I don’t act in the capacity of an adviser. I just report the facts as they are presented to me from expert sources in the financial world and financial indicators that are published for anyone to see.
My technical trading skills are nothing but a tool to help you and I, as a trader, improve the probability of a successful trade. No one gets the price direction right all of the time, especially today with the wide scale interventions in the markets from the central banks.
But I had someone tell me recently, ‘no-one can predict where the stock market is going; if they could, they would all be billionaires’. Well, I can tell you that people predict market direction all the time using statistical analysis (Technical Tools) and fundamental analysis (Accounting Tools).
Ever heard of Warren Buffet, one of the most famous billionaires in the investing world? You don’t think he predicts where the direction of his investment is going before he invests?
There are plenty of billionaires that manage hedge funds, commercial money funds, mutual funds, ETF’s, etc, that predict price direction all the time. They may not be right all the time, but they get it right most of the time and they always hedge against the possibility of being wrong.
It’s really not that difficult to learn, once you understand the concept. The successful traders are contrarian traders. That means they make their investment when everybody else hates it. Then they ride the wave as everybody else discovers the trade and jumps in.
Sentiment towards gold cannot get much worse. Gold and silver are hated and that’s the best time to get into a trade. When there are no buyers, the price bottoms and if you get in at the bottom, all you have to do is sit back and enjoy the ride when it changes direction.
There is a huge increase in demand for physical gold recently due to the economic instability we are witnessing around the globe, but it’s not enough to affect the paper markets which are being controlled and manipulated by the central banks; at least not yet.
Let’s get back to predictions. I believe now is the single best time to trade precious metals, as long as you’re in it for the long haul. We are near the bottom. Do I think it could possibly go lower? Yes, but even if it does, it will be a shallow dip in comparison to the upside that is coming when investors lose confidence in the system and that’s coming soon.
I’ll go on record. I’m sticking to my prediction for the stock market to roll over into a bear market before the end of the year, probably October, and crash completely into 2016. I think all that has been earned over the last 7 years will be lost and people who keep their money in the market will have lost almost a decade of gains.
I also believe that at the same time, the current bear market in precious metals will reverse and skyrocket to record highs. The naysayers will be stunned by the price movement as the world economies crash.
Our time is coming soon. Be prepared to prosper.
Until next week,
Richard Russell Warns Panic Will Set In If We Get Confirmation That Economist John William’s Dire Prediction Is Now Unfolding
- Last Time Industrial Production Activity Was This Weak, The U.S. Economy Was in Collapse
– Second-Quarter Production Contracted at a 1.4% (-1.4%)
Precious Metal Stocks: (RGLD) (SLW) (GDX) (SIL) (GLD) (PHYS) (PSLV)
These securities will provide massive gains when the market decides to break loose. Buy the stock outright or trade late 2016 CALL options.
Stock Market Indices: (SPY) (QQQ)
Look at the chart of the Dow Jones below. Notice how the peak was reached in January 2015 and it hasn’t gone anywhere since? It’s just bounced off of resistance for the past 6 months. This is a sure sign of a market about to roll over.
The best time to short the stock market is when the price drops below the lower trend line. That break will signal a move down into a bear market. I expect that in September, if not sooner. If you are long the stock market, then that trend line break is where you should put a hard stop loss. That way, you’re out before all hell breaks loose.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude oil is falling. We need to wait for a bottom before making any moves in this sector. (See commodities comments below.)
Financial Stocks: (XLF) (IYF)
I’m staying away from financial stocks at this time, until after the S&P correction. Once this economy implodes, financial stocks are going to lead the way. I will place short positions at that time.
Biotech: (BIB) (KITE) (IBB)
Biotech’s have been in an uptrend along with the stock market, however, just as a rising tide raises all ships, a receding tide will lower them as well. I think we will see a correction in the biotech sector along with the impending stock market correction.
Commodities: (FCX) (JJG) (DBA) (FM)
Commodities will move higher if we have inflation, however, I think deflation will come first as the global economies crash and then we should have inflation after the central banks begin printing more money to try to stem the crash in the markets. I will just watch these until I see a signal of a move up in price and a break of the downtrend line.
I’ve added this new sector to the trading section because I think insurance is one of the safest investments and best run businesses in the world. (IAK) iShares Dow Jones U.S. Insurance Fund is an ETF that holds big-name insurance companies, like MetLife, AIG, and Aflac, etc. (See comment below from The Growth Stock Wire.)
Insurance stocks are also a great way to play inflation defense. Insurance companies take in current dollars… and agree to pay out claims in "future dollars." Should inflation gradually erode the value of the U.S. dollar as some analysts expect, well-managed insurance companies will prosper.
Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. The information included in this report is for educational purposes and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data sources believed to be reliable, but there is no guarantee as to its accuracy. L. H. Marks does not represent himself as acting in the capacity of a licensed investment counselor or manager for funds that are not under his direct control and fiduciary responsibility. L. H. Marks will not provide you with any personally tailored advice concerning the nature, potential value or suitability of any particular security, portfolio or securities transaction, investment strategy or other matter. From time to time, L. H. Marks may hold positions in securities mentioned, but are under no obligation to hold such position.