The Stock Market Crash of 1929 began on October 24. While it is remembered for the panic selling in the first week, the largest falls occurred in the following two years. The Dow Jones Industrial Average did not bottom out until July 8, 1932, by which time it had fallen 89% from its September 1929 peak, making it the biggest bear market in Wall Street’s history. The Dow Jones did not return to its 1929 high until November 1954.
BREAKING DOWN ‘Stock Market Crash Of 1929’
The stock market crash of 1929 followed a bull market which had seen the Dow Jones rise 400% in five years. But with industrial companies trading at price-earnings ratios of 15, valuations did not appear unreasonable after a decade of record productivity growth in manufacturing – that is until you take into account the public utility holding companies.
By 1929, thousands of electricity companies had been consolidated into holding companies owned by other holding companies, which controlled about two-thirds of American industry. Ten layers separated the top and bottom of some of these complex, highly leveraged pyramids. As the Federal Trade Commission reported in 1928, these holding companies’ unfair practices — like bilking subsidiaries through service contracts and fraudulent accounting involving depreciation and inflated property values — were a “menace to the investor.”
The stock market crashed in 1929, plummeting into a correction.
Margin buying, lack of legal protections, overpriced stocks and Fed policy contributed to the crash.
There are ways to protect investors’ portfolios from downturns.
On October 16, 1929, Yale economist Irving Fisher wrote in the New York Times that “Stock prices have reached what looks like a permanently high plateau.” Eight days later, on October 24, 1929, the stock market began a four-day crash on what became known as Black Thursday. This crash cost investors more than World War I and was one of the catalysts for the Great Depression. Irving Fisher’s declaration went down as the worst stock market prediction of all time.
Before the 1929 stock market crash: Risks and warning signs
Hindsight is always 20/20 but in the Roaring Twenties, optimism and affluence had risen like never before. The economy grew by 42% (real GDP went from $688 billion in 1920 to $977 billion in 1929), average income rose by about $1,500 and unemployment stayed below 4%. In the wake of World War I, the U.S. was producing nearly half of global output and mass production made consumer goods like refrigerators, washing machines, radios and vacuums accessible to the average household. Investing in stocks became like baseball – a national pastime. As newspaper headlines trumpeted stories about teachers, chauffeurs and maids making millions in the stock market, concerns about risk evaporated.
Why The 1929 Stock Market Crash Could Happen In 2018?
As U.S. stocks continue soaring to record high after record high, investors anticipating an inevitable plunge have yet another cause for sleepless nights. The CAPE ratio, a measure of stock valuations devised by Nobel Laureate economist Robert Shiller of Yale University, is now at a higher level than it was before the Great Crash of 1929, the Financial Times reports, adding that the only time the CAPE was even higher preceded the dotcom crash of 2000-02. However, the FT notes, there are some differences between 1929 and 2018 that make the CAPE parallel less terrifying for investors.
From their previous bear market lows reached in intraday trading on March 6, 2009, through their closing values on January 12, 2018, the S&P 500 Index (SPX) has gained 318% and the Dow Jones Industrial Average (DJIA) has advanced 299%. Regarding the CAPE valuation analysis, there are several key limitations.
Drawbacks of CAPE
According to investment manager Rob Arnott, the founder, chairman and CEO of Research Associates, CAPE has been on an upward trend over time. This makes sense both to him and to the FT since the U.S. as progressed from being essentially an emerging market to the world’s dominant economy during the course of more than a century. As a result, both believe that an increasing earnings multiple for U.S. stocks would be justified. While the current value of CAPE is above its long term trend line, the difference is much smaller than in 1929, as Arnott’s detailed research paper shows.
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The dot.com mania underwent a backbreaking correction before the market blasted off and topped out at the end of 1999. The image above illustrates that Bitcoin also experienced such a correction, but because of the large follow through move it appears to be nothing but a blip. Consider that from a high of 2977 (June 10, 2017); it dropped to a low of 1808 set on the 15th of July 2017; it shed roughly 40% in that short period (illustrated by the green box). Everyone knows what followed.
Misery loves company, but it tends to Pay’s very poorly in the long run
It looks grim, the media is pumping end of the world type scenarios, strong bulls are showing signs of weakness, and even contrarian investors are starting to break. Pure contrarians are smarter than the masses, but they do have flaws; the smartest investors are the ones that put the principles of mass psychology into play. They observe the mass mindset, and they understand that even when fear starts to creep into the equation, they are compelled to ask this question: Was the crowd in a state of euphoria when the market topped out? If the answer is “no”, then no matter how terrible the picture might look, the end game is that the crowd is being set up for a false downward move. And the normal response would “why”. Simple answer, this is an advanced form of Pavlovian training.
The Bitcoin crash was like the Tulip Bubble, it was a scam from the beginning. The ones that made the money were the ones that got in first, the ones that got in late were handed their heads on a stinky tin platter. Never get into an investment when the masses are euphoric, buy when there is blood in the streets and vice versa.
Stock market crashes are different as they don’t represent one sector, so it is just a matter of time before the markets will revert to the norm. From a mass psychology perspective, stock market crashes are nothing but long-term buying opportunities. Forget about the what happens if the stock market crashes scenario, and focus on what you would do if stocks you were dying to own before are now selling for pennies on the dollar.
Pavlovian Type Training Is Being Used On The Masses
When the market does put in a bottom after experiencing a backbreaking correction, and then goes on to mount a powerful rally; the crowd imprints the following data in their minds. Buy the pullback because it is a fake trap to drive us out; they also start to believe in the following mantra: “The stronger the pullback, the better the opportunity”. Next time when the Market puts in a top, bullish sentiment will remain unusually high, and that will be the warning to students of Mass Psychology that the real skull crushing correction is on its way. Again, we point you in the direction of the not too distant Bitcoin spectacular bull market and the equally spectacular crash. From low to high Bitcoin tacked on 11,000% in gains and the masses still assumed that the only direction it could trade was up. When it topped the Bitcoin crowd was beyond ecstatic.
As for whether the bitcoin crash is over, we believe that one should wait a bit longer before jumping in and for all intents and purposes, Bitcoin is highly unlikely to test the 20,000 ranges for a very long time. On the downside, bitcoin is likely to test the 3000 ranges with a possible overshoot to the 2,500 ranges before a meaningful bottom takes hold. At this point in time, there are many other stocks that look interesting and far more attractive than bitcoin, for example, PG, MRK, TCEHY, etc
Courtesy of Tactical Investor
Random views on Bitcoin Crash
So, you’ve heard about Bitcoin and you want to invest…
You’re not the only one! Bitcoin has been one of the best investments you could have made in the last 5 years. People are still using it to make a lot of money, in many different ways.
