Increase in the global stock market for the fourth week in a row – despite much talk about ‘Fiscal cliff’.
The last week before Christmas looks to be a quiet week. The key figures are in the soft end and the focus will be on the ‘Fiscal cliff’ in the United States.
Video courtesy of en.jyskebank.tv
London Gold Market Report
from Ben Traynor
BullionVault
Monday 17 December 2012, 07:30 EST
THE WHOLESALE gold bullion price rose to $1693 per ounce during Monday morning’s London trading, but remained slightly below where it ended last week following falls in Asia, where the Yen opened sharply lower against the Dollar before recovering some ground following the result of Japan’s general election.
“Gold is continuing to trade below the psychologically important threshold of $1700,” says a note from Commerzbank.
“There are signs that the current price weakness is not sustainable, however, and we envisage prices climbing significantly again in the medium term.”
Silver meantime hovered around $32.20 an ounce this morning, a few cents off Friday’s close, while stocks and commodities were little changed on the day.
“Participation is really low right now,” one Hong Kong trader told newswire Reuters this morning.
“It hasn’t been a very exciting year for most people and I don’t think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013.”
“For 2013 we expect principally similar supporting factors [for gold] as in 2012,” says a note from refiner Heraeus.
“Low interest rates, monetary policy measures by central banks, fear of inflation, purchases by central banks, recovered demand from India as well as increasing demand from China.”
Over in Japan, the Liberal Democratic Party won Sunday’s general election, gaining a so-called supermajority of two-thirds of the lower house of parliament, which will allow it to block decisions made by the upper house.
“The LDP’s landslide election victory gives it a virtually free hand in policy,” says Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities.
“The macro[economic] stance will shift to ‘print and spend.'”
During the election campaign LDP leader Shinzo Abe, who will now become Japan’s prime minister for the second time, called on the central bank to adopt an “unlimited” Yen policy to fight deflation.
“It is very unusual for monetary policy to be a focus of attention in an election,” Abe said Monday following his victory.
“But there was strong public support for our calls to beat deflation…I hope the Bank of Japan takes that into account.”
BoJ policymakers meet on Wednesday and Thursday this week to discuss the latest monetary policy decision. Abe said that after he has formed his cabinet next week, his government will issue a joint statement with the BoJ which will include a 2% inflation target for the central bank – double the current target.
In Washington meantime, Republican House of Representatives speaker John Boehner has said he will consider raising tax rates for people earning more than $1 million a year. President Obama has said he wants the income threshold for higher taxes to be lower, at $250,000 a year.
Boehner has also offered to remove the subject of the debt ceiling from the debate for a year, according to US press reports Sunday.
The US government is expected to hit the current $16.4 trillion debt limit in early February next year. In August last year, ratings agency Standard & Poor’s stripped the US of its AAA credit rating after negotiations to raise the previous limit continued without agreement until the limit was hit.
The ongoing lack of agreement on the fiscal cliff “will likely leave investors somewhat at a loss as to what they can expect heading into the year-end,” says Edward Meir, precious metals analyst at brokerage INTL FCStone.
“At this stage of the game, we would welcome a broad multi-market retrenchment over the course of this week, as it may finally nudge the politicians towards a badly-needed compromise. However, should we get a sell-off, we suspect gold will be caught up in the resulting downdraft.”
The difference between bullish and bearish contracts held by Comex gold futures and options traders – known as the speculative net long – gained slightly in the week ended last Tuesday, weekly data from the Commodity Futures Trading Commission show.
The data do not however cover gold’s price drop that began Wednesday last week.
Gold value calculator | Buy gold online at live prices
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+
(c) BullionVault 2012
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
Gold is a frustrating investment, even for its proponents. Actually, “disciple” is probably a better a better word for the truly-committed gold investor. More than any other asset class, gold tends to create a quasi-religious cult around itself. An investor might buy a stock. But they believe in gold.
Unfortunately, gold is often the god that failed. It is billed as a “crisis hedge,” and in the lead-up to a crisis it tends to do well. But when the crisis actually hits, gold tends to behave like any other traded risk asset. This is more true today than in years past because of the popularity of gold ETFs, such as the popular SPDR Gold Shares (NYSE:$GLD) and other exchange-traded options favored by hedge funds and retail investors alike. Gold has become more correlated to the stock market because now gold is the stock market.
As an “inflation hedge” or “currency hedge,” gold tends to hold its ground a little better. But during times of macroeconomic stability it tends to lose its appeal.
