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Sample MarketGauge Stock Market Outlook: March 23, 2011

**Here’s another sample of MarketGauge’s Market Outlook newsletter.  Given the amount of global political and economic news affecting the stock market, we thought this latest newsletter from MarketGauge is a worthwhile read for both the big picture and technical analysis of market conditions and trade ideas.

March 23, 2011

by Keith Schneider
According to Venezula President, Hugo Chavez, life on Mars was destroyed by Capitalists. He believes that those same guys moved here and are going to do the same thing. He could be right, if one looks at the market’s behavior today and trusts that a modicum of logic should prevail while trading.

Today we had so much bad news that it is mind boggling to see the market close as strong as it did. Bad housing starts, continued unrest in the Mid-East, a terrorist attack in Israel, higher oil prices, record setting gold prices, and food embargoes because of nuclear contamination all were headlines today.

The icing on the cake was that the 9.0 earthquake that devastated Japan will cost upwards of 300 billion (dollars… not yen). Food is unsafe to eat in large areas of Japan, including Tokyo. The US Equity Market closed up across the board with good volume. As a student of the markets, I call upon the old adage, “Horrible news/good action=Bullish.” This, however, is extreme.

SPY (S&P 500), DIA (Dow Jones), IWM (Russell 2000) and QQQQ (NASDQ 100) Indexes

The market phases of the key U.S Equity indexes are quite divergent. The NASDQ (QQQ’s) and the SPY (S&P 500) are the weakest and are in warning phases, while the DIA (Dow Industrials) and IWM (Russell 2000) are back into bullish phases after flirting with warnings. We turned from a 1% morning decline in the weakest index to a modest +.47% gain in spite of several pieces of news that should have brought this market down big time. At this point in time we are now down since the start of the year.

Market Internals

VIX (sentiment): This sentiment indicator flashed a sell signal after moving above the 200 day MA for a few days and then with the rally off the panic low, moved back into bullish territory, but in an overall weaker position before the Mid-East crises began. This indicator is cautiously bullish.

Accumulation/Distribution Volume: The market responded to all the news with several bearish distribution days and is currently on a sell signal with over 4 days of distribution in all key indexes. However to add another piece of data to the mix is that last week’s 240 plus decline in the Dow had the earmarks of a selling climax.

Sectors

Gold (GLD): Gold’s closing price is on new all-time highs today, and looks poised for another big leg up. If we can take out the 5 month intraday high, we could move up another $100-$125 quickly.

Oil (OIL) and Coal (KOL): The Mid-East unrest and current disruption of Libya oil production along with the viability of nuclear power in question put continued pressure on energy prices. This includes coal, crude and natural gas.

New Economy Stocks: The most interesting charts playing out in terms of leading stocks representing the web economy are both NFLX and BIDU. BIDU is at all-time new highs and NFLX keeps roaring. Other leaders such as AMZN GOOG and AAPL performed well today but have been a drag overall on the NASDQ indexes. All look a bit oversold, so they could bounce.

Netflix Nasdaq Tradestation Chart Technical Analysis

Opening Range Strategies

Today we featured an energy play BTU in our live trading room. It was a fairly classic pattern with the daily chart pattern very strong and we bought an OR breakout but waited for the stock to clear R1 (a floor trader pivot number) before entering. By the end of the day we achieved our first profit target as the stock ended up over 3%.

BTU stock opening range breakout trade

Good Night and Good Trading.

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The 5 year massive bull run in Gold and Gold Stocks continues

by: Dave Banister- TheMarketTrendForecast.com

Last August I penned an article predicting a massive five year bull run in gold and gold stocks.  I outlined my reasoning and compared this 13 year period from 2001 to 2014 to the tech stock bull from 1986-1999.  .

In February of this year, I again wrote an article for Kitco.com explaining the 13 year Gold Bull still had a lot more room to run.  At the time Gold had pulled back to 1040-1070 windows and I mentioned that “smart money would be accumulating” and we should look for $1300-$1325 as the objective.  That brings up forward to October of 2010, with Gold running to $1350 as recently as this morning.

We have a huge rally because we are in the 2nd year of this final 5 year run I predicted, and this is when the general investing public becomes “aware” of the bull market.  They miss the first five years from 2001-2006, and then while we consolidate for three years from 2006-2009 they fall asleep.  It is not until Gold breaks all time highs that people wake up and start buying.  This is typical in a super bull cycle, the behavioral patterns are always the same with the herd.  I based my forecast on herd mentality, whether bullish or bearish.

I am now looking for Gold to continue to run during this trampling into the asset from the herds of investors to about $1480-$1520 on this leg before we have a strong correction. That figure is not taken out of the thin air, it’s an Elliott Wave based pattern that I recognize and forecast in advance.  Subscribers to my website are exposed to my outside the box forecasts on the SP 500 and Gold all the time.  Usually it starts with them not believing, and later they wonder how I arrived at the predictions. To wit, on August 30th I predicted a huge breakout in Silver to $26-$29 per ounce when it was at $18.75 per ounce.  This was purely based on the Elliott Wave pattern and the lack of awareness by the investing public at the time of the Silver bull.  It is also “poor man’s Gold”, and as simple as that sounds, it is what drives the herd of investors to invest. Look for Silver to continue higher to those target zones before correcting.

Many investors who are briefly exposed to Elliott Wave Theory assume that a certain well known forecaster must be the only person in the world who uses it.  Since he is wrong more often than he is right, people toss out Elliott Waves as mad science.  That is a mistake and why I continually write articles for Kitco using my Elliott Wave methods to forecast SP 500 and Gold moves in advance.  Look for Gold and Gold stocks to continue powering higher than people can imagine over the next four years, and pick up some darts and throw them at some juniors while you’re at it.

You can check out our forecast service at www.MarketTrendForecast.com, consider subscribing ahead of our rate increase as well. Best to you and your trading!


More Forensic Evidence of Gold & Silver Price Manipulation

The following is a summary of an article that was taken from Market Force Analysis’s website where they did a simple linear regression comparing gold and silver for the past 7 years.  The study has definitely confirmed what most traders have known for these past few years…that gold and silver were heavily correlated in these past 7 years, but the data also brings up suspicion that this relationship between gold and silver is actually heavily algorithmic due to the high r-squared of > 0.91 for the past 3 yrs and an r-squared of 0.96 for 2003-2008…almost perfect correlation for two metals that have different functionality and market uses.  It’s a heavily programmed trade that does not correlate the fundamental pricing of the commodity itself, as both metals are heavily “suppressed” by the industry’s heavy algorithmic trading schemes. The regression below displays the cross-plot between silver and gold.  The black line is from 2003-2008 and the green line is from 2008-2010.

Figure 1: Cross-plot of Silver versus Gold 2003-2010 (from More Forensic Evidence of Gold & Silver Price Manipulation by Adrian Douglas of http://www.marketforceanalysis.com)

The current trend that we are seeing in silver might be a first sign of de-leveraging (well, actually de-correlating) from gold, and might finally make for a better trading opportunity than gold.

Read the article here.