In this guide, I will teach you the history of Bitcoin, the future of Bitcoin and how to understand what goes into a Bitcoin price prediction. We will look at predictions for different years, including the Bitcoin price prediction 2019. I will answer the questions that are on everybody’s minds, like “Will Bitcoin crash?” and “Why is Bitcoin rising?”.
Understanding how to predict and invest is the first step to building a successful portfolio. However, with all investments, there are risks involved. So, you should always speak to a financial advisor before making any major decisions. Before going to Bitcoin price prediction, let’s go back a little to the basics. I assume, as you are reading this guide, you must have heard of Bitcoin. Bitcoin is the world’s first digital currency and it has been very popular over the last year! A lot of people have made large profits by buying Bitcoin for a low price and then selling it for a high price.
Confused? Well, let me explain.
Bitcoin is a currency, just like US Dollars, Japanese Yen or British Pounds. It can be bought, sold and exchanged for goods and services. Full Story
Is Now The Time to Buy Bitcoin? The 2019 Edition
Many investors are still hesitant about Bitcoin ending the bearish period, despite Bitcoin’s recent consolidation price action and market fundamentals looking strong
How will you know if it’s the time to buy Bitcoin? In this article we’ll present signs that may indicate on an end to the current bear market.
Timing the market is almost impossible – meet the DCA option.
Most experienced traders know that markets are primarily driven by emotions, and the key to cracking them is understanding the market psychology as well as being able to interpret technical analysis and chart fundamentals.
Despite this public knowledge, many of us still fall into the same traps that cause us to either lose money or miss out on significant investment opportunities. This is not just limited to Bitcoin and crypto.
The current sentiment around the crypto markets indicates that the majority may be falling for yet another emotionally driven trap.
Ironically, people rushed to buy Bitcoin when it first hit $10,000 and $15,000 in late 2017, yet now when the price is around the mid $3K range (discount of over 80% from the all-time high), there is steady progress and strong market fundamentals, buyers seem to be more hesitant than ever about entering the market and buying Bitcoin.
Perhaps it’s the fear of being yet another victim of the market crashes we’ve seen during the 2018 bear market, or the constant negative messaging led by the mainstream media insisting that ‘Bitcoin is dead’ or a ‘pyramid scheme’. Full Story
Strategist Who Called Bitcoin Crash Says It’s Time to Buy Crypto
Bitcoin is in the middle of a sustained recovery and investors should use recent weakness to buy more, according to Fundstrat technical strategist Robert Sluymer. The largest cryptocurrency climbed to its highest since November.
“Use pending pullbacks to continue accumulating Bitcoin in the second quarter in anticipation of a second-half rally through ~6,000 resistance,” Sluymer wrote in a note May 2. He sees Bitcoin’s rebound from its 200-week moving average and breakout from its first-quarter trading range as “the early stage of a longer-term recovery developing.”
Bitcoin advanced as much as 7.2 percent to $5,795.50 as of 9:33 a.m. in New York, according to Bloomberg composite pricing. The 55 percent jump in 2019 has helped pull rival tokens higher. Litecoin has soared more than two-fold.
Adding to the overall optimism Friday was a Wall Street Journal report that Facebook Inc. is reaching out to financial companies and online merchants to help launch a cryptocurrency-based payments system tied to the social network.
Sluymer warned in mid-November, when Bitcoin was trading around $5,500, that the asset had suffered “significant technical damage” that could take months to repair. Over the next several weeks, Bitcoin slid to as low as $3,136.04. In February, Sluymer cautioned that the technical position in the crypto space was still weak. Bitcoin didn’t recover the $5,000 level until early April.
Fundstrat was an early mover in analyzing cryptocurrencies and developed its own indexes. And Sluymer’s colleague, Fundstrat co-founder Tom Lee, is regarded as a Bitcoin bull. Full Story
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Have you ever heard or seen the press push good news and that begs the question why? Fear sells, and everyone is using fear as the tool to manipulate the masses. It is the oldest trick in the books, but unfortunately, it works like a charm. The so-called Trending Now News concept is just another ploy to make garbage somewhat platable.
Once you realise the ploy, it is easy to deal with the issue. How do you recognise the ruse, the best way is to stop watching TV. For example, I cut the cord roughly 10 years ago. I am always asked if I have a smart TV, and I respond with “yes it’s brilliant” because it keeps its mouth shut most of the time. When you stop watching the news which is nothing but gossip on steroids, one finds out that nothing has changed. That’s when the realisation sinks in that today’s news has, and will always be an avenue for the best gossipers to turn garbage into sensational headlines. The news is worse than “toilet paper”; at least toilet paper is good for one swipe, one can’t lay the same claim to today’s news.
The media is going to continue to weaponise the news. Be prepared for fantasy claims regarding Brexit, the trade war with China, and any other factor that can be spun. Ridiculous claims that make no sense will be used to try to push the fear factor higher; once again the best solution is to just ignore what the media is pushing and focus on the trend.
The “silver lining” is that fear of the unknown increases the “uncertainty factor” and in doing so breathes even more life into this bull market. Until the Masses embrace this bull, this mad bull is unlikely to die. The logical path based on the news is to panic, the illogical path is to ignore. Logic works when it’s based on reality, but fear is not based on reality, it’s based on a perception of what “could” happen. If you start to fantasize over what could, would, and should happen, one cannot focus on the trend. Ignore the noise and focus on the trend.
Despite the fact, that the DOW is dangerously close to testing its old highs, there are too many traders sitting on the sidelines waiting for the markets to pull back. For almost this entire year, the number of individuals in the neutral camp has exceeded the individuals in the Bearish and Bullish camps. Neutrality equates to uncertainty and uncertain individuals are the 1st ones to panic.
These chaps will react the same way they have always reacted in the past when the markets do pullback, they will panic and flee for the hills and the whole process of waiting for the next pullback will start over again. In the end, these guys worry about everything but never focus on the main issue, which is to make money in the markets. The only way to make money in the markets is to be in it; as the say, the rest is just noise. Hence there is a very good chance that the next pullback could push neutral readings to the 50% mark. Every time this has occurred (since the inception of this bull market), the markets recouped their losses and then surged to new highs.
