Time for a Market Road Map

Most analysts shy away from making forecasts. They don’t want to take a chance of being wrong. So they end up talking out of both sides of their mouth. Or worse, they give you a bunch of mumbo-jumbo leaving your head spinning trying to figure out what they are saying.

Not me. I consider myself in the business of forecasting. After all, if I say “buy,” I am forecasting the price will rise, aren’t I? And conversely if I say “sell.”

I don’t mind putting my reputation on the line. It comes with the territory. I am not going to be right 100% of the time, or even 70% of the time. It’s going to come in streaks. Streaks of being right, and streaks of being wrong.

But you should all know that. And if you don’t know that forecasting the markets is one of the toughest things in the world to do, then you shouldn’t be trading. It’s that simple.

That said, my forecasting, unlike most other analysts, is NOT based on opinion, interpretation of fundamentals, news, or anything similar.

My forecasting methods are based solely on objective criteria that eliminate all emotion, all subjective interpretation, from the equation. In short, I use …

ArrowA unique form of technical analysis that has its roots in Newtonian physics and the basic Newtonian law of actions and reactions. It also includes measurements of entropy, for all systems have energy in them and are governed by many Newtonian physics laws.

ArrowI use the power of today’s modern computing to crunch hundreds and, in some cases, even thousands of years of data to screen for cycles in prices that cannot be seen with the human eye.

These cycles can range from as short as a few days in duration to decades-long major price cycles.

ArrowI use neural net forecasting models that then take all the cycles that have been discovered, crunch that data based on their past iterations, and then project them forward dynamically.

Most cycles are fixed in duration. But when acting together, they become dynamic, and fluid, vacillating back and forth in a new matrix of cycles that govern price behavior.

And then finally, I use my buy and sell signals to determine what is a legitimate signal that indicates either a trend change or continuation, all in accordance with what the cycles say.

The buy and sell signals are also a proprietary program I developed in the mid-1990s. It’s uncanny how accurate it can be, often pinpointing trend changes to the penny.

Right now though, I want to freeze this moment in time and give you a roadmap of what I am seeing in the major markets. In gold, silver, oil, the dollar, the euro, and the Dow Industrials.

This way you’ll have a roadmap by your side. Print it out. It should come in very handy over the next few weeks. We start our journey now …

Gold: Correcting as expected and has already given a daily sell signal by closing this past Thursday below $1,227.70. The pressure remains to the downside.

Weekly support at the $1,201.30 to $1,202.50 level should now be tested. If those levels give way, gold should fall to at least the $1,168 level — where it would be a tremendous buy!

In short, gold is now correcting its first leg up. This first pullback since that first leg up now becomes all-important. As long as gold holds major support at the $1,168 level …

The next, second leg up should see gold soar to over $1,400.

Ditto for mining shares. They should pullback sharply, then as long as support holds in gold, take off again to the upside with a vengeance.

Silver: Same overall pattern as gold. Now correcting the first leg up. Silver has support at the $14.57 level and first major overhead resistance at the $15.46 level. Silver is going to be far more volatile than gold, so be careful with it. Key your silver trades more off of gold.

Crude oil: I don’t like to brag, but with oil, I feel compelled to pat myself on the back. When it was trading in the mid-$100 level, I put out forecasts that oil would not bottom until it fell below $30, and more specifically, tested the $26 level, where a bottom would form.

That is, indeed, precisely what has happened, and now oil is back up near the $40 level, bouncing to and fro, relieving some of the built-up pressure of its first leg to the upside.

So what now for oil? It’s simple, per my objective, unemotional models. Crude now has MAJOR support at the $32.15 level, with a pivot point at the $39.25 level. A pivot point simply means that when oil is above $39.25, it will tend to be bullish, building support … while when below $39.25, it will tend to have a bearish flair to it.

Additional support lies at the $36 level, which may be tested on a pullback, while additional overhead resistance stands at the $42 level. Right now, oil is and will be in a trading range for a month or so, but its next big move should be a breakout to the upside to the $50 level.