As you might have guessed by now, I’m not the biggest fan of gold, particularly as a long-term investment. It’s difficult for me to like an asset that pays no interest or dividend and has little real industrial value. Your return on a gold trade is purely dependent on your ability to sell it to someone else at a higher price, and that bothers me. If you buy an income-producing asset—be it a stock, bond, rental real estate, mineral rights, oil and gas royalties, a small business, etc.—you can realize a return irrespective of Mr. Market’s mood that day.
That said, gold can be a profitable trade if you are able to maintain your objectivity and not get wrapped up in the cultish ideology that tends to surround the barbarous relic.
All else equal, I would expect gold to perform well under the following set of circumstances:
Today, Condition 1 certainly holds. The Fed is experimenting with the loosest monetary policy in history. Just this week, Bernanke announced that “QE Infinity” was being expanded beyond the original $40 billion per month in mortgage securities to include another $45 billion in Treasuries. And short-term rates would be held at virtually zero until the unemployment rate dipped below 6.5%.
Condition 2 is a little hazy. Gold sentiment reached what I would call (in professional terms, of course) the “nutty loony” phase of bubble sentiment about two years ago. Gold was all anyone wanted to talk about. Since then, sentiment has settled down. I wouldn’t call sentiment towards gold bearish by any stretch; this week the Financial Times reported that sales of American Eagle gold coins soared by 131% in November as investors feared the worst from renewed government gridlock and the ballooning debt. But I would say that sentiment is on the slightly-bullish side of neutral.
I expect to get a little hate mail for my views on Condition 3, but I do not see any major crises hitting in 2013.
I know, I know, there is the fiscal cliff issue. And the possibility that Europe might blow up…or that the recovery in China misfires…or that Japan’s day of reckoning finally comes…
Any of these could happen, and the fear that they might happen is bullish for gold. But I’m betting that the fiscal cliff crisis gets resolved by early January, that Europe muddles through, and that Japan’s day of reckoning is still a year or more in the future.
While I have laid out a modestly bullish case for gold over the next 6-12 months, I still don’t recommend it for most investors. I see gold drifting higher in 2013, but I expect several other asset classes to perform much better. With domestic energy production booming and interest rates near the lowest levels in history, I expect to see Master Limited Partnerships enjoy a monster rally.
I also expect European and emerging market stocks to have a good run, and U.S. stocks should have some life left in them too.
Gold will probably outperform bonds…but then, at current yields, begging with a soup can in front of the subway will probably be more profitable than investing in bonds.
SUBSCRIBE to Sizemore Insights via e-mail today. This article first appeared on InvestorPlace.
The post What Will Gold Do in 2013? appeared first on Sizemore Insights.
Source: ForexYard
The US dollar tumbled against its main currency rivals on Friday, following the release of a worse than expected US Core CPI report. The CPI figure reaffirmed speculations that the Fed will keep interest rates at their current levels for the foreseeable future. This week, traders will want to pay attention to the ongoing negotiations between US Congressional leaders and President Obama regarding the upcoming “fiscal cliff”. Any signs of progress could lead to risk taking in the marketplace. Additionally, investors will be closely watching Wednesday’s German Ifo Business Climate for clues as to the current state of the euro-zone economic recovery.
The US dollar took significant losses on Friday, following a worse than expected Core CPI report which led to speculations that the Fed will keep US interest rates at their current levels for the foreseeable future. The USD/JPY fell more than 60 pips during the first half of the day, to eventually trade as low as 83.0, before bouncing back to 83.50 where it closed out the week. Against the Swiss franc, the greenback dropped some 80 pips to trade as low as 0.9164.
This week, investors will closely monitoring any developments in the ongoing budget negotiations between US Congressional leaders and President Obama. The deadline is quickly approaching before automatic tax increases and spending cuts are triggered, known as the “fiscal cliff”. Any kind of breakthrough in the negotiations is likely to lead to risk taking in the marketplace, which could send the safe-haven dollar lower. In addition, dollar traders will also want to pay attention to Wednesday’s Building Permits figure, Thursday’s Philly Fed Manufacturing Index and Existing Home Sales reports, and finally Friday’s Core Durable Goods Orders.
Speculations that US interest rates would remain at their current levels for the foreseeable future led to risk taking in the marketplace on Friday, which resulted in significant euro gains. Against the US dollar, the common currency more than 100 pips during afternoon trading, eventually reaching as high as 1.3170, its highest level since last May. The pair ended up closing out the week at 1.3160. The EUR/JPY gained some 90 pips during the second half of the day, to eventually trade as high as 109.92.