The weekly charts illustrate that the Dow is now trading in the overbought ranges; it still has a bit of room before it moves into the extremely overbought zone. On the monthly charts the MACD’s have still not experienced a bullish crossover; until they do there is always a chance that the markets could experience a stronger than expected pullback. If this occurs embrace the correction as we from Nov 2018 to Jan 2019. Market Update April 13, 2019
Random thoughts on the Fed and Stock Market March 2019
In terms of the stock market, until the Fed changes its mind, all sharp corrections have to be viewed as buying opportunities, and backbreaking corrections have to be placed in the category of “once in a lifetime events”, provided of course the trend is positive. That is what we are here for; to inform you if the trend is positive (Up) or negative (down).
The world is going to witness a Fed that has decided to make a cocktail of Coke, Heroin, Crack and Meth and take it all in one shot. Imagine what a junkie on this combination of potent drugs is capable of doing, and you will have an idea of where the Fed is heading in the years to come. Now the Gold bugs will cry “I told you so”. Our response to this statement; not so fast little bugs. While precious metals will do well, we think stocks in key sectors (and we are not referring to Gold stocks) will pulverise the precious metals sector in terms of returns. One such area is robots (particularly Sex-bots) and AI. Market Update Feb 28, 2019
Courtesy of Tactical Investor
Random views on Trending Now Fake News
how to avoid financial fake news
Steve McDonald (SM): The topic this week is information sources. With the president claiming that there’s all types of fake news out there, I have news for him: There’s always been fake news in the money press.
So we have Matthew Carr here today to talk about reliable information sources and why that’s so important if you’re going to get the market right.
Welcome, Matt.
Matthew Carr (MC): Thanks for having me, Steve.
SM: It’s my pleasure. We’re not going to get political, I promise you. But is there a lot of fake news in the money press?
MC: Oh, I’m with you. I believe there’s always been some sort of fake news or bias in the press. You know, when I was growing up, we were always taught to read, for example, The Washington Times and The Washington Post.
You read the same story in both publications. They each have a slant either to the left or the right. And you know that somewhere in the middle is the truth. And in the financial press, everybody’s going to pick their sides.
We live in this divided world where our political affiliations sort of dictate everything that we do, so it is important you try to make sure you’re cobbling together the best, clearest picture as possible, and a lot of times that just means pulling from as many sources as possible.
SM: Do you have a primary source of information that you like to use? Full Story
How Social Media Giants Are Fighting The Fake News Menace
In recent times, the issue of fake content has taken epic proportions. Major social media platforms like Facebook (NASDAQ:FB) , Twitter (NYSE:TWTR) , Weibo (NASDAQ:WB) and Alphabet’s (NASDAQ:GOOGL) Google have frequently come under fire for failing to combat the spread of fake news on their platforms.
Social media giants are playing an expansive role in connecting the world, thanks to the improvement in Internet speed and connectivity as well as solid penetration of mobile devices. Per a survey by Pew Research Center last year, 20% of American adults learn about current affairs through social media and only 16% through newspapers.
However, according to the Reuters Institute Digital News Report 2018, the usage of social media and aggregators for news is declining, primarily due to trust and privacy issues, and fake news concerns. The report, which surveyed more than 74,000 people in 37 markets, stated that only 23% of respondents trust the news they find on social media.
Fake News Proliferates Faster
Fake news is spread via bots and fake profiles that use cookies to track people’s website visits. Based on that data, fake profilers and bots allure users to view fake content. Notably, this not only fans the flames of misinformation but also creates cybersecurity threats.
Fake news has been responsible for numerous sensitive situations, including terror propaganda and tampering with people’s sentiments about culture, religion and politics. Full Story
How To Invest In A Time Of Fake News?
This election year has created a major challenge for investors: How to deal with the fake news that now circulates daily. The basis of investment fake news is trying to build forecasts and outlooks on political pronouncements. Therefore, we need to ignore the fake flow and focus on facts. Only by doing so can we have a sensible strategy for pursuing returns and controlling risks.
Disclosure: Author is invested in selected U.S. stocks and actively managed U.S. stock funds. Holdings include Apple, Starbucks and Walt Disney, mentioned below.
“Fake news” has two components, commonly used after elections
Taking as fact the statements of desire (primarily by President-elect Donald Trump) that drove the election cycle. The problem is that desires often change when the governing period starts, Moreover, the U.S. Government structure and political realities offer no assurance that desires can become reality, either quickly or as envisioned.
Making pronouncements of surefire investment actions based on simplistic interpretations of those statements of desire. This elementary A=B without fact, fulsome reasoning and common sense is an invitation to underperformance or, worse, loss as the contrarian approach turns out to be the correct path.
Ramping up the challenge is the trail of contradictory statements of desire
Based on his Donald Trump’s statements regarding military buildup, the advice is that we should buy defense stocks. However, what about Trump’s roast of Boeing and Lockheed, plus his dismissive attitude toward our NATO allies, a source of foreign sales? Full Story
The lies the media and all the experts were pumping during the sell-off phase (Nov-Dec 2018) was that the crowd had to worry about higher rates and an increasingly hawkish Fed. And viola, like magic the narrative has changed; now they are talking about a Powell put and how the Fed is turning dovish, which clearly proves two points we have been stating for a long time
Mass Media should be viewed and treated with the same respect one accords to sewage.
The masses (which include the experts) are always on the wrong side of the fence. For the record, these same penguins were stating that the markets were destined to crash last year.
Fear pays Poorly
First of all, we hope that the majority of our subscribers are starting to perceive that succumbing to Fear is a dangerous strategy to adopt. Life and investing should not be stressful; stress is something that every Tactical Investor should abhor. Moreover, remember, stress comes down to perceptions; alter the perception and one can shift from being stressed to being serene.
Experts love to push the argument that investing is hard and that it takes forever to master this art. Remember that investing is an art, not a science and art is meant to be enjoyed. So are the masses starting to jump on the bandwagon after this strong turn around; the obvious answer would be yes_? The not so obvious answer would be ___? Continue reading, and you will find out 🙂
Investors are sitting on a massive pile of cash, and it is growing by the day.
The masses panicked when the so-called Santa Claus rally failed to materialise. What they failed to spot was that Santa was providing the astute player with a lovely shopping list and all the goods were on sale. This January effect was one of the strongest on record and more than makes up for the Santa Claus fail, proving that our stance to remain cool during the so-called December meltdown (opportunity as far we are concerned) was the right posture to take. Santa Claus did not give presents last year, but he provided us with a fantastic list of stocks to buy at a discount price.
To date institutions and individuals have poured billions upon billions of dollars into money market funds. The apparent culprits were; Interest rates, the trade war, government shutdown, Trump investigations and whatever other rubbish you can come up with. Money market assets surged to $3 trillion this January, the highest level since March of 2010, clearly indicating that the masses as always know nothing and jump into the wrong investment at precisely the right time.
