Looking Ahead (Gold and US Stocks)

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In this blog I have made frequent posts relating to stocks, but also to gold and oil. Oil is what drives our world, and gold is the money of the ages. Oil and gold prices have strong positive correlations, while the correlation between oil and stocks or gold and stocks is not consistent for long periods.

Right now my view is that stocks, oil, and gold are in bear markets. I think all are likely to go down further in the next several months and probably longer. In bear markets, the best opportunities to make money are when the price is falling, because that usually happens at a very fast rate.

Gold and stocks have had a relatively strong negative correlation this year, and I think that is likely to stay for a little while. Gold has made a massive price advance the last couple weeks that has made its momentum based indicators the highest they have been in years. These times tend to correspond with tops in gold prices. I am waiting for a good candlestick pattern to emerge to help recognize any peak in prices soon. I think a little patience will be necessary though. Then, I will advise on buying puts on gold related assets or shorting gold stocks.

I believe that based off of recent correlations that this peak in gold will correspond with a bottom in the stock market that should last several months and produce good price gains off the bottom.

I will be looking to make trades on GLD put options and SPY or QQQQ call options when I feel the market is ready to turn. I will keep you updated.


Pete