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1.Do you
feel comfortable and in control of the markets, or are they in control of
you? Please click
here now. You are looking at a very basic chart of the Dow Jones
Industrial Average. It’s a weekly chart that shows the RSI indicator is
falling. MACD is on a sell signal.
2. Rather than wondering if the Dow might crash, simply
prepare yourself to buy it inside the crash zone. The dividend yield
on the Dow is currently around 4%. Getting paid 4% a year to wait for
quasi-hyperinflation that could send the Dow skywards is a fairly good
deal.
3. Please click
here now. That’s a chart of the Dow Diamonds ETF, DIA-nyse. The high at $120.66 that I’ve highlighted
with a blue circle is the first HSR (horizontal support & resistance)
area that I would buy, but the amount of risk capital I would commit there is
negligible.
4. The reason for my caution at that price is that the
Dow has rallied about 100% from the lows of 2009 without a significant
correction.
5. A much more interesting entry point is the HSR at $106.45. That price
on the “diamonds” is equivalent to about 11,258 on the
Dow.
6. A decline to the 11,200 area on the Dow would likely be accompanied by
a significant amount of fear and very bearish news. The best investors
establish beachheads in the Dow at prices where most investors are selling.
Don’t guess when investors might sell; just be ready to buy when they
do. Once you’ve established your beachheads, you can begin to have fun
by shorting the market occasionally.
7. The big question that gold stock investors are dying to ask is, “what
happens to our gold stocks if the Dow crashes?”.
8. Gold stocks have already experienced a 1929-style crash numerous times
in this crisis. I think they are at the lows of one of them now.
9. I think the Dow probably is about to crash, but the crash will
be against your gold stocks more than against the dollar. Please click
here now. That’s a weekly chart matching the Dow against GDX-nyse.
10. The Dow looks terrible. Technical indicators and oscillators are
having a veritable fist fight to see which one can show the Dow as most ready
to tumble.
11. If the Dow crashes, this chart indicates that gold stocks are likely
to soar.
12. I believe that just as retail investors sold their stock market
holdings into the lows of 2008 and bought bonds, investors in the gold
community have recently sold their gold stocks in despair, and bought gold
bullion.
13. The gold community’s version of the “growth with safety”
play is understandable, but those who engaged in it should probably reverse
course very quickly.
14. To understand why they should reverse course, please click
here now. That is a weekly chart of gold against GDX. It indicates that
gold stocks look set to give gold bullion a severe beating. Note the
disintegrating volume as gold rallied against gold stocks from early January.
15. Most of the weekly chart indicators and oscillators are on sell
signals. In my professional opinion, it doesn’t matter if the $1525
area lows represent the bottom for bullion or not. Regardless of what happens
to bullion, gold stocks now look set to dramatically outperform the dollar,
the Dow, and gold itself.
16. Please click
here now. GDXJ is a well-known junior gold stocks
ETF. As good as the senior gold stocks look, the juniors look even better.
17. That daily chart suggests that GDXJ will almost
immediately begin to outperform GDX.
18. Gold could break the lows near $1525, and fall
towards $1432 or $1266. While that happened, I still think gold stocks could
stun investors by soaring.
19. Please click
here now. I call this chart my carrier strike group map. It’s a
monthly chart that covers the entire gold bull market. I view the major HSR
zones like carrier strike groups, because I view the market as a war.
20. As the price of gold declines to the outskirts of
these enormous support zones, it’s critically important that investors
in the gold community are ready to buy.
21. Note the support areas at $1432 and $1266.
There’s nothing to be afraid of. $1432 and $1266 are significant
support zones that will support you in your battle against the “dollarbugs”.
22. Please click
here now. That’s the same monthly chart of gold against the dollar,
with an emphasis on the technical indicators. It doesn’t look good for
gold right now in the battle against the dollarbugs.
23. I have little interest in seeing investors try to
call exact tops or bottoms. Instead, I think investors should focus on
accumulating the highest quality assets when they appear to be undervalued at
significant HSR zones. Liquidate a modest portion of your holdings when they
appear to be overvalued.
24. For those who are interested in calling tops
and bottoms, I don’t think a case can be made that gold has bottomed
now, but a strong case can be made that it offers superb value for
accumulators. In contrast, a very strong case can be made that gold stocks
are making a generational bottom!
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Cheers
St
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