This week, euro traders will want to pay attention to several key EU news events. First, today’s speech from ECB President Draghi, set to take place at 14:30 GMT, could give the euro an additional boost if there are signals of improvements in euro-zone economic growth. On Wednesday, all eyes will be on the German Ifo Business Climate figure. As the EU’s biggest economy, indicators out of Germany tend to have a significant impact on euro pairs. A better than expected business climate figure could lead to additional euro gains.
The price of gold took slight losses on Friday, as questions regarding stalled US budget negotiations to avoid the upcoming “fiscal cliff” weighed down on precious metals. Gold fell as low as $1692.95 an ounce during mid-day trading, down more than $8, before bouncing back to the $1695 level when markets closed for the week.
This week, developments in US budget negotiations are likely to have the biggest impact on gold prices. Any breakthroughs in the talks between Congressional leaders and President Obama are likely to result in increase in investor risk taking, which could turn the precious metal bullish.
The price of crude oil was able to gain close to $0.80 a barrel on Friday, following a positive Chinese manufacturing report which signaled to investors that global demand may increase. Crude closed out the week at $86.86.
This week, crude traders will want to pay attention to a batch of US news. Specifically, the Philly Fed Manufacturing Index and Core Durable Goods Orders will provide clues as to the current state of the US economic recovery and how high demand for oil is. Additionally, Wednesday’s Crude Oil Inventories figure will be closely watched by investors to determine the level of demand for oil is in the US.
The Bollinger Bands on the weekly chart are beginning to narrow, indicating that this pair could see a price shift in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed over into overbought territory, signaling that the price shift could be bearish. Traders may want to open short positions for this pair.
A bearish cross on the weekly chart’s MACD/OsMA indicates that a downward correction could take place in the near future. Furthermore, the Relative Strength Index on the same chart appears close to crossing into the overbought zone. Opening short positions may be the best long-term choice for this pair.
The Slow Stochastic on the weekly chart has formed a bearish cross, indicating that a downward correction could occur in the near future. Additionally, the Williams Percent Range on the same chart has crossed into overbought territory. Opening short positions may be the wise choice for this pair.
The weekly chart’s Williams Percent Range has crossed into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart appears close to forming a bullish cross. Traders may want to open long positions for this pair.
The Relative Strength Index on the daily chart has crossed into overbought territory, indicating that a downward correction could take place in the near future. Furthermore, the Slow Stochastic on the same chart appears close to forming a bearish cross. This may be a good time for forex traders to open short positions ahead of possible downward movement.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Source: ForexYard
Hey Everyone,
Below are some market trends for today.
Good luck!
-Dan
Gold- May see upward movement today
Support- 1674.65
Resistance- 1699.70
Silver- May see upward movement today
Support- 31.69
Resistance- 33.15
Crude Oil- May see downward movement today
Support- 86.29
Resistance-88.18
Dax 30- May see upward movement today
Support- 7525.93
Resistance- 7630.56
EUR/USD May see downward movement today
Support- 1.3055
Resistance- 1.3186
Read more forex news on our forex blog
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Source: ForexYard
The USD/JPY shot up to its highest level in more than 1 ½ years during the overnight session, following Japanese elections yesterday and expectations that the Bank of Japan will soon initiate a new round of monetary easing. The pair, which is currently trading just below the 84.00 level, gained some 75 pips when markets opened for the week.
The EUR/USD saw a minor downward correction during Asian trading, but remained close to its highest level since May, which it hit on Friday following a worse than expected US Core CPI figure. The pair, currently trading at 1.3162, fell around 30 pips last night.
After advancing close to $0.70 a barrel when markets opened for the week, crude oil spent the rest of the night range trading, and currently stands at $87.35.
Main News for Today
ECB President Draghi Speaks- 14:30 GMT
• If the ECB President’s speech signals positive EU economic growth, the euro could extend its recent bullish trend during afternoon trading
Read more forex news on our forex blog
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Hedge funds have had another shocker of a year.
If you had parked your cash with those self-appointed Kings of finance, you would have gained just 5.5% so far this year.
That’s according to the Hennessee Hedge Fund Index, which calculates this average of reported hedge fund returns.
Imagine all those hundreds of thousands of man-hours spent analysing, calculating, and theorising. All that effort expended, billions of dollars in brokerage, and the sleepless nights spent worried about trading positions.
Then consider that the ‘hedgies’ could have just bought gold at the start of January, then slept in a hammock in Bali until Christmas – and made a far better gain of 8.2%…
And 2012 was actually a slow year for gold. The average for US dollar denominated gold over the last ten years has actually been an incredible 17.5%.
