If you have not been paying attention, get ready for some real volatility and big rotations/reversions in the markets.
It is time to put on your BIG BOY/GIRL pants because the markets just exited a simple upside trend bias and entered CHAOS with a new downtrend setting up.
If you don't know what to do, then you better start paying attention. This downtrend may last until 2025 or so and could extend a deep correction in the SPX500 to levels near $2200.
Don't play a fool with this new trend. I'm warning you right now - this one could be very violent and wicked.
There must be a reason why the gold price has been creeping up in the background for weeks. If the equities outlook were so good, why should that be the case?
BradMatheny
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@ReallyMe, The downside risks are quite high right now. I expect a fairly solid reversion over the next 6+ months. The setup in precious metals is a DREAM for certain traders. Can you say $3750 or higher for Gold?
ReallyMe
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@BradMatheny, The strange pullback that gold had between the new all-time high $2075 in August 2020 and March 2021 is comparable to the period March 2008 to October 2008. There were no fundamental reasons, yet the price went down for a while. Good for those who were not deceived and bought up during this period. You can see what happened after October 24, 2008. Gold is a dragon, when it flies, it flies.
BradMatheny
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@ReallyMe, That move lower in 2008 was related to the start of the Housing/Credit crisis. It is not comparable to the downside price trend in Gold recently (Aug 2020 to Mar 20210). The only type of similar price comparison I could suggest goes all the way back to 2004 to 2007. My research suggests we've entered a new Depreciation market phase (late 2019) and that cycle phase will last till 2027 or so. The previous Appreciation phase lasted from 2010 to 2019. The previous Depreciation phase lasted from 2001~2 to 2010. So that period for Gold (2004~2007) would be a better comparison (IMO) than the 2008 market collapse. Remember, the move from 2007 to the 2011 peak was the HYPERBOLIC trend. My research suggests we'll get started with that trend in late 2022 or early 2023.
A bit of a warning, if the markets start to move hard to the downside, Gold and Silver will also initially move lower, but bottom fairly quickly and start to move much higher. If you time that downside move properly, it can lead to some big profits throughout the upside price recovery.
Nice chat so far. I appreciate it.
ReallyMe
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@BradMatheny, The paradox of the downward movement in 2008 was that it should have been upward. The market can never be explained logically, that's the beauty of it. We will just have to see. Thank you!
BradMatheny
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@ReallyMe, Gold and Silver always sell downward at the start of a panic. Take a look at the COVID crash (February). Gold started to recover faster than Silver, but then Silver rallied faster than Gold for about 5 weeks.
The way I explain it is like when someone yells "shark" at the beach. Everyone runs for the short (avoids risks) - in this case with traders they all want to go into CASH. Then, they start to realize metals are a great hedge and start to pile into the metals trades again.
It is just a panic trend that happens at the start of almost all bigger downtrends.
ReallyMe
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@BradMatheny, I like the way how this idea has developed over time, I think you were on to something