A Perfect Setup for a Stock Market Correction

Since there’s no holy grail to analyze financial markets, the best approach is an eclectic one. So I incorporate as many tools as possible in my analysis, including: Fundamental valuations, macroeconomic models, monetary and fiscal policies, interest rate developments, sentiment and momentum indicators, and chart analysis.

Major market turning points are usually characterized by many of these tools. That was clearly the case in 2007 when everything fell neatly into place to call the end of a bull market that had started in 2003.

Bull markets don’t go straight up. And this one is no exception.

To a somewhat lesser degree…

Gold Giving Another Strong Buying Signal

In my September 9 Money and Markets column I showed you this gold chart:

Source: www.decisionpoint.com

On that date, I said, “This breakout of a huge triangle is a clear technical buying signal.” I added that the minimum price target of this triangle formation was roughly $1,100. This was well above major resistance in the $1,000 area, thus hinting that another major breakout and buying signal would take place soon.

Well, that’s exactly what happened last week!

Gold Hit 1,059 …
Triggering Another Major Buy Signal

Take a look at the weekly chart below. It gives you a good perspective of how important this breakout…

Rearranging the Deck Chairs on the Titanic

The Candlestick price bar in the NASDAQ Composite on Thursday was double-barreled bearish, in that it was a combination of two patterns in one – the “Doji” and the “Hanging Man.” A “Doji” occurs when the opening price and the closing price are the same, or nearly so. A “Hanging Man” occurs at the top of a long advance in prices when the range of prices between the open and the close is very small, and that range is near the top of the total range of prices of the period. The “Hanging Man” requires a lower closing in the…

The Crisis Is Not Over, but the Bullish Interlude Can Last a Few More Quarters

You might be familiar with this common example of probability theory: The exercise of drawing colored marbles from a container.

Half of the marbles are white, the other half are black. You remove one marble, write down the color, and put the marble back in the container. Then repeat the process, again and again.

In the short run you may experience streaks of drawing one black marble after another. It might happen three times in a row, five times in a row, even ten times in a row.

However, these short-term results do not change your long-term outcome — the fact that…

This Market Is Weaker Than a Wet Paper Bag

Here’s the magic number: 124.07. That’s the number you need for shorting U.S. government debt.

In my DailyWealth column April 13, I said if the long bond fell below 124.07, it would signal a bond bear market. Well, the long bond closed at 123.26 last Tuesday and is now making new five-month lows…

The "long bond" is the nickname for the 30-year Treasury bond. It’s the longest-dated debt instrument the U.S. Treasury issues. And on March 18, the Federal Reserve announced it would buy $300 billion "longer-dated" Treasury bonds.

This was the news the bond bulls had been waiting for. The world’s most powerful…