So keep your eyes on the $42 level in oil. That’s your next breakout point.

U.S. Dollar: 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.

The dollar’s fate is in the hands of the euro, a dying currency.

Overall, the dollar’s fate is in the hands of the euro, a dying currency. So as the euro dies, the dollar will soar like an eagle. I expect new highs in the dollar and new lows in the euro by late June.

Euro: The dollar in reverse, trading sideways right now, but with a bias to the downside. Support at 1.1030 followed by 1.08995. After that, support plunges to the 1.05 level, then 1.03 and then even lower.

Overhead resistance is formidable at the 1.1216 level to 1.1400 area. I doubt any short-term rally could see the euro move above 1.1400, and if it gets anywhere near there, I would short the heck out of it using an inverse ETF, such as EUO.

Dow Industrials: Toughest market on the planet to forecast short term, due to all the cross currents. But all of my models are still resoundingly in agreement that there will be a possibly large and steep correction before the re-emergence of the long-term bull.

Here are the key numbers you need to know about:

Major resistance: 17,901 and 18,500. 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.

Major support: 16,652 and 14,687.

Notice the gap between where the Dow is right now as I pen this column (17,519 Monday 9:46 AM EST) and the first level of major support at 16,652.

That’s almost 1,000 points below the current market, compared to the Dow being a mere 400 points away from resistance at the 17,901 level.

Some would notice that and say that’s a sign of the Dow’s strength; it’s closer to resistance than it is to support.

But that would be a rookie talking. An experienced trader knows that all markets like to suck or draw in the unwary by moving and hanging out near resistance levels …

Only to chew them up and spit them out on the way down.

So beware: Unless the Dow Industrials can soon blow through 17,901 and 18,500 on the upside … the blood will overwhelm the street on the downside, with the Dow still capable of plunging to the 13,900 area.

Stay tuned!

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 34

Howard March 30, 2016

Larry It seems like the stock market is the only game in town until all the local smart money gets out. Then investors from other countries will come in and take over looking for a yield for their cash. Then maybe it is time for the FED to lower the boom and lift interest rates and crash the market. What do you think? Are there any charts showing global capital flows and their direction.

Sandra March 30, 2016

Larry, You have said that our US Govt may, in the future, resort to the same tactic as Greece and actually confiscate wealth of citizens from their private Bank Accounts..... However, you have maintained in the past that they would not/ could not confiscate wealth that is invested in STOCKS. In stock trading accounts, such as Ameritrade accounts, ALL dollar assets are usually NOT invested in stocks... some dollars are held on the "sidelines" while we wait for opportunity. Those dollars are held by those institutions usually in a money market funds until the owner decides to use them to buy stock. My question is, while funds are held in those money market funds - are they vulnerable to Govt confiscation - should times get tough?

$1,000 gold™ March 30, 2016

good question. i'd like to hear an answer too. i'd hate to thing the only place my money is safe is in physical gold or stuffed in the mattress.

Bill,r March 30, 2016

Larry I have to be honest with you sometimes I am critical of you & to be honest it's well deserved but this in my opinion was your best article yet..it showed humility.. its showed guidance ..and most importantly it showed strength in your self..all I can say is bravo Larry, bravo! Your right it's hard to forecast things & your going to get some wrong I get a kick out of these people criticizing you from the cheap seats I'd like to see them try to do what you do..good luck! Anyway I for one appreciate what you do keep up the great work and best regards.

$1,000 gold™ March 30, 2016

so, larry, our plan should be to wait for confirmation of the dow breaking through the 18,500 level before buying ... or, wait for the dow to pullback to the 13,900 level before buying. hav i got that right?

$1,000 gold™ March 30, 2016

i would say, (because of an accommodative fed and improving employment reports), your first scenario of the dow breaking 18,500 is the most likely thing occur.

