed policies are helping the economy - when in fact they are causing inflation and making it so the middle class guy can barely survive anymore.

If you don't support the Fed than you won't be a regular guest on CNBC - and if you are let on you will be attacked and smeared.

Liesman is correct though in that TARP was indeed a successful bailout operation for Wall Street.

Someone I know that grew up in East Germany told me that watching American TV isn't much different than watching old Communist TV was back in those days, because national news generally here is of the same format he says:

1 - a breaking news segment about a world enemy to fear
2 - news about some government program that is going to fix the economy
3 - a human interest feel good story

These are essentially the three things you see on TV news in the United States over and over again - with zero real journalistic analysis.

In other words its propaganda.

The above clip of Liesman fits into the second category, because it's a defense of the Federal Reserve and US Treasury whose programs helped create the 2008 stock market crash and whose policies now have bailed out Wall Street and created a dead zombie economy as a result.

Zero interest policies have been a disaster for the retiree, but have been a boom for Wall Street big banks that Liesman loves.

Anyway - enough of a rant.

Stock market is simple now:

End of the year rally but pause now is going on.

Next year a 7-10% correction is very likely.

So you gotta figure out how you want to navigate that. Buying now for a rally is fun.

Being cautious when next year comes will be prudent.

But right now PARTY TIME.

Comments

Party on Wayne! Party in Garth! *air guitar*

Hi Mike thanks for the update on the S&P and Gold. Can you explain what might be happening with EWI and SAN?
Thanks

Europe has been pulling back since October. Once S&P 500 correction ends I expect it to take off again and go up even more than the US for the next few months.

thanks Mike. So this may be a good time to add to some EWI and SAN positions.

HUI is making a new low while Gold is $10 higher than yesterday. I think gold mining companies might be headed for disaster. With the HUI making two almost consecutive new lows you might have to revise your theory that the mining stocks are basing. Hope not, but it is going to take a lot for buyers to regain confidence in this sector.

Best,

Abe

I've come to the conclusion that confidence in this sector is not going to come around in any incremental fashion. It has simply been too decimated (just who is going to be buying after being slaughtered??). The HUI to Gold ratio is nearing the year 2000 (around that times) low of .133 . . . that when everything about gold was dismal and forgotten.

Rather, it's going to take nothing less than shock treatment to bring back buyers, IMO. And that, I think, will be when the Central Banks lose control of the $US, the reserve currency. They have done a masterful job of propping up a broke financial system and managing perceptions, but the more propping done the less the margin for error they have, or put another way, the easier it is for some event to upset the apple cart.

Gold is nothing more than a bet on the Fed at this point.

-GZ

It's been 2 and a half years since gold peaked in 2011. Since then the HUI has lost more than 2/3 if it's value. If I am not wrong the HUI was not far from 100 back in 2001. If gold indeed double bottoms or spikes lower, what will happen with gold stocks, the could move close to pre-bull market levels. So I don't think, regardless of what gold does in the future, that we can still think gold is in a bull market. This pause has been way too long to be thought of as a correction.

So when Mike reasons that miners are basing and about to turn around at the beginning of next year, all that is, is a guess, not much more than that. Chart patterns don't guarantee anything. He might be right or he might not, I think it is probably close to a 50/50 guess. He has been calling for an end of the current slaughter for quite a while now. Yes, GDX is extremely oversold, but we have been saying the same since HUI broke 500, remember? But it went to 250. Now it is below 200, could it go to 100... why not?

Best,

Abe

Don't look like $200 NUGT.


[gold price charts provided by goldprice.org]

No, I don't know what to make of this chart either.

W

For the graphic perspective. Yes, that chart still looks bullish, I just wish the HUI's chart looked like that. Still, gold is the head and gold stocks the tail, but this time the tail is way back.

Best,

Abe

Looking at this chart, the 50% retracement appears to be around 1100.
Jim

Why would that be important? Do you know, percentage wise, how big was the correction in 1976, or what would be a "normal" correction in a bull market?

The thing with this correction, though, is also the length. Two years and a half seems like a very long time. I think the correction in 1976 was less than a year.

The chart is still bullish, as was also the case for some time after 1980. The problems is that it is very difficult, heck, I would say almost impossible, to determine where we are in the cycle.

Best,

Abe

Krassimir Petrov: "Well, most gold bugs won't like my answer again, because I think we are still between six to ten years away from the peak of the gold bull. We are exactly in the middle of this secular bull market, and a secular bull market is usually punctuated or separated by a major cyclical bear market. I think that the ongoing 24-month correction is that typical big major cyclical correction-a cyclical bear market within the context of the secular bull market."

He has some good supporting evidence.

Interview transcript here: http://www.safehaven.com/article/32081/the-correction-isnt-over-but-gold...

W

Petrov's geopolitical analysis sounds a bit far-fetched, although anything is possible. His views on the precious metals, however, are very insightful. I've said it many times in a much simpler way: "What happened in 1976 will probably take much longer this time around."

L: Understood. On this subject of dating markets, what is it that makes you think this one's going to be a 25-year cycle? That's substantially longer than the last one. We have a different world today, sure, but can you explain why you think this cycle will be that long?

Petrov: Well, based on all the types of analyses I use-cyclical analysis, behavioral analysis, portfolio analysis, fundamental analysis, and technical analysis-this bull market is developing a lot slower, so it will take a lot longer.

The correction from 1973 to 1975 was the major cyclical correction of the last gold bull cycle, from roughly $200 down to roughly $100. Back then, it took from 1966 to 1973-about six to seven years-for the correction to begin. This time, it took roughly 11 years to begin, so I think the length of this cycle could be anywhere between 50 and 60% longer than the last one.

