I have never seen the markets coil up in tight trading ranges in late September like they’re doing this year. It can mean only one thing: Huge, explosive market moves are right around the corner.
Be sure to see my video update for this week.
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Good morning. This is Larry Edelson with my Uncommon Wisdom video market update for Monday, October 1.
We are continuing to see a rather tight but volatile market, with all the markets literally coiling up in springs. It’s highly unusual for the September period to see such sideways, but volatile, tightening trading markets with volume in most markets literally falling off a cliff.
So, I continue to be very certain that we are on the cusp of very big moves in many markets. And most likely, those moves will not be the moves you’ve seen recently.
I still remain bearish on gold, looking for a top in the stock market, and looking for a bottom in the dollar.
We are getting close to the point where there would be the potential for me to reverse those opinions, but we are not there yet. And I remain (convinced) with what my models are saying — which is to look for a top in gold, look for a top in stocks, and look for a bottom in the U.S. dollar.
Gold: As I wrote recently and you can see here on this chart, even (with) the latest rally — which occurred over Thursday and Friday of last week — gold has yet to take out its March 2012 high or its November 2011 high.
And given all the money-printing that’s going on — with China jumping in on the fray this past week — that’s pretty amazing.
That’s a subtle sign that we may be reaching a top here, and all this money-printing is not going to be the catalyst that sends gold to new record highs.
Ultimately, it will be — it was in the first phase of gold’s bull market. But we may have to wait for gold to really take off until the sovereign-debt crisis hits the United States. That’s the big atom bomb for the financial markets.
And we are not there yet. Most of the sovereign-debt worries are still, of course, focused on Europe.
Silver: Silver is pretty much the same. Silver hasn’t broken out yet despite all this money-printing. That’s somewhat not surprising because silver is more of an industrial metal; but nevertheless, silver has not broken out yet.
U.S. Dollar Index: The dollar is indeed trying to find a bottom in here. I believe it certainly will very soon. The euro has sold off rather sharply last week, and that’s lending support to the dollar. I’m starting to get some preliminary buy signals in the short- and intermediate-term for the dollar, so please stay tuned to my work there.
Dow Industrials: The Dow Industrials are starting to show some signs of weakness. This is a longer-term chart here. But you can still see we haven’t critically broken out yet. The Dow requires a close above the 14,200 level and we’re not there yet.
There’s nothing wrong with buying a breakout on the highs. In fact, that’s what you want to do. There are some times when buying low, so to speak, and selling high doesn’t work. There are times when it’s important to buy only breakouts, for example, of new highs.
Having said that, I believe we are really critically close to some major market turns in here.
So stay tuned to all of my work. Have a good week. This is Larry.