Bonnie E March 30, 2016

$1000....Question, since I am now really confused.....What happened to Larry's projection (and yours) of gold going down to $1,000 an oz? Larry's statement this week: "....If those levels give way, gold should fall to at least the $1,168 level — where it would be a tremendous buy!" Thanks

$1,000 gold™ March 30, 2016

i predicted years ago we'd see gold remain in a long-term price range of about (±)$1,000, and that i expect the bottom to be under $1,000. my opinion has not changed. i also said anyone who thinks gold is going to $5,000 if full of caca, which everyone was predicting at the time.

$1,000 gold™ March 30, 2016

btw, bonnie, does the "e" after bonnie stand for eagle?

Bonnie E March 31, 2016

Thanks 1,000 ....no; Evans

$1,000 gold™ March 31, 2016

gold is still in a bear market. (volatility in the stock market woke up gold). gold has been doing the exact opposite of stocks (mirror image). if stocks go up, gold will go down. it does not appear we are at a top in stocks yet (but you never know), so i would expect more downside for gold is to come. watch stocks and you'll know what gold is going to do.

John Fox April 2, 2016

How's that 1000 Gold going for ya ?

Bonnie E April 2, 2016

Thanks 1,000!

Bonnie E April 2, 2016

John, I recently saw T. Boone Pickens on tv. His quote comes to mind as I read your question: ....."Don't rush the monkey, and you'll see a better show!!" Hahaha!! $1,000 gold, who comments here, seems to have some good insight so I definitely take his thoughts into consideration..... Personally, I don't think gold is finished going down yet. Larry said in this article that we're due to pull back after this current leg up...and I believe that gold may not continue to trade as a mirror opposite of the djia. I think that, when they get to selling out the stock market in earnest, gold will go with it!!

vic March 30, 2016

AS A LONG TIME SUBSCRIBER AND TRADER,I'VE FOLLOWED YOUR FORECASTS CLOSELY WITH MUCH APPRECIATION.THANK YOU.

JTMarlin March 30, 2016

Thanks for taking a stand this week, Larry. Nice to see a clear roadmap and your columns are mostly good reads. Thanks for keeping us updated every Wednesday.

Stephen Ettinger March 30, 2016

Good morning Larry, I am a New Yorker, Live on Long Island, and have most of my life. I lived in Indiana, worked 3 jobs for 5 years and paid for my Education from 1978-1982. Government loads at 3% were offered at $2,500.00 per year if needed. All in... Indiana University was $7,000.00 a year. I received a Great Education from Professors at the I.U School of Business. Today, my son has the opportunity to go to Virginia Tech. Very Hard working bright kid that has done everything right, Very gifted Musician. He will major in a world Class Architectural 5 year masters program, and minor in music, and play a killer Jazz Trumpet. My wife is an educator, and I am in the Printing, Display and Packaging Business. Even with both of our Incomes, living very prudently in a Very Middle Class town called East Meadow, we seem to be able to fund both our Pensions (Her 403B, and my SEP-IRA). We pay all our bills, pay all our taxes, which by the way exceed over $60,000 a year (including our property taxes), squirrel away about $1,500 a kid (And I have 2 of them)into UGMAs. At $40,000 a year for a 4 year education to provide the seeds for a bright future for our September College Bound Son, after 20 years of investing, I am about 1/2 way there in savings for a 4 year undergraduate education. HOW THE HELL DOES THE AVERAGE HARD WORKING family send a kid to school to develop a future that is bright when the cost of an undergraduate education will cost $160,000? - Sure there are loans, and the piling up of debt for the student and me the parent. If I get aggressive investing for the kids future, and the investments lose value while he is in school, the hole will be deeper to pay off. Any investment suggestions in the precious metals market that we can dive into now as we have a 4 year time line for these investments to grow significantly to apply to my sons education and future so he starts off Debt Free? Thanx.

Anthony G March 30, 2016

is this research in agreement with Martin Armstrong? I saw you participate in the movie the forecaster. I certainly hope that your strategy prevails.