Pay close attention to the masses for the data they willingly provide is worth its weight in Gold. Sadly, the masses volunteer for the role of being used as “cannon fodder” over and over again. Try to save them, and they are likely to crucify you to the nearest pole they can find. Watch or read Plato’s allegory of the cave to understand why the masses will never reward anyone that tries to open their eyes.
Common Themes During Stock Market Crashes
The world is ending, and everyone needs to flee for the hills. The wretched media then diligently create a cocktail on steroids, and serve it to the herd; without fail, they fall for the same ploy over and over again.
“Investors can penalize themselves. While money market funds offer safety, they come at a cost as they accept a lower yield,” said Jerome Schneider, head of short-term portfolio management at PIMCO in Newport Beach, California.
https://www.youtube.com/watch?v=BgQ79evjylc
“I like cash now. You can earn a very reasonable return on cash,” said James Sarni, senior portfolio manager at Payden & Rygel in Los Angeles.
We stated all along that the Fed was lying about inflation and now the truth has emerged. Suddenly Powell is changing his tune. Now he has pledged to be “patient” before raising rates; what gives? B.S that is what gives, the Fed’s only function is to foster boom and bust cycles.
“I worry those investors who have long-term horizons may be hurting themselves,” said Kristina Hooper, global market strategist at Invesco in New York.
As always the masses will wait until the very end, then they will jump in and shortly after that the markets will tank. For the masses, the only possible outcome is pain and loss. Investors sitting on the sidelines are already paying the price, quality stocks have made a strong comeback from their Dec lows, and the party has just begun.
PIMCO’s Schneider stated the following, and we could not agree more
“They tend to play it safe for too long,”
What Is Our Response To These Stock Market Crash Stories
It is rubbish end of story, for the markets have already priced this factor in and the experts are now going to spin gossip into news. At the moment they are still pushing the Tariff wars issue, but it will end on the same note; lots of huffing and puffing but the bad wolf will not be able to blow the house down. What will knock this bull out? When the masses are ecstatic; until then all the nonsense that is graciously labelled as “news” should be taken with a barrel of salt and a shot of whiskey.
Despite, the sharp rally the markets have experienced, the masses surprisingly are far from bullish; in fact, the largest number of individuals is in the neutral camp. The current reading; the number of individuals in the neutral camp stands at 37 and bears account for 32; this means that 69% of individuals are still either uncertain or bearish and that has to be viewed as fantastic development.
Courtesy of Tactical Investor
Random views on Sock Market Lies
Stock Market Facing a 2019 Crash: 70% Correction Warning
July 2019 will mark exactly 10 years since the end of the Global Financial Crisis in 2009. It will also mark the longest period of economic expansion on record, surpassing the 1991 to 2001 internet boom.
The question – Is the current boom sustainable?
The 90s economic boom was fuelled by the internet. This economic recovery has been fuelled by historically low-interest rates and cheap credit – a situation many investors and economists say cannot last.
Warning Signs: The End of the Economic Boom
2018 has been the most volatile year in the stock market since the recession, and volatility can make stock market crises more likely.
The Interest Rates and Financial Crises Relationship
As the US economy firing on all cylinders, the Federal Reserve has increased interest rates eight times since 2015. However, as the US nears full employment, there is an increased danger of rising inflation and consumer prices.
Increasing interest rates is a strategy to curb the rise of inflation – increasing the cost of credit and making saving more attractive strikes a balance between people spending and saving.
However, there are also dangers to this approach. Lower consumer spending has a negative impact on the revenue of consumer-facing businesses. Declining revenue then tightens spending across both the consumer and business landscapes. At the same time, higher interest rates make it harder for financially weak companies to meet their debt obligations. Full Story
A Global Market Crash In 2019? 5 Must-See Charts!
Global markets look shaky. Global stocks were volatile this year, and even U.S. stocks have followed their path lower in recent months. The million dollar question is whether this will result in a global market crash in 2019 or whether this is the end of a weak period. After publishing our Stock Market Crash In 2019 Brewing forecast we now look at global markets. Based on these 5 charts we want to make a point about the probability of a global market crash in 2019, and indicate which leading indicators to watch.
InvestingHaven’s recent analysis of the important and violet global market crashes recent decades shows that any important crash started with weakness in currency and credit markets.
In other words any attempt to forecast a global market crash starts with a thorough analysis of leading currency charts as well as yields.
More specifically we have to look for the long term chart patterns, and structural changes in patterns like reversals from secular support or resistance as well as breakouts or breakdowns from secular trends. This is also the focus in this article, and we do so based on 5 long term charts.
The short answer to our question whether we should prepare for a global market crash in 2019: no we do not see enough evidence as of now of a global market crash in 2019 but some of our leading indicators are visibly deteriorating. Full Story
Stock Market Crash Inevitable in 2019: Bitcoin to Rise
Whenever a person buys a bitcoin or any other cryptocurrency, basically you are investing in a market known as the crypto market. Most of the people think that there must be a relation between the current trend of other markets such as the stock market on the crypto market. And if it so, one must be worried about what will happen to the crypto market if the stock market collapse. Also, before that, one must foresee the chances of the stock market to be crashed in the upcoming years.
Well, in this article we will discuss two things which are anyhow interconnected to each other. The first phenomenon that we are going to discuss is the collapse of the stock market in 2019. Is it going to happen and what are the chances of the stock market crash in 2019? In the next section, we will discuss how if the stock market crashes in 2019, it will uplift the crypto market and bitcoin will rise due to it. So, let us first focus on how the collapse of the stock market is inevitable in 2019.
The stock market going to crash in 2019:
It has been ten years that a stock market crashed. As per the trade experts, the stock market is definitely going to collapse this year. The year 2018 itself was one of the worst years for stock market after 2008. Let us have some facts regarding the stock market current scenario: Full Story
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The data below serves as further proof that the economic recovery is nothing but an illusion. It has only benefited those who don’t really need it. The rich have become even richer, the middle class has vanished and the poor are becoming even poorer.
Real incomes have been flat to down slightly for the average household in the bottom 60% since 1980 (while they have been up for the top 40%).
Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.
Only about a third of the bottom 60% saves any of its income (in cash or financial assets).
Only about a third of families in the bottom 60% have retirement savings accounts—e.g., pensions, 401(k)s—which average less than $20,000.
