Market Road Map Follow Up: April 6, 2016

It’s times like these — sideways markets trading in tight-but-volatile ranges — that try the souls of traders and investors everywhere.

Most traders, always overly eager to trade, try to step in and out of these kinds of markets for very short-term profits. The typical end result of all their actions: Making their broker rich.

Then there are others who take on new long positions, thinking that it’s just a pause in existing trends and that by adding to positions now, they’re setting themselves up for a home run. When in reality, many markets are actually getting ready to change trend, violently.

The hardest times for any trader or investor are ALWAYS periods like the recent months of sideways, go nowhere, tight-but-volatile market ranges. And almost always the best, most-profitable course of action is not to push the markets, but to lie in wait, like a lion tracking and stalking its prey.

The hardest times for any trader are always periods of sideways, go nowhere, tight-but-volatile market ranges.

And so it is with me. For all my paying customers, I am lying in wait, stalking the best opportunities, ready to jump on them before you can bat an eye, to help make oodles of money for them. Money that can be kept and built on, not money made in a flash in the pan that can just as easily go up in smoke.

With all that in mind, this week’s column is a follow up to last week’s market road map column. Let’s see just how much has changed in the most important markets of all, starting with …

Gold: Last week, I told you that gold had elected a sell signal by closing below $1,227.10. Since then gold has fallen to as low as $1,210 (basis June futures), only to bounce back to the $1,234.70 level as I pen this column (Tuesday, April 5 at 5:00 am EST).

A stinking $24 trading range, with no gusto, in a week’s time. No opportunities there, even for short-term traders. Maybe for day traders, but for overnight or position traders, nothing but noise.

Any changes in trend in gold? None whatsoever. Merely a sloppy, go nowhere mess. Worth sticking your neck out? Hardly.

The trend remains negative, with the next move likely to bring gold down to support at $1,202, then bust through that to the most important support level at the $1,180 to $1,160 level …

Where, if that happens, I expect to release a MAJOR FLASH ALERT.

All of the above general comments equally apply to silver, platinum and palladium.

Crude oil: Last week I told you that crude oil had an important pivot point at the $39.25 level. When below it, the trend, short-term would be bearish. When above, the trend, short-term would be bullish.

Oil has opted to correct more than I had expected, staying below $39.25, and moving down toward the lower end of the trading range that I cited last week at the $36 level.

Overhead resistance still stands at $39.25 naturally, followed by $42. Overall, oil is doing what my neural net models called for, a largely sideways correction that will lead to a new level up in the spring to the $50 level.

Oil appears to be basing now, just below that $36 level, so don’t be surprised if oil soon takes off to the upside. Take advantage of it with any of the leveraged long crude oil ETFs.

Perhaps the most important market of all right now, and for the weeks and months to come …

The U.S. Dollar: Last week I told you how the dollar, as measured by the Dollar Index, was largely caught in a trading range for now, but within the context of a long-term bull market. Short-term support can be found at 93.197 on the Dollar Index, followed by 91.257.

Resistance will be found at 96.955 and then the former highs just above the 101 level.

Nothing has changed there. Over the past week, the dollar has traded in an extremely tight trading range, chopping up traders left and right and spitting them out as wounded animals.

And that is just the opening act of another major move for the dollar that will destroy even more investors and traders who continue, for some odd reason, to listen to all the pundits coming out of the woodwork who are again screaming about the death of the dollar — one well-known analyst, with alleged ties to the CIA, shouting the loudest, an analyst who has NEVER been right about any market let alone the dollar.

If you want to avoid losing money, simply ignore these harum-scarum analysts who don’t have a clue about real economic history and the forces that drive them. Listening to them is the fastest way to the poorhouse.

There is NO way the U.S. dollar is back in a major bear market. It is, conversely, in a major bull market and is merely taking a pause. The next move up in the U.S. dollar is going to knock your socks off with the Dollar Index moving from its current roughly 94 level to well over 105.

Chief reason: Deflation and the demise of …

The euro: Since last week, the euro has managed to eke out a new, short-term-range high at the 1.14385 level but there has been no change in trend to the upside.  Just a short-term spike higher, the euro essentially catching its last breath of fresh air before rolling over and dying.

The new high at 1.14385 should prove formidable, while support remains under the market at 1.1030 followed by 1.08995. After that, support plunges to the 1.05 level, then 1.03 and then even lower.

The only thing holding the euro up, or should I say, suspending it in thin air, right now — is the fact that Janet Yellen has softened her tone on rate hikes here in the U.S.

