Posts filed under “Technical Analysis”

NDR: 1980s Gold Pattern Suggests $660/oz

Gold is one of those topics that always generates fierce pushback whenever I write about it. Yesterday’s column How Low Can Gold Go? was no different. A deluge of emails and over 150 comments soon followed.

I may post some of the more informative, vociferous and misguided comments / emails from readers later today as a public service to everyone else. But note that I find this pushback highly encouraging, as it suggests a topic that not only resonates, but is a hot button emotional issue. The lack of rationality is obviously so dangerous for investors. These last two make the subject especially intriguing to me.

One more thing: As it turns out, I am not the only one who has been skeptical on Gold since its uptrend cracked late in 2010. This weekend’s Barron’s, citing Ned Davis Research, excerpted part of a recent research report from John LaForge and Warren Pies of NDR on historical gold cycles:

“[F]rom its peak in January 1980 through its trough in February of 1985, gold suffered 65.8% losses. So far in this cycle, it’s lost 35.7% from its August 2011 peak, so if it were to follow its 1980s path, it could easily slip below $700 an ounce.

There were a number of factors working against gold in the 1980s, but notable among them was the strength of the U.S. dollar: It rose 54% from January 1980 to February 1985, versus as basket of major currencies.  LaForge and Pies write that it’s not difficult to see how the same pattern could play out again, weighing on gold. These waters aren’t friendly to contrarian investors, who usually lose out when betting against a rising dollar. Nor does it seem like a time for bargain hunters in gold, if the price is in danger of falling significantly more and pessimism hasn’t yet reached its peak.

NDR concludes: ”Gold is not worth additional capital at this point. It is oversold, but is trending poorly. Like gold, the overall commodity super-cycle looks to be dying.”

-Ned Davis: If Gold Follows 1980s Pattern, Expect $660 An Ounce


Feel free to take the other side of the trade from what is widely regarded as the most astute technical analysis firm in the world . . .


Category: Cycles, Gold & Precious Metals, Technical Analysis, Trading

Analyzing Dips in the S&P’s Path

Bloomberg’s Michael Regan reports on stock market fluctuations and what they mean for investors.

Source: Bloomberg, Sept. 25 2014

Category: Federal Reserve, Hedge Funds, Technical Analysis, Video

Get Ready for the Shanghai Composite Break Out

  China is on the verge of breaking out from its pattern of consolidation, at least according to the monthly chart book from the analytics team at Bank of America Merrill Lynch. If you look at the chart above you can see that the Shanghai Composite Index is in the midst of transitioning into an…Read More

Category: Markets, Technical Analysis, Trading

Volatility Over the Past Century

Source: Goldman Sachs via FT Alphaville     Despite what you might have heard recently, as it turns out, periods of low volatility are not particularly unusual. Have a look at the chart nearby. It comes to us from Goldman Sachs via FT Alphaville, and it shows that spikes in volatility are quite unusual. Periods of…Read More

Category: Markets, Technical Analysis, Trading

Why Is It So Hard to Call a Market Top?

Each morning, I go through a similar routine: I wake up (no alarm clock), go to the kitchen to get a cup of coffee (this is my machine of choice lately), launch a script that opens 40 or so Firefox tabs. As part of my morning research, I quickly scan this series of websites to…Read More

Category: Investing, Sentiment, Short Selling, Technical Analysis, Trading

Is This the End of the Secular Gold Bull?

In the beginning of this year, we looked at some of the trading errors commonly made by gold investors during this cycle. At the time, gold had fallen 38 percent from its 2011 peak. Yesterday, spot gold traded at less than $1,242 before closing slightly higher. Gold is hitting new multiyear lows relative to the…Read More

Category: Cycles, Gold & Precious Metals, Markets, Technical Analysis

The VIX, Variance Premium and Stock Market Volatility

Category: Options, Technical Analysis, Think Tank, Trading

If Stocks Go Up, Must They Always Come Down?

What’s gone up won’t always come down Barry Ritholtz Washington Post, April 20 2014     U.S. equity markets made substantial gains last year. The Standard & Poor’s 500-stock index, the traditional benchmark for equities, was up 29.6 percent. Add in dividends, and it’s well over 30 percent. Technology and small-cap stocks did even better, with…Read More

Category: Apprenticed Investor, Investing, Technical Analysis, Valuation

Video: Signs of a Stock Market Top?

click for video
tops video

Source: Yahoo Finance

Category: Markets, Technical Analysis, Video

How Market Tops Get Made

With all the bubble chatter and talks of over-valued stock markets, I thought it was time to have a discussion with someone is the expert on the subject. In this case, that person would be Paul Desmond, chief strategist and President of Lowry’s Research. Desmond has spent the past five decades analyzing markets; his research…Read More

Category: Markets, Technical Analysis, Trading