For those in the bottom 60%, premature deaths are up by about 20% since 2000. The biggest contributors to that change are an increase in deaths by drugs/poisoning (up two times since 2000) and an increase in suicides (up over 50% since 2000).
The top 40% spend four times more on education than the bottom 60%.
The average household income for main income earners without a college degree is half that of the average college graduate.
Since 1980, divorce rates have more than doubled among middle-aged whites without college degrees, from 11% to 23%.
The number of prime-age white men without college degrees not in the labor force has increased from 7% to 15% since 1980. Full Story
What should you do?
Sentiment indicates the masses are not bullish so this market is not ready to crash. Instead of panicking make a list of stocks you would like to own and when the market’s pullback, buy these quality stocks at a huge discount.
The meaning of a Permabear, characterized by persistent pessimism about market prospects, is fundamentally flawed and historically disproven. This approach not only defies logic but also contradicts decades of market data. Consider the case of Robert Prechter, a notorious Permabear who predicted a Dow Jones Industrial Average (DJIA) crash to 1000 in 1987. While the market did experience a significant drop that year, it rebounded swiftly and continued its long-term upward trajectory, leaving Prechter’s followers with substantial losses.
Examining any long-term chart of major market indices reveals an undeniable upward trend. For instance, the S&P 500 has shown an average annual return of approximately 10% over the past century, accounting for inflation and dividend reinvestment. This consistent growth pattern renders the Permabear stance not just imprudent but potentially ruinous for long-term investors.
It’s crucial to understand what is bullish divergence in this context. A bullish divergence occurs when the price makes a lower low, but a technical indicator forms a higher low, often signalling a potential trend reversal. Permabears frequently overlook these signals, missing out on significant market rallies. A notable example is the period following the 2008 financial crisis, where numerous bullish divergences appeared in various technical indicators, presaging the strong bull market that followed.
The 100-year chart of the Dow Jones Industrial Average serves as incontrovertible evidence against the Permabear stance. Despite numerous economic downturns, world wars, and financial crises, the overall trajectory remains decisively upward. This chart demonstrates that markets have consistently recovered and surpassed previous highs, rewarding those who maintain a long-term optimistic outlook.
The solution is simple.
Focus on the simple factors, for that is what helps determine the trend; factors such as mass sentiment and extreme patterns (technical analysis) are on the charts. The news is not an essential factor; in fact, toilet paper has more relevance than news; at least it serves a noble function; one cannot say the same of news.
Anyone who advocates giving into fear should be thrown head first out of the front door(figuratively speaking, that is) and never allowed back into your house or mind. Fear never pays off; only the vendors of fear will make a handsome buck, and the buyers will lose their pants, shirts, and knickers, too.
Marc Faber is a classic example of A PermaBear that is full of rubbish
This dude has predicted prediction calling for the mother of all crashes since the inception of this bull (2009), but the only thing that has crashed so far are his predictions of a crash. He would probably make a very good science fiction writer, for he seems to spend a lot of time concocting scenarios that have a very low probability of coming to pass.
Here he states that we are going to experience a great recession in 2018
It turns out, once again, that the only recession was in his predictions, which, for now, are the only things that have been in a bear market. Hence, if you are a Permabear on his ability to predict market direction, it could actually pay off.
Then he goes on to state the party is going to end in 2018
Random Musings on Permabear Meaning
The concept of a permabear extends beyond mere pessimism; it represents a deeply ingrained psychological bias that can severely impair investment decisions. This mindset often leads to missed opportunities and financial underperformance. For instance, consider the case of Dr. Marc Faber, known as “Dr. Doom” for his consistently bearish outlook. Despite his reputation, Faber’s predictions have frequently been off the mark, particularly during the bull market that followed the 2008 financial crisis. His persistent bearishness caused many followers to miss out on significant gains in sectors like technology and healthcare.
Fear, the driving force behind the permabear meaning, is a potent but often misguided emotion in investing. Historical data shows that fear-driven market exits typically result in substantial opportunity costs. For example, investors who sold during the market panic of March 2020 missed out on the subsequent rally, where the S&P 500 gained over 100% in the following 18 months. This underscores the importance of maintaining a balanced perspective and not succumbing to fear-based decision-making.
Understanding what bullish divergence is can be a powerful tool in combating the permabear meaning. A bullish divergence occurs when the price makes lower lows, but technical indicators show higher lows, often signalling a potential trend reversal. For instance, during the 2018 market correction, several technical indicators displayed bullish divergences on the S&P 500 chart, preceding a strong rally in 2019. Recognizing such signals can help investors maintain a more balanced and opportunistic approach to market fluctuations.
Stress reduction in investing is not just about emotional well-being; it’s a crucial factor in making sound financial decisions. Research in behavioural finance has shown that stressed investors are more likely to make impulsive decisions and fall prey to cognitive biases. A study by the University of California, Irvine, found that chronic stress impairs decision-making abilities and risk assessment. To combat this, successful investors often employ strategies such as diversification, dollar-cost averaging, and maintaining a long-term perspective, which can help mitigate stress and improve overall investment outcomes.
Experts love to push the argument that investing is hard and that it takes forever to master this art. Remember that investing is an art, not a science and art is meant to be enjoyed. So are the masses starting to jump on the bandwagon after this strong turn around; the obvious answer would be yes. The not-so-obvious answer would be no. Continue reading. It turns out, at least in the first half of 2019, the not-so-obvious answer would be the right choice. The masses are still nervous, and until they start to dance on the streets, every strong correction should be viewed through a bullish lens.
Conclusion on Permabear Meaning
This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market, give or take a few months; after 2009, the game plan changed, and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as it did before 2009 and, in many cases, would lead to a faulty conclusion. Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one.
The results speak for themselves; the majority of our holdings were in the red during the pullback, but now they are in the black, proving that one should buy when there is blood flowing in the streets. It is a catchy and easy phrase to spit out but very hard to implement because when push comes to shove, the masses will opt for being shoved.
Courtesy of Tactical Investor
Random views on Permabear
Another warning light is blinking on the dashboard of the US economy. This time it is the inflation-tied Consumer Price Index (CPI) which has the bears scurrying for their bomb shelters. David Rosenberg, a so-called perma-bear, was filling Twitter feeds with his unique brand of doom and gloom for the Dow Jones and wider US stock market.
GLUSKIN SHEFF ECONOMIST: CPI DATA PORTENDS RECESSION
David Rosenberg
Today’s CPI did miss targets against an expectation of a 0.2% increase relative to the 0.1% reading. The Dow Jones is easing gently off its highs today as well, having lost 53.29 points as of the time of writing.
