Fasten Your Seat Belts – The Roller Coaster Is On The Move!

Posted by Mark Leibovit - VR Trader

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Mark Leibovit, Timer’s Digest’s #1 Stock Market Timer of the year in 2011 so far & Timer Digest’s #1 US gold timer in 2011 takes a critical look at markets: 



STOCKS – SELL As we know (though the financial press downplays it), is that the global economy is teetering, Europe is imploding and the global banking system is dysfunctional. You shouldn’t be buying anything except sitting in cash, looking to buy gold (and silver) when we see a technical bottom, and perhaps positioning in inverse ETFs on rallies. Downside potential is easily to the 950-1000 range in the S&P 500, but we don’t have to see it all right away if we’re truly in a bear market. Traditionally, we often see a September/October low followed by a healthy rally into the end of the year. I suspect when a low forms here in October a sizeable rally could very well unfold, but it could be a bull trap. All we can do is monitor the technical patterns and sentiment and take it a day at a time. Can Bernanke pull out all stops and come to the rescue of the stock market and the economy? What the Fed and the Treasury have been doing to resurrect the economy hasn’t worked and they knew it wouldn’t work. The idea is to extend the time line. With regard to the European crisis, if there is a secret master plan put together with the help of the Fed, it will destroy Germany’s constitution and democracy. The future for Europe is not pretty. Smart Europeans are moving their wealth to gold and silver related assets. As the Federal Reserve lends trillions of dollars to banks, transnational corporations, and foreign banks and governments the average American cannot get a loan. Many Americans are living constantly under financial stress wondering how they can make it week to week. There are soon to be 45 million people on food stamps and unemployment remains at 22.4%.How can anyone afford health care? Is it any wonder we’re seeing demonstrations in lower Manhattan? Unfortunately, this is only the beginning. Why have sales of gun manufacturers skyrocketed in the past couple of years? It is not a pleasant thought, but it is best to know than to be caught not knowing. Did you know thousands of people marched through several of Spain’s biggest cities on Sunday to protest against banks seizing the homes of borrowers unable to meet their mortgage repayments? The marchers called for a change to Spanish mortgage law, which currently allows banks to not only reclaim property, but also to freeze borrowers’ accounts and other assets until the full debt is paid. Bottom line: Investors should be in cash. Traders are short or looking to get short with an eye to reverse to the long-side as technicals and sentiment confirm some form of seasonal low this week or this month.


GOLD – BULL Gold needs to clear 1678.10 and silver 33.65 to establish any semblance of an uptrend. Under 1531.90 in gold and 26.00 in silver will likely trigger further panic selling with the next downside objective of 1430 in gold and 20.00 in silver. I don’t think it is wise to expect a ‘V’ bottom formation here, that is, a sudden reversal back to the upside regaining most (if not all) lost ground. It should some time (a few weeks or a few months at most) to regain footing for another advance. As you know, we watch this market like a hawk. “Seasonal” patterns call for a low by the end of October followed by a zig-zag pattern higher into February. Here, gold and silver appear to have stabilized a bit and we could at least get a little ‘dead-cat’ bounce. Maybe more, if we’re lucky. That said, the bigger picture is dramatically higher and nibbling at gold and silver (assuming you have not purchased any to date or you were smart enough to lighten up in recent weeks into the rally) here makes a lot of sense. Bottom line: A trading bottom may be forming here, but it appears after a bounce we’re still headed sideways to lower until the dust settles.


BONDS – NEUTRAL I remain ‘NEUTRAL’ on the bond market at this time, but it will be interesting to see just how far bonds will rally as the major stock indexes continue to overall push to new market lows in the weeks and months ahead. The Fed should be selling bonds (not buying them) into this ‘bond bubble’ with prices at record highs. The Fed teems with academics that adhere to models, no matter how faulty, because they cannot rely on experience and acumen that they do not possess. Selling the bonds might keep the Fed from paralysis and insolvency at a critical moment later, but that is not politically expedient at this time. That said, I still feel offering zero percent interest rates to every mortgage holder in America is one of the keys to turning around the economy. It’s housing, stupid! It will fall on deaf ears so long as folks like Jaime Dimon at JP Morgan Chase (the puppeteer) have a strangle hold on Bernanke (the puppet). Bottom line: Since the Dollar has become the ‘best of the worst’ short-term bonds are probably okay to park some money, but keep those maturities short. Long-term bonds may offer some profit potential as markets move lower, but the risk is far too great going out to 20 or 30 year instruments at this stage, unless you’re very nimble.

The above is just a portion of Mark’sVRTrader. Much more analysis contained every day in To subscribe just send an email to or call 928-282-1275 Do you want to see for yourself the Leibovit Volume Reversal in action? Get the Volume Reversal Toolkit from Metastock! Both the Toolkit and Metastock software are FREE for 30 Days! –