These markets continue to frustrate the heck out of just about every kind of investor out there — whether you’re a buy-and-hold investor, an active trader, or even a day trader, or a scalper of the markets.
The markets continue to coil up in very, very tight trading ranges. It’s like watching paint dry. A lot of this has to do with the hesitation by investors to make any moves considering the still-ongoing crisis in Europe and now, very importantly, the upcoming elections, which are about two and a half weeks away.
Unfortunately, we may have to contend with this very sideways action for a couple more weeks. It’s lasted longer than I expected and it may last yet a little bit longer until we get the elections out of the way.
However, all of my economic models and my trading models do indicate that there have been no major trends changes at this point in time.
Now let’s go right to charts.
Gold: This is a weekly gold chart that I showed you in my last video update. As you can see, gold is still pressing up against channel resistance here, but it’s largely gone nowhere for the last three weeks.
The trading range in gold is tightening up — it’s roughly defined now by support at $1,750 and resistance at $1,805 and $1,823. And until we see a breakout above resistance or below support, there’s really nothing to do in gold and I urge you to stay away from it because you’ll just get chopped up.
Silver: Largely the same thing as gold. Silver has been going mainly sideways for the last week or so. It is still beneath overhead resistance but it is also still below the previous high back in February/March of this year and the previous high back in 2011, and, of course, its record high back at $50.
This overall is a bearish indication to me and I do believe silver is running out of steam like gold and we will soon see a turn to the downside.
The U.S. Dollar: The dollar is really tightening up in a very coiling type of range here.
This is a weekly chart of the dollar. It’s still holding support at this uptrend line here, but largely going sideways.
And that’s true of virtually all of the major currencies. They have really been going nowhere but sideways over the last couple of weeks, indeed the last month or so.
I’ve looked extensively at the cycles for the dollar over the last few days and they all point higher, which is why I remain bullish on the dollar.
Dow Industrials: The chart of the Dow Industrials looks very much like gold — actually pushing up against upper channel resistance here but largely going sideways.
I’m afraid here, too, until we get the elections out of the way, we’re not going to see any decisive moves.
In short, I’ve said this before, there are three kinds of positions in the market: You can be long the market, you can be short a market or you can be on the sidelines. I strongly feel that right now is the time to be on the sidelines.
While it’s certainly not as exciting as being in a market, sideline-type of affairs where you’re sitting out the market waiting for high profit potential/low risk trades is often the best place to be. It not only preserves your capital, but it can also generate a return on your capital because you’re not taking unnecessary risks.
That’s it for today. Please stay tuned to everything. I’m sure we’re going to see some major progress and trending moves occur in all the markets soon — if not right before the election, certainly right after it.
Larry Edelson has over 34 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Power Portfolio provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management.