In isolation, that’s a snoozefest, but Mr. Rosenberg did note something particularly interesting about the data as a predictor of recession. Apparently, he is using price pressure as a sort of alternative yield curve.
BOND-YIELD INVERSION: A STRONG INDICATOR OF RECESSION
Given that interest rates are always somewhat interconnected with inflation due to the Fed’s approach to monetary policy, this is not particularly ground-breaking. It is interesting, though, particularly with the bond market teetering on the brink of inversion. Full Story
A prominent Wall Street permabear says the stock market is ‘stoned on free money’ and it could ‘prove fatal’
One prominent strategist says the market is high literally and figuratively. Albert Edwards, global strategist at Société Générale, cautioned on Thursday that stock markets were becoming “stoned on free money,” leaving them “detached from reality.” It’s a condition that the strategist says could “prove fatal,” in the end.
U.S. equity benchmarks — and those across the globe — have roared back from a late-2018 selloff that culminated in one of the worst December returns in years, but Edwards says, in a Thursday note, that those gains have been largely aided by central banks that are willing to “inject another dose of euphoria into its market patch.”
Indeed, since a Dec. 24 low last year, the Dow Jones Industrial Average DJIA, -0.70% and the S&P 500 index SPX, -0.50% have both advanced by about 20%, while the Nasdaq Composite Index COMP, -0.22% has returned about 23%, thus far, as of trading midday Thursday, according to FactSet data.
Easing trade-war tensions between the U.S. and China have helped stocks rebound, but a policy pivot by the Federal Reserve in January arguably delivered the most substantial shift in investor sentiment over recent weeks.
The Fed, headed by Chairman Jerome Powell, said it would be more patient in assessing future rate moves, and minutes of the January gathering released on Wednesday indicated that its efforts to reduce a $4 trillion asset portfolio could conclude as early as the end of 2019. Full Story
Permabear Sentiment Index
Yesterday, I have created a download item that creates an index called the Roubini Sentiment Indicator. The same guys who created this indicator also created another one called the Permabear sentiment index. Permabear refers to people who are always pessimistic and negative about the future direction of the economy and markets. The Permabear sentiment index is built using aggregate keyword volume data from Google Trends. The index is the result of the sum of four Google Trends popularity indices; the keywords used to create these indices are: Roubini, Peter Schiff, Marc Faber and Nassim Taleb.
The item will login in your Google account, load Google trends and create a Google Trends popularity index for each permabear. It will then download the data, parse it, calculate the sum of each permabear volume data and then save the result in ticker symbol: ^GOOGLE_TRENDS_PERMABEAR. As with the Roubini Sentiment Indicator, you must set the email and password fields of this download item to your Google email and password (Select the item, click on Update, click on the “2 Field(s)” button).
The author of the Permabear Sentiment Index claims that the Permabear Sentiment Index can make 3.5% over a short period of 3 weeks compared to the 1.6% yield of the Roubini Sentiment Indicator over the same period. The author gives one reason behind the good performance of this index. Full Story
The Perilous Path of Overconfidence: Unveiling Strategies for Mitigation In the complex world of investing and decision-making, overconfidence bias stands ...
Understanding the Growth Investing Philosophy: A Comprehensive Exploration The growth investing philosophy has long been a cornerstone of successful investment ...
Venture funding for AI is surging as evidenced by the chart below and the trend is showing no signs of letting up; in fact, the trend is so powerful that one can almost start with certainty that technology-driven deflation is going to be a very powerful force to reckon with. Imagine, small companies having the power to do what Amazon does but on a different scale. For example, flippy the burger bot replaces several workers saving a business up to 100K a year
“We are excited about the impact Miso’s AI-based solutions will have for the restaurant industry. Humans will always play a very critical role in the hospitality side of the business… We just don’t know what the new roles will be yet in the industry.”
The Bot will never get tired, never need uniforms and it’s not going to get sick or complain. Bottom line it is the perfect worker for small business burger joints that are looking to contain their costs and improve their services. As for the big players are concerned, it has the potential to reduce their overhead by billions. Last but not least, companies won’t have to worry about paying a minimum wage of up to $15 an hour and providing benefits
Little Caeser’s want to create their own Bot
Pizza chain Little Caesars has been awarded a patent for an AI-based robotic system that will help assemble Pizzas at a significantly faster pace. The patent includes two robots, one stationary arm and another fully-fledged robot chef to handle the dough and take care of oven duties.
According to the company’s explanation in the patent, the robot would free Little Caesars from the tedium of repetitive tasks and allow them to “perform other value-added tasks.” Presumably, that’s the same thinking that gave us Flippy, the burger-flipping robot.
It doesn’t appear to actually cook the pizzas or slice them, and the only listed topping is pepperoni — though it probably wouldn’t be hard to adapt it to other toppings. I’m sure there are only so many ways one can “properly distribute” pineapple or olives. Still, there are other robots already doing the things this particular one can’t — Zume Pizza in Silicon Valley, for example, can shape the dough and bake the pizzas at a rate of 372 an hour.
If Little Caesars were to ever combine their robot with Pizza Hut’s self-driving pizza delivery truck, the only human force we’ll ever need will be a single human to load the pizzas into the car. Full Story
Could the pizza bot move like Flippy? Time will tell
“Now he moves like a ninja and is more reliable,” says David Zito, the CEO of Miso Robotics, which created Flippy.
“We’ve been trained since childhood that robotics were coming in the future,” notes Louise Perrin, an accountant who works nearby. “To be a part of it, to see it and watch it happen live in front of you … is absolutely incredible.”
“I had to come in and see Flippy,” she says. “I’d heard the buzz. The concept of a robot flipping your burger is awesome.”
Central Bankers action could Fuel Technology-Driven Deflation
The shrinkage of the U.S. Federal Reserve’s balance sheet has played a significant role in exerting upward pressure on borrowing costs as parts of the U.S. economy have shown signs of decelerating, a study from the Kansas City Federal Reserve released on Wednesday showed.
The model developed for the study showed the level of reserves plays “an important role in determining the federal funds-IOR spread over the medium- and longer-term and that repo rate dynamics play a relatively less important role,” A. Lee Smith, a Kansas City Fed senior economist and the author of the study, wrote. Full Story
The China Factor
It is premature to say China is coursing toward a Japan-like falling-prices drama. Yet recent data warrant a moderately sized blip on investor radar screens. In November, consumer prices slid 0.3% from a month earlier, while producer prices fell 0.2%. On a year-on-year-basis, producer prices advanced just 2.7% in November, the weakest reading in two years (consumer prices are up 2.2% from a year ago).
