As I’ve explained before in this column, every security that can be traded has an uncannily regular cycle; a kind of ‘circle of life’, where things perpetually fluctuate between bear and bull markets. That’s why there’s always money to be made, whether you’re buying or selling, bull or bear.
This week let’s take a look at where this cycle is for the overall stock market and precious metals. Is one waiting in the wings while another fades…?
Below is the long-term chart of what is probably the benchmark index for Planet Earth: The S+P 500:
This is the chart that simply doesn’t want to go down. For the last few weeks I’ve been saying the market is at least due for a healthy correction but it doesn’t hear me. The curvy blue line is the long-term average price. As you can see above, the S+P simply will not go below that average price line- a bullish sign. In fact, the S+P could take a fall right down to where that average price line is- at 1,871- and still be in a healthy uptrend.
There’s lots of noise out there about a market crash, and anything can happen for sure, but there’s no evidence of it here currently. All the noise you’re hearing about a crash is simply that: ‘noise’. But a healthy correction (no lower than 1871) would be most welcome.
Now let’s turn to the unfolding story I’ve been covering in precious metals- the ‘bull market in waiting’…
First let’s look at gold:
Gold has followed through nicely since I commented on this potentially explosive bullish set up- just a few dollars away from the trigger to a renewed bull market in gold. The market always does a good job of shaking off the ‘weak money’- the people who are late to the party- and that’s what happened in that big drop you see there in 2013. But gold found a new ‘floor’ around $1,150 (an ounce), and is looking to spring up from it. Price is above the moving average line (wavy blue line) and that line is turning up.
And gold’s baby brother- silver- is following suit:
You can see the base silver formed around the $18 mark, and after a triple bottom bounce that’s lasted a year, silver looks to be pushing higher. If it can get comfortably above $23 it should be ‘game on’.
Best
Jim
The author has an interest in the securities discussed in this article. Source of charts: stockcharts.com
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