Monday , 24 June 2024

5 Must-Watch Market Signals to Maximize Your Portfolio Returns

[It is important to watch market roadmaps] very closely because they tell you when a fork, a speed bump or U-turn is coming in the markets. They are critical signals, and they should not be ignored. Words: 1087

Lorimer Wilson, editor of, provides below further reformatted and edited [..] excerpts from the Larry Edelson’s ( original articles* for the sake of clarity and brevity to ensure a fast and easy read. Edelson goes on to say:

What My Market Models Are Telling Me
1. A big correction in the broad stock markets is coming
The warnings come from the same models that alerted me to the bottom of the stock market in March 2009, and projected its subsequent rally to over 10,000 not to mention a slew of big moves in the markets since 1985. That gives you an idea of how important and accurate they are. Specifics in a few minutes.

2. The broad stock markets are now back in long-term bull markets headed to new record highs by 2015
[As such,] the upcoming weakness in the broad stock markets will be an opportunity to start loading up for a bull market that almost no one will see coming… because they fail to realize that the sovereign debt crisis is really a third-world debt crisis in the first world. Which, in turn, means that the first world’s currencies, the euro and the dollar, will be devalued to reinflate the stock markets.

3. Asian economies and markets will zigzag higher
China and India remain in long-term bull markets, and will see new record highs in the years ahead [as will] Singapore, Taiwan, Hong Kong, and even Thailand, Sri Lanka, Indonesia and Malaysia.

4. The natural resource sector will outperform virtually all other sectors
Their long-term bull markets are very much intact, and have much more to go on the upside.

Key Must-Watch Signals

1. Gold:
Gold is now consolidating its back-to-back new record highs that it made in May and June… [and] The short-, intermediate- and long-term indicators are very bullish for gold. Short term, look for gold to make yet another new record high, on its way to the $1,350 level. It won’t be a straight line up, however, as there will be zigs and zags [on the way up]. Between $1,149 and $1,212, gold is essentially neutral short term. So watch those two support points. Core long-term gold positions should be accumulated on any pullback into that trading range.

2. The Dow Jones Industrials:
I’ve nailed the Dow consistently for years – nearly every one of its major turning points – and now, after the initial leg back to the downside, my systems are showing the following critical signals …
a) 11,887 on the upside
b) 9034.52 and 8745.94 on the downside

In the worst case, the current pullback in the Dow should find a bottom at one of the above two downside levels. On the other hand, when the Dow closes above 11,887 it will be off to the races and new record highs – [but not before] we get a test of one of the two downside levels. [Incidentally,] cycle charts also support a decline now with major cycle turning points for the Dow [commencing] in 2012 and 2015. [As such, as a result of both my market model analysis and what the cycle charts are telling us] I have no doubt we will see new record highs in the Dow by 2015, surprising almost everyone, as the Dow begins to reflate on the back of devalued currencies, especially the dollar and the euro.

3. The Dollar:
The dollar is still clearly in a long-term bear market… down more than 31% from its 2001 high! My key system reversals, which are …
a) 92.38 and 107.81 on the upside
b) 82.43 and 80.41 on the downside

It would take a closing above 107.81 in the dollar index to establish a new bull market in the dollar that would surpass the 2001 high. I consider that highly unlikely. On the other hand, the Dollar Index has already met very stiff resistance at the 89 level, and is likely to start turning lower. A close below the 82.43 level would put the Dollar Index squarely back in a bearish mode in all trend levels: Short, intermediate, and long term.

4. Oil:
Despite the dramatic decline from its $147 high in July 2008, oil is still very much in a long-term uptrend, and I expect it to hit $200 a barrel, as soon as 2012. Short term, [however] it’s in a very wide trading range defined by $81.48 on the upper end, and $68.73 per barrel on the lower end. A close back above $81.48 a barrel, and I have absolutely no doubt we will then see $88 oil. A close above $88 and oil is destined for $200 longer term. Right now, I expect oil to swing pretty wildly, and would not rule out a retest of the $68 level but,[frankly,] I would welcome it as a fantastic opportunity to aggressively buy oil and energy and related shares.

5. Copper:
Often referred to as “Dr. Copper” — copper is a leading indicator for the global economy. It’s also a very important indicator of the state of China’s economy, as it is critical to building out housing and infrastructure in the Middle Kingdom, and is one of China’s largest imports.

Copper is currently trading at about $3.00 a pound… [and] my long-term work shows its bull market very much intact, and I expect to see it hit $6.00 a pound by 2012, 2015 at the latest. In other words, it should double over the next two to five years! The two signals you want to watch, shorter term, are:
a) major support at $2.52 on the downside where I would be a very aggressive buyer of copper and copper shares
b) $3.36 and $3.63 on the upside and once it closes above $3.63 the metal is off to the races … to new record highs.

[There you have it! The benefit of Edelson’s insights to better understand where the various markets are going and what to watch for along the way. Thanks Larry!]

* (Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. To view archives or subscribe, visit our web site.)

Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
Permission to reprint in whole or in part is gladly granted, provided full credit is given.
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