Bond traders are taking no chances. Earlier this week, 10-year yields dropped to 3.27%, the lowest in more than 18 months. And, really, they have every reason for gloom considering the headwinds blowing China’s way — and how they may intensify next year. Full Story
Stubbornness does have its helpful features. You always know what you’re going to be thinking tomorrow.
Glen Beaman
Expert after expert is busy proclaiming that the world is about to come to grinding halt again.
They never seem to let up on pushing this sewage onto the unsuspecting masses. This is a clear example of insanity in action; mouthing the same thing over and over again with the desperate hope that this time the outcome will be different. The outcome will not be different this time, at least not yet. These guys should focus on writing fiction for reality seems to elude them completely. For years we have stated (and rightly so) that until the sentiment changes, this market will continue to soar higher and higher.
Here is a small sample of the flood of articles that were pushed out this month. If one simply glances through them, one would almost be compelled to think that the writers shared the same notes. There is almost no originality in these articles. The theme is the same, just because it’s October the focus is on the disaster aspect of the 1987 crash. Almost no one mentions that it proved to be a monumental buying opportunity. The focus is oh the financial world came to a grinding halt. Only it did not, the only that came to a halt was the rubbish the predecessors of today’s experts were uttering back in 1987. This reinforces the view that most financial writers have chosen the wrong profession One word sums all this nonsense “Rubbish.”
Black Monday anniversary: How the 2017 stock market compares with 1987 – Market Watch
Black Monday: 30 years after 1987 stock market crash… Wall Street raises fears of REPEAT- express.co.uk
Thursday marks 30th anniversary of the Black Monday stock market crash – courier-journal
Buy Climax at 30th Anniversary of 1987 Stock Market Crash – Money Show
The Crash of ’87, From the Wall Street Players Who Lived It – Bloomberg
Black Monday: Can a 1987-style stock market crash happen again? – USA Today
So are we stating that the stock market will never crash?
No that is not what we are stating. The market will crash, but for the astute investor, “crash” is the wrong word to use. A strong correction is more likely as most astute investors got into this market a long time ago. It is the crowd that will eventually decide to embrace close to the top that will experience this crash that the experts have been hyping about for years.
This market will experience one strong correction before it crashes, but the moment the Dow sheds 1000 points or more these experts will crawl from the rocks they were hiding under and start screaming bloody murder. To which our response is, please scream as loud as you can; for it will push the markets lower creating a better buying opportunity for us. This is exactly what we said in Aug of 2015 before Trump won and countless times before and after that.
This market is extremely overbought so a pullback ranging from 1500-3000 points should surprise no one and it certainly should not be construed as a crash but viewed as market releasing a well-deserved dose of steam. To state otherwise, would simply be disingenuous, which seems to be the only real qualification these so-called experts posses
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Market Sentiment indicates that the crowd is far from Ecstatic
The Bullish sentiment has risen somewhat, and the crowd is not as anxious as it was at the beginning of this month or last month, but until the readings indicate this crowd is euphoric, a crash is unlikely. Many people state that most people don’t have money to invest in the markets. We beg to differ; look at whats going on in the Bitcoin market, now that is a market showing some signs of Euphoria; the stock market in comparison is at the lukewarm stage.
Buy The Fear & Sell The Noise
The only thing that is going to crash and has been crashing since 2008 is the egos of these “know it all” experts. If any of them had even listened to themselves half of the time; they would have bankrupted themselves several times over. The fact that they are still around chiming the same rubbish is clear proof that they don’t believe a word they are putting to print and therefore neither should you.
Why Not Try Something New For A Change
Make a list of stocks you would love to own at a discount. When the market lets out a nice dose of steam, instead of fleeing for the hills, you can purchase top quality stocks for a discount
The sheer volume of these articles validates our view that the masses are from bullish and a crash is unlikely. Until the sentiment or the trend changes, all strong corrections should be viewed through a bullish lens.
Obstinacy is the result of the will forcing itself into the place of the intellect.
Nickel: Is This The Beginning of A new Bull Market
If you look at a shorter-term chart 1-3 years, it looks like the main move is underway already. However, looking at a ten-year chart, we can see that Nickel is at an important junction. It needs to close above 1100 on a monthly basis; failure to achieve this could push it back down to the 820-855 ranges over rather quickly. If one is looking for a solid confirmation, then a monthly close over 1200 should do it; this would set the pace for a test of the 1500 ranges with a possibility of trading to 1800.
We looked at several large producers of nickel, and all their charts illustrated that the stocks were consolidating, which suggests that Nickel is likely to pullback before trending higher unless the metal is going to diverge and trend in the opposite direction.
Let’s take a look at some Nickel Producers
VALE, which is the world’s second-largest producer of Nickel, appears to be consolidating while nickel prices trend higher and the same appears to be true of NILSY (Norilsk Mines). What could be taking place here is that the stocks are pulling back and building energy for the next phase upwards.
On the monthly chart of VALE, we can see that the stock is holding up quite well, while our indicators are letting out some steam. If one were willing to take some risk and wanted to act before our indicators moved into the oversold range capital could be deployed in the 9 to 10 dollar ranges.
The pattern is quite interesting here; this is one of the few stocks in the sector that has not experienced a nice upward move. The other stocks are now consolidating building up steam for the next leg up, however, this chap is still trading in the extremely oversold ranges and technically could mount a rally at any moment. However, note that this is a speculative play.
This company also trades in London under symbol GLEN (LSX: GLEN), and it is currently the world’s 4th largest nickel producer. Risk-takers could deploy some capital in the 3.25-3.30 ranges and another lot deployed if it drops down to the 2.90-3.00 ranges. We would hold onto the third and deploy it after one of our customer indicators generates a buy signal.
Courtesy of Tactical Investor
Random views on Nickel Stocks
Use of nickel has been traced as far back as 3,500 BC. In more recent times nickel has been used in coins (a nickel), but is best known for its use in stainless steel driven mostly by Chinese construction. With the current negative sentiment due to the US-China trade war and some mild slowdown in China, nickel prices have fallen to a low level, as have the nickel miners. Provided we don’t head into a significant China or global slowdown, any resolution in the trade war with China should lead to some recovery in nickel prices and the nickel miner’s stock prices.Class 1 nickel demand forecast to increase 17 fold from 2017 to 2025 due to the EV boomAccording to McKinsey research if annual electric vehicle (EV) production reaches 31 million vehicles by 2025 as expected then demand for high-purity class 1 nickel is likely to increase significantly from 33 Kt in 2017 to 570 Kt in 2025. Class 1 nickel is the “high purity” nickel that is used in electric vehicle lithium ion batteries. The stainless steel industry uses both class 1 and class 2 nickel (lower purity) and is the main driver of overall nickel demand. Full Story
The share price of nickel mining stocks rose significantly in the Philippine Stock Exchange last week. This was driven by the sharp increase in the price of nickel traded in the London Metal Exchange (LME). The price of nickel is currently $14,860 per ton, up 17 percent compared to its end-June level and up 39 percent compared to its end 2018 level. This is despite the slowing global economic growth, which is pulling down the price of most commodities.