You can see in the chart above that in the last decade, the relatively ‘slow years’ of 2004 and 2008 have been followed by big years.
And gold has now had TWO slow years in a row – so maybe gold is now set for a boomer year in 2013.
The gold market is fundamentally primed for a big year at any rate, and a gain of more than 20% next year could realistically be on the cards.
The single biggest reason to expect gold to run next year is the US government’s laughable inability to balance its books.
The US debt level is out of control. And the tedious, endless debate over the ‘fiscal cliff’ tells you that it’s not about to get under control any time soon. They couldn’t decide on the colour of an orange, much less run a balance sheet.
And like I was saying in my letter to you last week, part of the discussion has proposed scrapping that pesky debt ceiling.
This hasn’t caught much media attention yet – but it could be the biggest reason to make 2013 the year you finally buy that gold you’ve been thinking about.
The reason is that the debt ceiling is the only thing keeping any kind of restraint on taking on more debt from time to time.
And this chart shows very clearly that whenever the debt level is stepped up (black line), the debt (red line) rapidly rises to meet it.
Where it gets interesting is that the gold price follows the debt level up almost exactly.
In other words, the US gold price is very highly correlated to the US debt level.
You can this relationship in the chart above – as debt (red) tracked up, gold (yellow) followed it very closely.
And when the debt level accelerated after 2008 – so did the gold price.
So what happens in 2013 if the debt ceiling is scrapped?
Would you give a shopaholic a credit card that couldn’t be maxed out? Me neither. Because having no credit limit will be an open invitation to push spending into overdrive.
The result will be a new acceleration in the US debt level, as the government spends with gay abandon. And if we see that – then gold will soar in its slipstream again.
The second biggest reason to expect gold to rally in 2013 is the return of Quantitative Easing (QE).
Not just the ‘QE3′ program announced two months ago, but last week’s announcement of the beefed-up version starting in January. Instead of $40 billion of asset purchases each month, the Fed will now buy $85 billion each month.
The extra $45 billion will be treasury purchases, which have had a big effect on the gold price in previous QE programs. It’s been almost 18 months since the Fed wound up QE2, and the market seems to have forgotten what happened to gold back then.
But from the start of QE1 to the end of QE2, the gold price DOUBLED.
Gold is a good investment at any time, but when the Fed is printing, it is madness to not own gold.
The difference this time is that with this current QE program, the Fed is planning to keep going until the unemployment rate hits 6.5%.
This is one hell of a bizarre monetary experiment.
For one thing, linking the two arrogantly assumes that their policies are what is driving the fall in unemployment. This is just not the case. New jobs have appeared in spite of their endless meddling, not because of it.
Bernanke may just as well have linked the end of the QE program to the price of chicken sausages at the Coles supermarket in Wollongong.
Anyway, the US unemployment rate is 7.7% at the moment, and is falling. At the current pace, it would hit the target 6.5% around next December. This would give a full year of the current QE program.
But nothing is ever that simple in statistics. Normally, assuming any existing trend will continue is financial suicide. So – what happens if the unemployment rate turns back up? Does the Fed buy $85 billion a month for two years, five years, or longer?
And besides, the unemployment rate in large part is only falling because of massive numbers of people giving up looking for work. If you stop looking, then they don’t even count you.
But if these people are encouraged by the falling rate, and start trying to come back to the job market, the unemployment rate could quite possibly start climbing again.
And what then Bernanke?
I wouldn’t want his job.
But I know what I would do if I was a hedge fund manager. I’d stick all the funds under management into gold in early January – then go and find that hammock in Bali.
Dr. Alex Cowie
Editor, Diggers & Drillers
From the Port Phillip Publishing Library
Special Report: The Fuse is Lit
Daily Reckoning:
The Trade Deficit Dilemma That’s Alive and Well
Money Morning:
The Sales Secret that Spells Trouble for Australian Banks in 2013
Pursuit of Happiness:
The One Industry Where the State and Government Excels
Diggers and Drillers:
Five Reasons Why Gold Stocks Are Set to Rebound
When it comes to the Federal Reserve, it’s not a matter of what you see is what you get. It’s more a matter of what you don’t see is what you’ll end up getting.
Getting, as in up the you-know-what!
I’m talking about getting socialism shoved up our capitalist backsides, for one thing.
It’s simple: We are about to go over the so-called fiscal cliff. Why? Because Congress can’t figure out how to stop spending money it doesn’t have.
