Weekly Update & Summary: May 10th, 2014
For the week the Dow Jones gained 70 points (+0.43%) and the Nasdaq lost 52 points (-1.26%). The number of divergences and market undercurrents continue to increase. While the Dow did very well structurally, it continues to have two near term gaps to the downside, the one on April 14th and a large gap on April 16th. Indicating an upcoming correction. Further, there are a number of smaller gaps left leading all the way down to February 5th low. We continue to believe that the Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).
WEEKLY REVIEW:
Why You Should Invest All Of Your Money In Cash. Hint….You Will Make A Killing.
Recently, I have been telling all of my friends and relatives to save and/or accumulate as much cash as they can. Better yet, to keep putting it in a 10-Year note. Assuming that they don’t actively invest/speculate in the stock market.
Stupidest investment advice ever?
Not when you are accumulating cash in order to raid the stock market at the bottom. AKA….to bathe in the blood of others. In fact, I gave the same advice in 2006-2007 or right before the collapse. Here is what happens when you accumulate cash right before or during the bear market.
First, you tend to avoid a bear market decline and losses of 30-50%. Second, you have the capital to come in at the bottom (ex: 2009) and buy the market/stocks at give away prices. Minimizing risk and maximizing gains in the subsequent bull market. Making cash one of the better investments today (because of a 2014-2017 bear market).Marc Faber tends to agree.
What You Ought To Know About The Upcoming Gold Rally. This Is Incredible.
According to a consultancy out of London you should sell your Gold and seriously consider buying some Twitter stock.
“Gold prices have probably peaked this year and could sink to their lowest since 2010 at $1,100 an ounce as the U.S. economic recovery gathers pace, consultancy Metals Focus said on Wednesday.”
Yeah, the US economic recovery gathers pace as it goes right over a cliff.
Here is what I believe to be the best way to look at Gold and it’s price. Forget about the fundamental factors such as supply/demand and geopolitical events. From our vantage point, Gold’s technical/structural setup is identical to the one in 2007 when Gold went from $600 to $1,800 an ounce.
With our mathematical and timing work predicting a severe bear market between 2014-2017, the FED will have no choice but to introduce further stimulus in order to try and re-inflate our markets and the economy. When that happens, I would expect Gold to be surging higher, not setting new lows. In fact, I continue to believe that Gold will be one of the better investments out there over the next 3-5 years.
All you have to do now is wait for Gold to break out above $1,420 and we should be off to the races. Be patient now. Our timing work shows that the next stage of the bull market in Gold is just around the corner as it will be surging higher by around this time next year. If you would like more precise timing please Click Here.
Is It Time To Short Homebuilders? This Answer Might Surprise You
According to Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, it is time.
“Investors should bet against the SPDR S&P Homebuilders ETF because he does not see the expected rebound in single-family housing occurring”
We like the idea as this ETF is likely to yield about a 50% return on the short side over the next few years. Why? For the following reasons.
- As we have outlined so many times before, the housing recovery is over and the entire real estate market is about to embark on the most vicious bear leg of it’s decline. Stage 3. You can read everything you need to know about this here. Real Estate Collapse 2.0 Why, How & When
- Our advanced mathematical and timing work predicts a severe bear market between 2014-2017. Under such circumstances the real estate market will not be able to maintain its upward trajectory. On the contrary, it might be one of the sectors leading the market lower.
- SPDR S&P Homebuilders ETF (XHB) is showing early signs of a technical price breakdown.
When you combine the points the above, SPDR S&P Homebuilders ETF (XHB) becomes a very good short investment opportunity.
MACROECONOMIC ANALYSIS:
Ukraine/Russia/USA/EU/NATO continue to be the most important issue. In fact, I continue to believe that things will escalate significantly over the next few weeks.
It appears that Mr. Putin’s game plan is clearing up. It is highly probable that he will wait for a referendum scheduled for this Sunday, May 11th. It is widely expected that Pro-Russian population in East Ukraine will declare independence or become autonomous and then in one form or another will ask to join Russia. Essentially it’s the same game plan as what had happened in Crimea. No shots fired, no invasion and Russia regains complete control of East Ukraine. A great strategy.
The fun starts when Ukraine’s interim government (under the direction of the US, the EU and NATO) refuses to let East Ukraine go (which they will). This should give Russia the pre-text needed to enter Ukraine in order to “defend” its new territory and its people.
As you can imagine this situation will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences. It is highly probable that this would be incredibly unsettling for financial markets. I can tell you one thing, the markets do not have this priced in. The upcoming week is critical.
TECHNICAL ANALYSIS THE FOR DOW JONES:
Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last few months. Yet, that in itself can be misleading as per our timing analysis discussion below.
Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.
Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.
Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.
MATHEMATICAL & TIMING ANALYSIS:
It’s going to be a long one.
First, a re-cap. Particularly for our new subscribers. Over the last few months we have maintained that the DOW will
(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).
In conclusion, xxxx
Longer-Term Overview:
The next turning point is located at……
Date: XXXX
Price: XXXX
TRADING:
I am now fully committed to the XXXX side of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.
Remember, you should have an exact strategy and entry/exit points based on the forecast above.
The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.
| Stock | Entry Point ($) | Action Taken | Stop Loss @ |
| xxxx | xxxx | xxxx | 91 |
| xxxx | xxxx | xxxx | 1250 |
| xxxx | 110 | xxxx | 121-123 |
| xxxx | 74 | xxxx | 80 |
| xxxx | xxxx | xxxx | 260 |
| xxxx | xxxx | xxxx | 460 |
| xxxx | 35 | xxxx | 39 |
| xxxx | 65 | xxxx | 70 |
| xxxx | 120 | xxxx | 120-130 |
| xxxx | 100 | xxxx | 108-112 |
| xxxx | 112 | xxxx | 120 |
Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).
If You Are A Trader: XXXX
If No Position: XXXX
If Long: XXXX
If Short: XXXX
CONCLUSION:
An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.
Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.
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Weekly Stock Market Update & Forecast. May 10th, 2014. InvestWithAlex.com Google
