The next market move

samsonLast week I explained how there could well be more pullbacks lurking out there, and how that would be healthy as long as the markets stayed above their new area of support, their ‘floor’.

Low and behold, we had that pull back- a rough week for sure as chatter about The Fed easing up on the money printing escalated. The Fed meets this week so we will see.

But what’s the market actually saying about where it’s at now…?

Last week I also explained how the S+P and Dow Jones had broken out of their channels, and found a new floor. After that break out we saw the indexes pull back to test this new floor, and they bounced off nicely.

Here’s the updated chart:

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As you can see, this is another test of the new floor, and so we’re at another important inflection point… that no doubt rests on what The Fed does/says this week.

For a bigger picture, look at this longer term chart for an uptrend:

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So the point here is that we must take last week’s action as being simply another pull back until proven otherwise (by this new ‘floor’ breaking). And as you can see from the long term chart, this market is a long way from breaking down.

Anything is possible with these imbeciles in Washington so taking a guess here would perhaps be risky. But if you put a gun to my head my guess would be that there will be no tapering announced. This would send markets into the customary Christmas rally as they bounce away from this new floor. The real economy on Main Street is still fragile, and I would hope that The Fed knows this.

Gold miners are, conversely, not doing as well. Currently, the market sees neither deflation or inflation, both of which would be bullish for gold (deflation would cause panic, and gold would do well from that too). I don’t know where the market does its grocery shopping, but I for one DO see inflation! But it’s not my opinion that matters…

As you can see from this chart, gold miners recently broke through their floor of support at $23, and seem to have found a new floor at $21:

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Many pundits have been proclaiming the bottom to be in for gold for a while now. The charts haven’t given me a green light though, which is why I held off making that call. Things can go lower than people imagine. But watch this chart of GDX this week- if more money printing is announced, gold miners could be pushed back above $23, and that would at least get things back on track so gold can find a TRUE bottom.

Best,

Jim.

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