First off, happy holidays! I wish you the best for the coming year.
You’ll also want to view my video update for this week. Though it’s on light volume, holiday trading is dominating the action — there are always hidden messages to be found in market action. That’s why I continue to watch all the key markets very closely.
In this video update, you’ll find my recent comments on the action in the gold market, in silver, the dollar, and the Dow Industrials. Don’t miss it!
Best wishes for a happy, healthy and wealthy new year!
P.S. One way to get off to a great start for 2012 is to do what members of my Resource Windfall Trader have been doing — raking in the profits! In the last 12 months, for instance, my track record shows 18 closed trades held for an average of 44 days, for an average gain of over 45%! That includes the inevitable losers that occur.
And it includes some big winners as well, such as 170% gains on the plunge in the euro … 233% in just over a month as gold slumped … and over 100% in just two months as the stock market slid, and more!
BEST OF ALL, to start the new year off on the right foot, you can now join Resource Windfall Trader for a full 30% off the regular price. So go ahead — start off the new year with all the profit potential you can muster up by clicking here right now!
Good morning, this is Larry Edelson for my Uncommon Wisdom market video update for Monday, December 26. First off, I hope you had a very Merry Christmas. And, of course, a very Happy New Year coming up. I wish you nothing but the best for your health and wealth for yourself, your family and friends for the coming New Year.
This is Monday the day after Christmas so the market action is very light of course, and additional pre-holiday, pre-New Year’s type of trading action, so I’m going to keep this video a bit brief because most of my in-depth analysis has been in my written comments in my column recently.
Having said that, please stay tuned to my columns. As light as the holiday trading may seem, it is important during this period to keep your eyes on the market. Sometimes when it appears as if nothing is happening, the underlying forces are actually gathering strength for the next big moves. Having said that, let’s go right to the charts.
I want to go to the gold chart first: Over the last couple of weeks, we’ve seen that big sharp decline that I was forecasting in gold. We’ve since seen a rather modest bounce back up above $1,600.
We did get the important sell signal by closing below $1,610 last week. I now fully expect gold to continue lower. We should have another leg lower very soon, probably even before New Year’s or immediately thereafter testing support down at the $1,500 level and down at the $1,480 level.
At that point I do expect gold to break $1,480 and move even lower. I don’t want to get too far ahead of myself right now or ahead of the market so let’s leave it at that.
I want you to look lower in gold and continue to hedge up your positions as I’ve recommended and suggested in my Real Wealth Report and suggestions I’ve made in Uncommon Wisdom.
Let’s now go to silver: Silver is looking pathetic. It continues to put in another plunge down to just below $28. We rallied back up very modestly like I just showed you in gold. But you can see in this silver chart how there is very little in the way of support until we get down to $20. I do have some system support $27, $25, and $23. I expect $27 to give way.
At a minimum I expect $25 to be tested and very likely $23, possibly even a little bit lower. And that should come during the month of January. So please continue to refrain from purchasing any more silver until we get to these lower levels.
Now let’s go to the U.S. Dollar Index: The Dollar Index has pretty much been doing largely what I expected. We rallied up above the 81 level, we pulled back and tested support at the 80 level, and now it looks like we should move up to the next resistance level at around 83.
This is all a result of the continuing problems in Europe. Europe has done nothing to resolve its sovereign debt crisis and it continues to deepen. So that is sending money basically into the dollar, which is bolstering the dollar in the short term. Keep in mind, the dollar long term remains very, very bearish.
Now, the Dow Industrials: I find the Dow Industrials very, very interesting. Its action has been really fascinating to me. We came out of this low last month and rallied sharply up to the 12,252, 12,232 level … which I indentified for you in my Real Wealth Report and my Uncommon Wisdom as a very important year-end resistance level, with the Dow so far having been unable to penetrate it.
I am looking back down in the Dow to 11,000, then 10,300, and even 9,100 in the first quarter of 2012.
However, the attraction of the market to the 12,232 level is telling me something very interesting on a longer term basis. To me it’s confirming the longer term hidden strength in the Dow Industrials, which will eventually see it move to new record highs and inflate higher with gold and commodities when the sovereign debt crisis really hits the United States.
You saw the opening act of it in the summer with the budget crisis and the debt ceiling talks — that was just the opening act. We are now seeing the sovereign debt crisis fully infect Europe and soon it will fully infect the United States. And at that point, believe it or not, even if the economy continues to deteriorate we will see a move higher in the Dow Industrials to new record highs.
I repeat, between 1932 and 1937 as the U.S. economy continued to go downhill during the Great Depression, the U.S. stock market rallied almost 400% on the back of a sovereign debt crisis and defaults in Europe and a sovereign crisis in Washington. So you need to keep that in mind for the longer term. That’s a unique perspective that most analysts don’t talk about, but I do want you to keep it in mind, and I will be talking a lot about it during 2012.
This is Larry Edelson. Again, have a very happy, healthy and safe New Year.