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Possible terminal wedge in the S&P 500 to end this powerful move that went beyond my expectations, to be sure. This termination pattern, were it to be validated by a breakdown, is still likely to result in a re-test of the highs (potentially with slight overshoot) to set up a momentum divergence, as this move higher has been too strong to just collapse immediately.
Anyway, here's my thoughts of what may happen, first on a 4 month 60 minute intraday-chart of the S&P 500 ($SPX) and then on a 10 day 15 minute intraday chart:
The pending correction will likely take everything with it but the US Dollar and government bonds, as Gold, commodities, stocks and corporate bonds have all been rising together and animal spirits are at an insane high right now.
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9 comments:
Adam,
on a very macro market dynamics level here...
One big signal that things are changing I'm waiting for is GBP decoupling from equities and crude oil.
The argument that the Dollar is hyperinflationary toast holds no water until Pound, and to a lesser extent, Euro, actually shows it has some life of its own.
If the US is going to experience hyperinflation, what the hell will Great Britain experience?
Anon-
Exactly. I am a deflationist (for this cycle) and expect a big rise in the US Dollar to get started in the next month or so.
Great Britain is in a worse situation than the US because the US has the reserve currency! All fiat currencies are sinking relative to Gold and it is Gold, the true form of money on this planet, that will restore confidence to the system.
Adam,
btw, Anonymous was me earlier. Forgot to add my name.
If you had to speculate and choose only one as investment: Physical gold or silver?
I don't know if you have discussed the fundamentals of silver on the blog already, but I've read that silver is one of the scarcest commodities around.
I am absolutely stunned by the latest market action.
The worse the fundamentals, the higher the market goes.
To which extent is "manipulation" here at play? And is it sustainable?
Personally, I think the correction will start with a bang....to take as many as possible by suprise, no?
The fact that we basically went up straight, makes me believe that the fall will be fast and furious.
alexander
Is this market ever gonna go down again?
I am starting to have doubts?
There are 100s of reasons this market should be 30%....yet it just keeps on getting higher!
About silver. Silver above ground is scarce. Silver in the ground is not. I don't like it as much as I like gold. To me it's about 25 percent monetary metal and 75 percent industrial. I own physical and love it. Putting big money in physical silver means you better have space in your house. Meanwhile 50k in gold will fit in your pocket. Just because it's a commodity, I like silver. Should be $18 an ounce in my opinion. Maybe a few bucks higher.
khalid-
I would choose Gold, hands down. Once deflationary forces have run their course and commodities have bottomed, then I will be more interested in adding to my small physical silver holdings. As an anon comment mentioned, tough to store physical silver at current prices.
Been reading here only a few days--
I like the views--agree with most--
IMO-Gold--Silv-USD--Yen--
Will be the long term safehaven deflation plays--
Also think gold will fall at least initialy,with the market,then start competing with USD and YEN--
If it gets the fear really ramped up--then silver should join the party--jmo--
good site--thanks for this
Adam,
I have been following your blogger for quite sometimes now. Found many useful ideas. Decided to join for discussion.
You have a very unique style, sit on side line waiting, do you think pursuing perfection in investment is a very risk business too. Because market never gives people what they are waiting for? If you think Gold mining stocks or Bullion are sound investment, why not accumulating them on weakness...
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