It’s a holiday today and, over the last couple of weeks, there hasn’t been much market action to speak of. Lots of background noise to digest, but the markets aren’t giving much in the way of clues.
Or maybe they are?
In this week’s video, I tell you about the telltale signs I’m watching for in gold, silver, the dollar and the Dow.
P.S. The February issue of Real Wealth Report published last Friday. Don’t miss it — I have three new recommendations I’ve made and more. Join now by clicking here.
Good morning, this is Larry Edelson with my Uncommon Wisdom video market update for Monday, February 20. Today’s a holiday, so there’s not much happening in any of the markets around the world, and of course the U.S. markets are closed. But we’re also likely to see light trading in the overseas markets.
I’m actually recording this ahead of the holiday due to my travel schedule. So what I’m talking about today may be a few days behind the actual market action, but I don’t expect much to happen.
Right now, we’re seeing a lot of sideways action in virtually all markets. The reason for that is primarily there is just too much background noise going on with Europe’s crisis, with the riots and Greece’s crisis, with Iran’s saber-rattling, and lots of mixed economic news coming out all over the globe. So the markets are really digesting this, trying to determine which way to go.
Let’s go to the gold chart. This is the gold chart that I showed you a couple of weeks ago. You can see gold is still below resistance here.
It might pop a little bit higher in here, but it’s going to find incredible resistance between $1,780 and $1,805. I still believe the next big move is to the downside, so I’m maintaining my bearish view here.
Now let’s take a look at silver. Silver, largely the same thing. It’s trying to hold its gains and probably will test a little bit higher, some overhead resistance. But here too, all my cycle work, my momentum indicators, and my other technical indicators indicate that the next big move is to the downside and we will take out this low in the $26 range. I know it’s trying all of our patience, but I maintain my bearish view on silver.
Now let’s take a look at the dollar. The dollar index is largely what most of the markets are waiting for here. We did start to see what I indicated to you previously — a bounce off of support and the Dollar Index is now starting to rally again. That’s good news for the bearish position.
I’m not a bull on the dollar. I do expect a continued rally in the short term for the dollar against the euro. Long term, the dollar remains in a very precarious situation.
Now here’s my chart of the Dow, updating from the last time. We’re still at this triple-top formation here.
The Dow’s strength is actually quite interesting to me, and its strength is surprising me in the sense that it’s acting stronger than I expected … earlier than I expected.
As you know, I expect a roaring new bull market in the Dow Industrials and the S&P 500 stocks as the dollar goes into another tailspin and as Europe continues to go down the toilet.
A lot of capital from Europe is going to head into the U.S. stock market. I do think it’s a bit premature and most of my models continue to remain bearish … looking for another sharp pullback in the Dow.
I don’t think at this point we will get down to 9,100, but I would not be surprised to see 10,600 again, 10,800, the low 11,000 before the next leg up in stocks really begins, which will take the Dow to well over 20,000 over the next few years.
So having said that, enjoy the rest of the holiday today. And stay tuned to everything I publish and comment on this week.