The higher price of nickel in LME is largely due to the steep drop in inventory levels. From 200,000 metric tons during the start of the year, LME’s inventory level fell to 160,000 MT as of end-June and is now down to 149,000 MT. This is equivalent to less than two months’ worth of supply and indicates a potential shortage, according to Jervois Mining executive general manager Michael Rodriguez, as reported by SmallCaps.com.
A reason for the decline in nickel inventory is growing demand for lithium-ion batteries used in electric vehicles. Note that various groups are projecting demand for electric vehicles to increase by a compounded annual growth rate of more than 20 percent in the next five to 10 years as governments globally are encouraging the adoption of electric vehicles due to environmental reasons. Consequently, demand for nickel used for electric vehicle batteries is also increasing and is expected to account for more than 50 percent of total nickel demand by 2030. Full Story
2016 was lithium’s year, 2017 was cobalt’s year, and 2018-2020 are likely to be nickel’s years as nickel inventories decline and nickel prices finally start to rise. Strong Chinese and global stainless steel demand and ever increasing demand from electric vehicles [EVs] using higher nickel content batteries NMC (8:1:1).
In this article the first 2 stocks are more solid and safe diversified nickel investments (with exposure to other metals) that will do ok even if the nickel boom is delayed until 2020. The last 3 stocks are nickel-cobalt optionality plays that can give out-sized returns should the nickel price continue to improve as I expect. They will also be helped significantly by strong cobalt prices. In all cases investors will need some patience with a 5 year plus investment time frame.
Nickel price and inventory
Nickel is only just recovering now from a severe bear market from 2012 to early 2016 (low of just below US$4/lb), with the price moving up in 2017 and reaching USD 6.10/lb by late January 2018. Inventory is finally slowly declining and price is recovering. Whilst some Philippine supply is expected to come back, the demand picture is strengthening as global economic growth picks up and the mass market EV boom begins.
In 2017 nickel prices rose 27.51% on the back of solid Chinese stainless steel demand. I expect something similar each year from now until 2020, as demand is steadily boosted from the EV boom. Full Story
There is no absurdity so palpable but that it may be firmly planted in the human head if you only begin to inculcate it before the age of five, by constantly repeating it with an air of great solemnity. Arthur Schopenhauer
Gold bottomed in 2002, and it took nine years for its trade to a high of roughly $1900 (September 2011). Contrast that to Bitcoin, in less than 1/3rd of the amount of time it is showing gains of more than 11,000%. It took nine years for Gold to show gains of roughly 700% and Gold has given up a substantial portion of those gains.
We bailed out of Gold in 2011 for two reasons:
Gold was trading in the extremely overbought ranges, and the Gold Bug Camp could not contain their glee; they thought the sky was the limit. Instead, they found out that the Ground was a lot closer.
The masses were not embracing Gold, and they refused to treat or view it as a currency.
Only those from the hard money camp continued to believe that Gold was a currency, but sadly their numbers are dwindling with the passage of each day. The masses view Bitcoin as cool and secure; a feat Gold has struggled to achieve and is not likely to achieve in the foreseeable future. Whether this is true or not, hardly matters for when it comes to investing, perceptions are all that matter.
Does this mean the precious metals sector is dead?
Well, that depends on what one means by dead. Gold has performed abysmally since (it topped out) 2011. The money supply soared, and Gold tanked, not exactly a good sign. In doing the opposite of what was expected from it, Gold cemented the view that it was an ancient relic that has no place in today’s monetary system. We are speaking in terms of Mass Perception. What we think, matters not; we follow trends, and we don’t waste time trying to look at things from a personal vantage point. There are many reasons for Gold’s underperformance after 2011; one of them was the “velocity of the money supply” which all but stalled after 2011. However, the masses don’t waste time on details like this. They look for simple cause and effect answers. Money supply soared, Gold did nothing, and hence Gold is a waste of time. A bit simplistic but that’s the mass mindset for you. However, looking forward some factors could limit Gold’s lustre
Demand for Gold continues to drop
India’s gold consumption is likely to drop to its lowest in eight years in 2017, hit by government moves to make bullion trading more transparent and by faltering demand from some rural areas, the World Gold Council (WGC) said on Thursday.
Evidence of weaker appetite in a country where gold is used in everything from investment to wedding gifts could drag on global prices that have been hovering near their highest in three weeks. India is the word’s No 2 consumer of gold behind China.Full Story
The Dollar appears to be putting in a base
The dollar topped in early 2017 and what did Gold do? Absolutely nothing; instead of surging to new highs it could not even trade past its July 2016 highs. The dollar, in contrast, has been going through a well deserved period of consolidation after mounting a stunning rally that started in 2011. It tested support and held, and as long as it does not close below 90 on a monthly basis, the outlook will remain bullish. Consequently, a monthly close above 94.50 will open the possibility for a test of the old highs.
Conclusion
The dollar is getting ready to mount a rally, demand for Gold is declining, and Gold has been unable to trade past $1350 even in the face of a weaker dollar. Then we have the Bitcoin market, which the masses (especially millennia’s) find to be a lot more exciting and rewarding than Gold. All these factors don’t bode well for Gold. It appears that Gold is likely to test the 1000 ranges unless it decides to diverge and trend upwards in tandem with the dollar. Bitcoin, on the other hand, is now in the feeding frenzy stage, so this market is ripe for a correction. However, the upward move is still not over. After a hard correction, Bitcoin is likely to resume its upward trend.
Gold will probably never experience a move akin to that of Bitcoin, but that does not mean it won’t make for a good investment one day. For now, the trend is neutral; a weekly close below $1100 will darken the outlook for Gold, but a monthly close above $1350 will indicate that Gold is ready to trend higher.
Word to the wise
Never fall in love with any investment. In the end, it’s the trend that you should pay attention to, for no sector can trend upwards forever. The odds of the Dow trading to 29,000 are far better than of Gold trading to $1900.
