Many think Europe’s past its problems and, therefore, so are the markets. I don’t think so. Not by a long shot.
To see why, you’ll want to listen to my comments and take a look at the charts I have for you this week.
Best wishes,
Larry
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Video Transcript
Good morning. This is Larry Edelson with my Uncommon Wisdom video market update for Monday, July 9.
There’s been quite a bit of action since I last sent you a video market update. Most of it, of course, the turbulence surrounding Europe and its sovereign-debt crisis.
There seems to be a new agreement in Europe that has caused some short-term rallies in the market. However, the latest agreement from Europe will probably fail, and fail rather soon, because there’s really no way the German citizens are also going to agree with Chancellor Merkel’s concession that Germany will share in European sovereign-debt liabilities and agree to directly fund banks.
There are a lot of big details about the latest agreement. In short, I don’t see it working out, and I do believe the recent downtrends that we’ve seen in most markets will soon resume.
Let’s now go to the charts.
Weekly chart of gold: You can see that gold made a low down at $1,522, $1,530 area, $1,545 support level. Then it rallied a bit on the news out of Europe a week and a half ago. And already that rally is starting to fade quite a bit.
It isn’t impossible that we could see gold move up — even test $1,700, but the downtrend remains intact, and the bias according to all of my signals remains on the downside for gold. I still believe quite strongly we’ll see a test of at least the $1,400 level in the weeks ahead.
Weekly chart of silver: Pretty much the same thing. We did fall the week before the latest European crisis meeting down below this uptrend line. After the news, silver rallied back up to test that line; it’s going to now kiss it good-bye.
And silver should fall quite sharply in the weeks ahead. It will remain prone to rally with some sharp, short-term snap-back rallies. But the overall trend for silver remains down on a short- and intermediate-term basis.
The U.S. Dollar: The dollar did correct a little bit and pull back. It’s holding support as you can see. Just before I started recording this video, the euro started to tank again. So I do expect a new rally in the dollar as the European crisis rolls on.
Dow Industrials: Holding firm, we’ve seen some pretty decent sell-offs here but snap-back rallies as well. That’s a testament to what I’ve been telling you all along: That long term, the Dow Industrials and S&P 500 remain in a very healthy long-term bull market.
However, it’s not ready to take off to the upside. I would not be surprised that we still see consolidation and a move down to 11,500, 11,000 in the Dow before we really take off to the upside.
So don’t go all in on the broader stock markets just yet. And certainly not in Europe. The only market that’s really buoyant right now is, surprisingly, the U.S. market, because it’s the recipient of so much cash coming out of European sovereign bonds and European markets that are looking for safe places to invest.
Naturally that money is largely going into the U.S. bond markets right now — from the frying pan into the fire, so to speak. But it is also going to U.S. stock markets, which is lending that long-term support to the Dow Industrials.
That’s it. Please stay tuned to all my writings and I’ll talk to you again soon.
{ 14 comments… read them below or add one }
I have been a subscriber to both Larry’s newsletter and also Martin’s for years. I am not really sure I re-subscribed to Money and Markets last time my subscription expired, but I did subscribe to Real Wealth. I am not receiving hard copies of Larry’s investmnt newsletter, and have not for some time. I can access the newsletter online, but prefer hard copies. Can I get the hard copies re-started ?? J. Rodrigue
Someone will be in touch with you soon, Whitney. Thanks for reaching out!
Hello Larry,
Thanks for this. I wish that your video updates were twice weekly in these nerve-racking market conditions. Could you please regularly include your analysis and predictions for crude oil, along with gold, silver, and the Dow? You sometimes mention crude oil, but less regularly. Thanks!
Best wishes
Mikjall
Larry,
You seem to always be out of the country to Asia, Thailand area. Have you moved out of the country, and taken your wealth with you or are you just on semi-permanent vacation? If you have left the country why should I support you?
Scott Gordon
Scott, Larry left the country because he knows what’s coming and he wants to keep his money . He doesn’t talk about it but Martin Armstrong does … check him out … Armstrong I mean . It’s quite an eye-opener .
Scott: I may be wrong but I believe Larry is an American currently living in Thailand. Most people subscribe because they think he has very good insight into the markets. I look to Larry for what the stock market and gold market might be doing. He is excellent at what he does. I think that where he decides to live at any point in time is his decision just as where you decide to live is your decision.
If you have the resources to support people providing advice only if they live in the US, let me know. I live in the US and would be glad to provide you with investment advice for a fee. My advice would not be as good as Larry’s but you would be supporting someone living in the US. You are free to spend your money as you see fit.
If I had the resources there are several places around the world I might enjoy living for a period of time. I would still be an American who was temporarily living abroad.
Larry E. uses the terms “short term”, “medium term” and “long term” frequently (as do all market analysts) but I have not been able to understood adequately the general length of these respective time periods; e.g., is “short term” two weeks? Four weeks? Three to six weeks? You get my point.
Can someone please enlighten me?
To Robert ..enlighten you ? I think it’s impossble . These days short term can be shorter than usual … like a day or 2 and than it reverses again… 1 market that is for sure in a bull market is … volatlity … long term !!!
The dow may go up a lot, but then again it may go down in the meantime, but not necessarily, as it could also go up, but probably won’t just yet, but then again, it might. Gold is going down in the short term, maybe, because it could also go up, but not necessarily, as it could slide a bit, perhaps, but not for sure, maybe.
Silver, oh that is bound to rise in the long term, or maybe fall, but not necessarily, as it could rise in a short term rally then fall, or it could fall sharply then rise, but only partly, maybe, but not necessarily, as it could rally in the meantime, maybe, but also could slide sharply overnight before it rises again, maybe, but not necessarily.
Larry has made all this abundantly clear, but for some reason you folks still don’t get it!
I am still holding SPXU that I bought last fall at $89 (post reverse split price) per your recommendation then that the market would likely tank to the 9000 level. Would you personally average down and buy more at this time? Or is the chance the market will tank becoming less and less likely as your thoughts on the market level have changed since the June ’12 newsletter that said to look for the Dow to fall to the 10,000 support level?
short, mid, long is usually vague enough so that it can be retconned at a later date to “prove” that all his 20 year history of predictions have been spot on. Usually you have to learn to do this yourself and no rely on these guys. These blog posts are for “entertainment value” only. Do not use them to invest real money.
Hi IOU — the editors aim to give solid, broader-market outlooks and overarching strategies that can help you in your individual investing decisions. But for specific trading opportunities, plus information about how to manage those positions and when to grab profits or otherwise hit the exits, you can subscribe to any of the editors’ individual services. You can check those out here:
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Hi Larry.
I am a beginner at technical analysis and was wondering about how to know when a stock or commodity is changing its trend. You said that from your technical analysis, gold is still on its down trend. What would it take for you to think that a stock or commodity that is clearly in a down trend, has reversed course and is on an up trend again?
Mark
I am thinking of selling puts on GLD or some other PM short ETF to be positioned for a rebound. What are your thoughts on this strategy and can you give some realistic price targets in a 6 mo time frame? Thanks.