Monday 10 October 2016

Update on the markets

Last week, gold had a nice drop. It broke its support line of the 1305 area which triggers the stop loss which is the reason for such a dramatic fall in price. I was being careful of this level being broken, and as I saw it break, I was hitting the sell button on all my mining shares. I sold them for a loss compared to the day before, but still closed profits about 150% roughly year to date. I managed to buy back the majority of them all below what I sold them for, and now I currently wait to see how this will play out. The support of 1305 range will become a resistance now, so we could see gold go up as high as that on a bounce. The bottom is 1242, so that level will be support, if it breaks that level, Ill most likely sell my shares again, On the shorter term, it is a bit more trickier to predict where the markets go, but on a longer term, I could imagine silver and gold go up. I am still cautious about the precious metals though. Deflation is overpowering inflation it would seem, which could bring down the metals. This would provide a fantastic buying opportunity, but perhaps if this plays out, wait for the massive printing to be started as a central bank guarantee to make gold prices higher.

The stock market is hovering still near all time highs, which is a bit of a surprise to me. I expected the markets to crash this year, which is still possible but I did not think about it being election year. I strongly believe shortly after the election, the stock market is going to plunge, but until then, the plunge protection team I'm sure is hard at work. That could be the reason for such the tight trading range lately. If Hillary wins, the market could have one last rally after the elections. If Trump wins, I'd imagine the market drops sharply on the day. It would seem more likely Hillary will win, but It seems like the media is trying to deny how big of a group trumps followers are. I do not know who will win, but I assure you the market will tank by the end of there term, and money printing never seen before will be started, unless the winner is Trump. I'd imagine he would not allow the money printing to happen. It would make me unsure of my metals position. If the metals break past its current support, I will wait on the stock market to drop so I can make money shorting that with my profits from the metals. When the trading range stocks are currently trading in break out, you will be able to tell if you should go long or to short.

Crude oil today looks like its breaking out of the 50 dollar level. This could be a false break out in the end, but it could be a good long position instead. I am not risking my money on this trade. I would feel much more better shorting it if it broke past the 40 level which will happen most likely if this is a false break out. Oil supply and demand are bad and will get worse, as we are most likely in a recession if not heading for one. This has been the third longest economic expansion (and the weakest one) and it is heading towards the second longest expansion quickly. A recession is right around the corner if we are not yet in one. This recession could plunge the price of everything causing deflation if quick action is not taken. If Deutsche bank fails, this could also cause a deflation crash since it would bring down other banks with it. I would imagine world leaders are not dumb enough to let this happen so I would expect them to be bailed out. 

Thanks everyone for reading, these are my thoughts on the market. At a time like this, we have to be careful with our money and our investments. The future will be rocky and if the next recession is a crash like 08, these times will most likely be considered the second depression. Good luck to all in the investing field.



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