Stocks Questionable – Gold Overbought…..

Posted by Peter Grandich -

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Markets Update 8:30AM EST

As we begin the week, please allow me to make a short update.

U.S. Stock Market -This week’s trading should go a long way in telling us if this was yet just another correction/consolidation in this bear market rally or they indeed rang a bell. Because I’ve thankfully not mistaken just noise as a bell for well over a year now, my bear suit remains in the closet (but I do visit it from time to time and remind it how much I still love it).

Gold – I’ve stated over and over again for years that we’re experiencing the “mother” of all secular gold bull markets. But into every mega bull market comes periods of corrections (often short but sharp) and consolidations (new base-building at new higher levels). I noted late last Wednesday evening with gold at $1,236, my technical work was suggesting a minimum consolidation period due to a significant overbought condition.

The end of last week’s trading suggested we could be putting in a  fairly significant “outside day” pattern whereupon Friday’s high was higher than Thursday and its low Friday was lower than Thursday’s low. Any significant sell-off today should confirm it was indeed an outside day and could bring in some technical selling. This in no way changes my long-term view and is actually very healthy for it. My target for 2010 remains $1,300 – $1,500

U.S. Dollar – While overbought, it now has all the makings for a run to as high as 92. I remain a bull for now but know despite the current glow in Uncle Sam’s face, he remains long-term terminally ill.

U.S. Bonds – The bulls continue to win the battle, but the bears shall eventually win the war.

Oil and Gas – Oil is starting to look interesting again and around $65 could become a compelling buy. Natural gas has a record short position and that may actually be its main support for now, but I think the shorts win the battle and natural gas is under $3 this summer.

Lets get ready to rumble!


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On Major Moves, Peter Grandich has been very right and not only saved many investors fortunes, but expanded them dramatically. On November 3, 2007 at the MoneyTalks Survival Conference, Peter Grandich of the Grandich Letter warned that “an unprecedented economic tsunami will hit American beginning in 2008”.   Peter advised publicly to short the US market two days from the top in October, 2007 and stayed short until the last week of October, 2008. He began to buy stocks in March 7th,  2009. He also bought oil and oil related investments near the lows after the dive from $147.
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