Forget the whole revenue side of the equation. It’s only part of the mix of fixes, and the only fix that matters ain’t fixed.
Stop spending money you don’t have and you don’t have to tax people more to pay for a bunch of crap they don’t need, don’t want, and don’t even know they’re getting.
Oh, that would be because on top of what we are getting there’s even more that we’re not getting.
Congress’ paymasters are getting pork and beans for whatever they want because that’s how our Congress gets elected, by greasing the wheels of insiders to get taxpayer money for their private purses, enough to plentifully pay for campaigns.
But that’s only the ‘private’ side of spending.
The spending scheme has mushroomed by expanding (and paying sickeningly outrageous wages and benefits) an ever-growing number of government workers.
And by expanding entitlements beyond what we are entitled to. And by expanding welfare and ‘social programs’.
Yes, I am including 99 weeks of unemployment, and accompanying food stamps, and free money for unwed mothers to have more kids so they can collect more free money, and free day care, and all the other free stuff that ain’t free if someone is paying for it.
All that spending creates a class of people, a voting class. And, guess what they vote for?
Duh, that would be more free stuff.
So what’s this got to do with the Fed?
I’m glad you asked…
Because Congress wants to glad-hand out these freebies, the private ones and the public ones, to get votes and all the personal wealth that comes with their political positions.
And they do not want to take away anything with the other hand (that would be raise taxes to pay for their spending), so they wink at the Federal Reserve, and lo and behold the Fed prints the money to pay for it all.
It’s just like magic. No, it is magic.
Congress spends and doesn’t have the money to pay up. So it borrows. It borrows from the Fed, people!
If there was no Fed to print money and give it to Congress, the crooks on the Hill wouldn’t get away with what they take for granted as their political right, which is to spend money they don’t have to pay us to keep them in office.
The Fed stripped off its cloak of invisibility and said they were going to keep easing (how low can rates go?). In fact, they are going to step up their Treasury bond buying spree.
Our government doesn’t have any money, but needs billions every day, so the Fed simply winks at them, they issue debt in the form of bonds, and the Fed buys them all up.
Revenue problem solved!
So under what authority does the Fed operate? How do they have the right to print money and pay for stuff that Congress didn’t get permission from the public for (because they didn’t come to us and ask if they could raise taxes on us to spend money on what they think is good for themselves)?
Oh, that right was given to them… by Congress.
Back in 1977 Congress gave the Fed a ‘dual mandate’. They said, besides your job to ‘maintain price stability and preserve the currency as a store of value’, we now want you to ‘promote effectively the goal of maximum employment’.
And just like that (it actually started back in 1946, but that’s another story for another time) the Fourth Branch of Government was officially sanctified.
The Fed says we’re going to keep the printing presses running to fund Congress’ schemes (what fiscal cliff?) until unemployment is 6.5%, or inflation is above 2.5%, or until all the banks in America that control us and Congress tell us to stop because they have enough profits to buy more politicians and relax more rules and fund their next gigantic scam.
What the Fed calls more ‘transparency’ in articulating their new monetary policy guidance schemes is nothing more than tearing off one cloak of invisibility only to find another underneath.
Which unemployment measure are they going to look at? How are they going to interpret U6, or how many people are counted or not counted in the ranks of people in the job market? Does the birth/death model need to be looked at, or ignored?
Targeting unemployment is their way of saying there’s not going to be enough money for banks to get really fat again if spending is cut back, or if taxes rise, so we’re going to do what we do, which is screw the public and feed the banks.
About that inflation in our future, we’ll worry about it when we get there. About that preserving the currency thing, we’ll worry about it when we get there.
The Fed only cares that its puppet masters (that would be the big banks and maybe all the banks) have enough money to lend (to the government) to collect their interest to enslave the population into paying them back by socializing America to keep them fat.
You see, in capitalism, the banks would be allowed to fail. And fail they would. But in a socialist world, failure is not an option.
Starting to get it?
Shah Gilani
Contributing Editor, Money Morning
Publisher’s Note: This article originally appeared in Money Morning (USA)
From the Archives…
Why Small-Cap Stocks Could Be Your Best Investment in 2013
14-12-2012 – Kris Sayce
How the Global Oil Grab Affects You…
13-12-2012 – Byron King
The Price of Risk in the Stock Market
12-12-2012 – Murray Dawes
Why Silver Could Be the Best Investment in 2013
11-12-2012 – Dr. Alex Cowie
The Long, Drawn Out Retreat in Australian House Prices
10-12-2012 – Dr. Alex Cowie
By Chris Vermeulen – www.TheGoldAndOilGuy.com
We all want new and exciting electronic gizmos and gadgets for the holiday season. Unfortunately they have the tendency to lose almost all their value within weeks because of newer versions etc… but what if you just got a lump of dirty old coal in your stocking, how would you feel?
