SHORT TERM: US market closed
Overnight the Asian markets were all lower, but the DAX managed to gain 0.20% while the FTSE was closed. US index futures traded slightly higher, Bonds were off a few ticks, and Crude gained about $1.00 to $133. While the bull/bear stock market debate continues, we’d like to point out an empirical observation about OEW. Nowadays there are many markets that can be easily traded by the average investor. Exchange traded funds have created many of those opportunities. Therefore, as an investor, it is not longer imperative to concentrate solely on the US stock market, or any stock market for that matter. There are many alternative investments such as; Bonds, Commodities, Currencies and the Precious metals. With these new opportunities, it becomes far more important to concentrate on bull markets, and less important on bear markets, or those markets that are possibly in the transition stage. OEW clearly defines, objectively, which markets are bullish, bearish, or possibly in transition. Much like the medium term trends that require confirmation by OEW, the long term trends that create bull and bear markets also require confirmation. The following is a review of the markets we follow and their confirmed long term trends:
US stocks – bearish
Europe – bearish
Asia – bearish, with some exceptions: China, Hong Kong and India.
Canada/Brazil – bullish
Bonds – bullish, but expected to enter a bear market.
Crude – bullish
CRB – bullish
Gold – bullish
Euro – bullish, but expected to enter a bear market.
As you can determine from this list, stock markets worldwide still present some risk. Bonds and certain currencies also present risk at the current time. Commodities, however, are solidly in bull markets, and the downside risk is limited. Although this sector has been known to be quite volatile. As an investor, the best time to enter a bull market is near the end of a correction, or the beginning of the next uptrend out of that correction. Upon examination of the commodity sector, using OEW analysis, we find the following: Crude has been an uptrend for a few months, and has risen nearly 60% during that time – wait for a correction. The CRB has been in an uptrend for even a longer period of time than Crude – wait for a correction. Gold and the precious matals just experienced their biggest correction since 2006, after Gold reached $1,000/oz. It bottomed recently at $846 (futures) and has risen to $935 (futures) this week. It appears to be just coming out of correction and to be starting a new uptrend. In summary, of all the investment opportunities available at this time Gold offers the best opportunity. Enjoy your holiday!