Important Update : Stock Market & Gold
by and courtesy of
Martin Armstrong, Zerohedge & Mitch : December 19th
As Martin Armstrong stated in his blog update as of 18th December.
The Dow Jones Industrials rallied sharply with the Fed starting to taper. We have a near double top but today was a turning point and this week was also a target for a Panic Cycle which seems to be on point. However, while the market remains strong long-term, there are signs of some exhaustion starting to creep in. If the Dow cannot break to new highs and close higher tomorrow, we may still move back to retest support for Jan/Feb. A low at that time will point to a rally into the end of summer. A high in Jan/Feb in the 16,650 level, could warn of a decline into that period with a rally into 2015.75. But a low, may signal the Cycle Inversion is developing now. That will warn of a very serious period between 2015.75 into 2020.05. TIME remains constant. Events and Price are the variables.
And then here in another post By Martin Armstrong entitled “Complexity & the Future of the Dow”
Nothing goes straight up. What does have to happen is the thinking process will invert and higher interest rates will be seen as bullish for people are bidding for money to invest. There is a possibility that we get an initial high at the end of the summer of 2014 with the Dow. The minimum target for a high in 2014 is 16650 with the optimum target being 18545. Passing the first target will start to get the retail involved. Thereafter, the critical support will form at 10350-9580 level for the maximum extent of any correction. However, the Dow will then take off to new highs again and we are probably looking at 40,000 level when this Private Wave ends by 2032.
So what is he saying here ??
Well first let me show you some charts courtesy of Zerohedge…Then I will explain below
Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).
The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.
Awkwardly that lines up with the 1920/30s analog we have previosuly noted…
Mr Armstrong is giving you several different outcomes in the short to medium term (Jan/Feb 2014 into Summer 2014).
He is warning that the market looks tired up here (exhaustion) but price action will confirm several outcomes.
Dow Jones as of now is trading at 16,120 (19th December as New York opens for business).
1 …… A rally into Jan / Feb (considering we have closed at a new high yesterday – but todays close is very important above 16,087), will exhaust itself (approximately at 16,650) with a sharp decline to support into the summer of 2014, from there a rally into the 2015 October cycle high of the Economic Confidence Model (which we may see extreme highs of 30,000 to 40,000 in the Dow). Critical support comes in at 10,350 to 9,580. as far as the correction into Summer of 2014.
2 …… A failure to hold here and a close below 16, 087 will see a move lower to test support into Jan / Feb (less likely considering we have closed at a new high yesterday – but todays close is very important above 16,087), with a sharp decline to support and then a rally into the summer of 2014.
This call very much could line up with charts above (although not a perilous decline after Jan/Feb - just a major correction before the next huge move higher).
Now this leads into Gold……
As Gold went through its 50% correction from 1974 into 1976, it only found it’s base at exactly the same time the Stock market found its high (after an enormous multi year rally) !!!!
Cycles are calling for a base to be formed in Jan / Feb time (which lines up with an exhaustion in the Stock markets – above in the medium term).
The Chart below I have over-layed the Gold price action at the exact correct period of the Dow in the 1970′s (the last great Gold Bull market). The price correlating to Gold can be seen on the left hand side in yellow.
So today’s close of the Dow is very important, to line up with what to expect into Jan / Feb and ultimately into Summer of 2014, into 2015 and between 2015 and 2020.
Gold you should prepare yourselves mentally for a capitulation in price into January / February 2014 of at least $ 1,050 and maybe sub $ 1,000 down to $950 or even $880 – as the final low of this huge 2 year correction exhausts itself. This is necessary evil for the next stage of this bull market in precious metals - leading into $3,500 by 2016 and a test of $ 5,000 by 2017.
This is not the end of the story however….
Now no one has a crystal ball, but history certainly rhymes.
Best of Luck