Chady S March 30, 2016

Larry, your involvement in Cyclical analysis greatly reflects on your forecasting precision and great timing. I would like to add to what you said about forecasting, that the fact that it s dynamic renders it even more difficult. Changes when they occur, must be discounted into analysts models and continuously updated. Taking all that into account, I greatly admire the fact that you are man enough to give a "Time Frozen Road Map" knowing all the "dynamic risks"! I hope all of us individual average investors can benefit from your work, and I invite everyone to stick to a long to medium term portfolio, and avoid all the fuzz about active trading which will eventually erode the portfolios and our hard earned money, just to pay a bonus to some broker. all the best Larry and thanks for the good work

gypsy gene March 30, 2016

You often get the "truth" when you piss people off. If you really listen in, most people talk out of both sides of their mouths. In sales and politics, you only have to be right half the time. Folks would not read your stuff unless they thought you are a smart guy, or offer a different perspective. I agree with your take on China. But, timing is often the most difficult side of the equation.

GT March 30, 2016

I read your Emails for several years and finally accept that you really are accurate. Started investing last fall and trying to follow your signals. Despite the your accuracy I'm still losing. Historical ETF price verses gold at similar value and direction are not being replicated. Looking backwards the ETF prices are tremendous, but the reality, so far, is that ETF peaks prices are very much lower for the similar gold price and movement direction. Its like there is an exponential damping factor on future ETF prices. So my question is what are realistic expectations for price movements for ETFs like DUST or GLL should gold fall according to model. Also, having just done taxes I'm finding the tax burden on an ETF is sometimes much higher. Paying the tax on the ETF earnings as well as the Sale profit effectively doubled my tax on a couple ETF investments.

Doug March 30, 2016

I appreciate the fact that you are (usually) a one-armed prognosticator. Almost all the others hedge.

John March 30, 2016

Why Not Update us on the S&P500, As the DOW is Hard to Predict.

frank March 30, 2016

Larry, You have mentioned to stay out of govt bonds . Do you include US Treasury I Bonds in that recommendation ?

Jean March 30, 2016

If you say there's a possibility of the Dow to plunge into the 13,900 area...that's a HUGE 4000 point hit on us retired investors whose security depends on values of our portfolios! I would rather sell my ETF'S BEFORE the drop & keep my investments in cash instead of losing all the unrealized gains & having to wait several years for the market to recoup..if it does! As a senior, my time horizon is not the same as a millenial investor. When should I get out? That's the question! Would dropping into the 13,000 bring us into a bear market?

UDO March 31, 2016

Jean , there is no guarantee the DOW drops down to 13,000 it's only a possibility . Stay in TLT I've been told

Daley March 30, 2016

Is there any chance that the debt bubble that we as americans have gotten ourselves into, alter your predictions. Article was a really good read. appreciate any feedback

Mark April 2, 2016

I also would like clarity on this topic. How long can we go with this outrageous debt before it causes everything to implode?

Ed B. March 30, 2016

What do you think of the Men's Underwear Indicator (MUI)? Apparently, when men think the economy is good, we buy new underwear. It's the only indicator I've seen this year that seems to be working.

Daniel Savoie March 30, 2016

Larry, I follow your forecasts and comments closely, I never see you talk about the uranium near future.... What is the near term (6 months) trend for this metal ? Thanks

Ed March 31, 2016

Nice report Larry

$1,000 gold™ March 31, 2016

so gold is going to $1,400 according to larry, so long as the $1,168 level holds. that's plausible. it could go to $5,000 if yellen screws up.

Rick March 31, 2016

I submitted a comment yesterday questioning your very strident prediction that the EU was about to unfold, as well as Japan. I bought some of the inverse etf's in these markets yourwere recommending early last fall and they have been duds and I've lost pretty heavily. While Europe is lackluster, it certainly doesn't show any indications of imploding. Possibly are you being a little excessive and things may just muddle along in Europe. BTW yesterday's comment said waiting modification and seems to have disappeared, like it got censored.

Fritz April 1, 2016

Larry is the only one I follow.