Reply #1: Today's Market WrapUp [View All]

[ozymandius]

Market Sees Consumer Weakness in Some Big Ticket Items
BY MARTIN GOLDBERG, CMT

The long term charts are indicating continued strength is most consumer stocks. However, if the US consumer is weakening, this weakness may be starting to show in the long term stock charts of big ticket consumer stocks. For most retailers, however, it appears that the stock market is not seeing an end in site for the US spending spree.

-lotsa charts-

Today’s Market

As a fundamental gold bull, the following has been a concern for the last month or so and so far nothing has changed. The concern is that gold has been tracking stocks, and with the stock market vulnerable due to its overbought condition, gold would be similarly vulnerable. Below is the 8-month daily chart of stocks, as represented by the Wilshire 5000 (right scale) overlaid on the performance of gold (left scale). As you can see, they are tracing practically the same price action. If stocks are correcting (and there was some indication of this in today’s distribution day action to suggest that they are), it is likely that gold will also correct. This correction in gold is clearly well underway as discussed below.

-another chart-

Now being a worry wart, I have another gloom and doom scenario to propose. (Not yet confirmed in charts.) The “fact” that almost everyone “knows,” bulls and bears alike, is that the world is “awash in liquidity.” This “truth” may indeed be as such, but if this were a trade, it surely would have practically everyone on the same side of it. I don’t know anyone involved in the financial markets who would not say “true” to the statement “the world is awash in liquidity.” If you do a Google search for the quotation, “awash in liquidity,” you will find a total of 10,200 “hits,” with practically all of these related to the financial markets. So why if I may ask, has gold hit a 7-week low today? I would humbly suggest that if this “liquidity” was drying up, then it would show in the price of gold which has been correcting for the last 7 weeks – well before the latest Bernanke Fed-speak of yesterday. By the way, how fast does liquidity dry up? Pretty fast? At the blink of an eye? With a loss of confidence, instantaneously perhaps?

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