Let's clarify this, because it's very important for gold bulls who are suffering through the pain of correction now. If we are facing a 50-60% extended time frame of this cycle and the major correction in the previous bull market was roughly two years, we could easily have the ongoing correction last 30 to 35 months. Given the starting point in 2011, the correction could last another six, eight, or ten more months before we hit rock bottom.

L: Another six to ten months before this correction hits bottom is definitely not what gold investors want to hear.

Petrov: I'm not saying that I expect it, but another six to ten months should not surprise us at all. A lot of people jumped on the gold bull market in 2008, 2009, 2010, 2011, and these people haven't given up yet. Behaviorally, we expect that these latecomers-maybe 80-90% of them-should and would give up on gold and sell before the new cyclical bull resumes.

Any idea of his past record? I'm at the Apple Store dealing w/ "issues" and haven't had time to read. I find it difficult though to read these things w/o some perspective about the writer.

Thanks

Alison

Nice chart Wullow.

In my advance years of walking this planet, I have found two thingys related to reading charts that have major merit. (1) Price tells all! That is, if one is good enough to read it correctly. (2) "KISS" - Keep It Simple Stupid. The older I get, the more I like this one. Don't know why. Maybe it has to do with the Stupid part.

When I look at a chart, I look at the obvious first. If I can not see the obvious, I find the nearest child and ask them. Can't get more obvious then that.

The obvious thing on that chart you posted Wullow is that from 2001ish to 2011ish, gold was in a bull trend. A long time ago I posted some good guru's thoughts on a 10 year cycle in gold. VOILA! 2001 to 2011 is 10 years. How does one tell a bull trend. Simple (one of those "S"'s in KISS) higher lows and higher highs. Taa DAAA!

It is quite obvious that using that higher highs and higher lows in reverse, one would get a Bear trend reading as well. Voila Again! We are currently in a bear trend on gold. And it will stay that way until we go back to a bull trend with higher lows and higher highs.

Next obvious part on that chart. This is "NOT" a correction! All one has to do is look at that 10 year bull trend and see what the nature of a correction looks like. We are in no way looking anything like a correction in that 10 year bull trend. We are in a Bear Trend in gold, period!

What other obvious things can be seen? Support and resistance levels for one. Currently the 1200ish area looks like one. The next would be about 1000ish. After that, around 700ish and then 400ish.

In my opinion, that is all one can see from this chart in gold. It ain't looking good toto.

After saying that, why am I still fully loaded in PM stocks? Because their are other charts and numbers that, when combined, tell me another story. In short, when the turn around comes, it is going to be explosive to the upside. Not to mention civil unrest that would be biblecial in nature.

The end times have only just begun.

Good life

I'm still skeptical, however, of the price-tells-all aphorism; perhaps it's just another way of saying KISS. Past price behavior certainly cannot tell you or me when the gold bear trend is going to reverse.

I am reminded of Armstrong's continued assertion that you cannot understand any market in isolation from all other markets. I am always interested in seeing correlations between gold and other statistics, such as government debt. I still think that you could come up with a handful of correlations that would help predict POG moves. It strikes me as interesting that all of the experts, by now, have not come to a clearer consensus about what drives the POG; and I emphasize consensus.

There are only a few analysts who think they've figured out everything and don't equivocate in their forecasts. One is Armstrong; he is bearish on gold for the near term. Another is Sinclair, and we always know where he stands.

But wouldn't it be nice to see the development of a comprehensive model of what drives POG that we could all understand? Armstrong's economic model sounds impressive in its vast scope and data mining abilities, but I have yet to see anything useful come out of it for us peons.

W

Wullow, I think one can do better than chance when picking the price where a trend change in gold would occur, or for that matter most assets. Support and resistance levels are a very good pick. If one watched the price of oil in 2008 when it hit just below $150 and then fell of a cliff until it had a trend change at around 35ish, then one can see that 35ish was a very good support zone. The only problem with support levels is which one???

I think gold is too much like a chameleon for any model to work for any length of time. Sometime it is an asset, sometimes a currency. Sometimes it follows the dollar and sometimes it doesn't. Sometimes it acts squirrely, and then sometimes it follows the trend like a row of ducklings. Sometimes it is controled to the max and then sometimes it is true price discovery at it's finest. And now they say there are two types of gold; paper and physical. I would say that gold acts more like a woman, but then again, I would like to see a few more Xmases before I go. So I will not say or imply such a thing. Just kidding Ladies... The only time I see any consensus amoung the guru's is only on some cycle timing. which is to be currently happening right now with a cycle low in gold.

The last I read regarding Armstrong on gold is that he gave up on price heading below 1K. He thinks there will be a somewhat small move up to test the highs at 1900 and then have the mother of all deflationary crashes of everything, ie gold to 600 or less.

We do live in interesting times.

Good life

I don't know what that will be.---Central banks buy dollars because that props up their own weaker currency. This, either because of poor competitive performance or some too extreme share the wealth drag on their economy. Increased degrees of socialism quenches productivity, creativity. A continuing circle./jimo

The lower gold goes now and the longer it takes for it to base out, the stronger the subsequent bull market will be and the bigger the blow off phase it will have. Also one has to take into consideration that back in 1976 people were allowed to trade gold only for a few years prior. Now the whole world it able to trade it. And every single government is debasing their currency.

As Jim Rogers said, "There is nothing unusual about gold pulling back. What is unusual is that it has been in a bull market from 2001 till 2011. Either gold is going to base out at these levels for a while, or as Mr. Rogers says, it's going to go down to roughly $1000 level and take off from there."

I've said it before and will say it again, messing around with NUGT/DUST is foolish. We need to wait till gold gets above its 150, 200-day MA, then pulls back, then buy it. Another strategy is to be averaging in all the way down to $1000 level.


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