But in the end, that won’t matter one bit. Yellen could lower rates here, and the euro will still meet its maker: It was a flawed currency from the outset, and now, every threat under the sun is combining at the same time to exploit the currency’s falls and take it under.

Markets have no mercy and take no prisoners. The euro is destined for failure due to the ignorance of the leaders who put it together; their ignorance of history, their ignorance of economics, and, perhaps most tragic of all, their ignorance of Europe and its many disparate cultures.

Dow Industrials: Last week, I told you the key resistance figures for the Dow Industrials are still the 17,901 and 18,500 level and …

Unless the Dow can get above both of those figures on a weekly closing basis, the bias toward the downside will remain the more probable path of direction.

The Dow hovered near the 17,900 level last week, but then started turning slightly lower. Major support still lies at the 16,652 and 14,687 levels.

Therefore, in the very short-term, the trading range is from 16,652 to 17,901.

A sloppy, wide trading range.

Nevertheless, every indicator I maintain and every neural net and AI model I run on the major U.S. stock indices points to a rout that will take the Dow Industrials down to the 13,900 area.

So stay alert, and stay tuned, and most of all, be patient. The best profits always come to those who are patient and not to those who are trigger happy.

Best wishes,

Larry

P.S. One year from today, you could be cracking open a bottle of Dom Pérignon and feasting on caviar to celebrate the outrageous gains you’ve made in the bull market of a lifetime … profits that could let you retire early and rich! OR you could be kicking yourself, muttering, “I wish someone had told me this would happen and how to take full advantage of it.” Well, that’s exactly what I am going to tell you in this report! Click here for information!

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 17

Larry April 6, 2016

Excellent analysis - I look forward to these reports - very concise and reassuring. I am profiting from your advice this year and I feel this is just the beginning of a very big wealth-building year for my family as I manage their accounts via your advice - thank you!

Raymond Lutz April 6, 2016

Larry, you recently recommended storing gold bullion and coins that I have stored with Hard Assets Alliance in Utah, to store it with HAA in Singapore. Would you explain the advantage. of doing that? Is this more safe and liquid should I need to sell gold for my retirement requirements? Thanks. Raymond Lutz

JTMarlin April 6, 2016

Why would anyone not just keep their gold at home? Singapore? If you are an American, why would anyone do that?

Aidan Fallon April 6, 2016

I would second that question. How liquid are physical assets when it is time to sell? Many Thanks for all your insightful posts, Aidan Fallon

Howard April 6, 2016

Do you hold some fear of gold confiscation when everyone else realises that their paper is worthless?

Roberto April 6, 2016

on a shoppy market like this it would be excellent to have an overwiev like this every market in order to help us in keeping calm and waiting for the real changes. Thanks regards

Jim April 6, 2016

The only market I really know anything about is oil. You continue to gain credibility with every forecast. Thanks! Jim

Will April 6, 2016

Gold is like an insurance policy; you do not wait until your house is on fire to go out and buy it. Just as you will not find anyone to sell you a policy when your house is already burning, so you will not be able to find gold when you are in dire need to make a last minute buy because you have not already put 10% of your investment funds into physical gold. Timing when the gold boom is on is like timing the lightning strike that set your house on fire, which is why you needed insurance all along. If you depend on some computer to tell you when to buy gold, you might as well give your money to someone in Panama to keep it for you

kc April 6, 2016

Gold is struggling. But miners are not declining.

SteveO April 12, 2016

Bgeix American Century Gold miners is up YTD 62%

Howard April 6, 2016

Hi Larry I have found that patience is the hardest skill to learn. Many times have I been in too early but out okay. This market has me rattled for the many reasons you and others have already covered. Don't know what the trigger is or time frames are as this could go on for some time. It seems like a dangerous time, particularly for those trading on borrowed funds.

Howard April 6, 2016

Just to add. Just learned that Newcrest in Australia has recently hedged some of their forward sales into 2019. Wonder what their time frame is?

kc April 6, 2016

Still waiting for the miners to roll over.

$1,000 gold™ April 7, 2016

secular stock bulls beget secular gold bears. secular stock bears beget secular gold bulls. i always remind myself of this when can't figure out gold.

$1,000 gold™ April 7, 2016

overlay the long-term charts of the s&p and gold. if you go back decades you'll see a strong correlation between the s&p and gold - a yin and yang.

Ed April 9, 2016

Larry - Nice report on euro (eur/usd) - computer down b bck soon Ed

Rod Johnson April 10, 2016

Look forward to reading your analysis Larry.