The only individuals who would appreciate a dirty gift like that would be those forward looking investors who see major opportunities before they become the next big movers and headline news.
Knowing how to spot Stage 1 patterns is one of the most important bits of information you need to know as an investor. This one pattern is how I found RIMM which now up 100% in the past 30 days, ANR up 30% in two weeks, FSLR up 20% in 20 days and the list goes one. My main focus is on ETFs because of lower risk they provide but very powerful when applied to individual stocks.
Coal and coal stocks have been out of favor for almost two years now. But these unwanted and hated shares may soon be owned by the masses, or at least by traders and investors. A few weeks ago to I talked about the four stages all investments go through and which patters you must be able to spot in order to make huge money investing while having very limited downside risk.
You can read about them here where I used Apple and Research In Motion shares as my example: http://www.thegoldandoilguy.com/articles/collapse-of-apple-rise-of-the-blackberries-stock-market-cycle/
In summary, Trade with the BIG BOARD and only focusing on buying stocks, ETFs etc… as they are coming out of a Stage 1 Accumulation Basing Pattern. This puts the odds greatly in your favor for not only winning the majority of your trades but to generate above average returns.
The New York Stock Exchange is the big board. This chart formed a reversal candle last week which points to lower prices. Its likely we see a 1-2 week dip before buyers step back in. Until then individual stocks should pause or form mini bull flags until the sellers are finished and buyers step back into risk on assets (equities).
Coal stocks have been bouncing bottom for some time and if you did not review the Stages Report using the link above then do so now so you know what to expect in detail.
KOL coal exchange traded fund is a basket of coal companies and is starting to show signs of a new bull market. A breakout and close above $26.00 should trigger strong buying with the potential of a 21% gain before it hits my first price target. This could go way past that but one target at a time folks.
Naturally I would like to see a bull flag or pause in KOL over the next couple weeks, then look to get long using the pivot low of that pause/bull flag as my protective stop. I’m not jumping in here as the broad market looks ready to correct and ¾ stocks follow the big board which will pull KOL down.
I pointed out ANR at $7.50 at the beginning of December to followers as it was the best looking coal stock I could find. The two key indicators “Price” and “Volume” were clearly pointing to higher prices and the potential gain even if it was just played up to the Stage 1 Resistance Level still netted a 30% move. Crazy part is that there is the potential for a 100% rally to my first price target. Follow my free ideas here live: https://stockcharts.com/public/1992897
In short, I really like the coal sector for the first quarter of 2013. I’m not too worried about the fiscal cliff as it’s not the end of the world and the US along with most other countries are all bankrupt together in my opinion. New rules and ideas will be implemented and life and business will continue… I am not to worried.
I am expecting stocks to continue sideways or higher into May at which time a serious correction could take place. But not to worry as we take things one week at time and will be adjusting my outlook accordingly.
Chris Vermeulen
What a comeback for the Dow Industrials!
From a March 9, 2009, close of 6,547, the senior index climbed to 13,610 on Oct. 5, 2012.
Moreover, the Dow achieved this feat in the face of a weak-kneed economy, and it has grinded forward now for three and a half years.
The persistent rise has emboldened stock market prognosticators.
S&P Could Still Hit 1,600 Year-End
–CNBC, Oct. 23
All the while, fewer and fewer investors have been participating in the so-called recovery.
Take a look at the chart below from the just-published October 2012 special video Elliott Wave Theorist, and then read Prechter’s commentary.
People have started ignoring volume because bears have been talking about declining volume ever since 2010. But it is extremely important. Volume overall has been shrinking ever since the market’s low of March 2009. This line that I’ve drawn tracks the volume on the rising portions of the rally from 2009. Every time the market gets hit very hard-such as in the collapse of 2008, the “flash crash” of May 2010 and the market plunge in August last year-volume picks up.
This is not a picture of a bull market. In a bull market, the opposite happens. Volume should be going up during the entire period, and it should be declining every time the market corrects. But we’re getting exactly the opposite situation.
—The Elliott Wave Theorist, October 2012
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This article was syndicated by Elliott Wave International and was originally published under the headline Prechter: “This is Not a Picture of a Bull Market”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
