Eight Months Into Rally, What's Next for Market and Gold?
Source: David A. Banister, Active Trading Partners (11/9/09)
We have come a long way since early March of this year. After bottoming at 666, the SP 500 Index has rallied as high as 1101 at its recent peak pricing. . .I believe the next leg for the market is a corrective movement to the downside.
To wit, the SP 500 has retraced a normal A B C pattern to the upside following a cataclysmic 5 wave pattern from October 2007 to March of 2009. The 8 month rally is roughly 50% of the 17 months of decline that preceded it into early March. With the sentiment readings back at very high bullish levels, many small cap stocks rolling over, and leadership spread amongst fewer and fewer equities, it is time for a corrective decline. We see this bounce ending shortly to the upside, followed by another bout of selling.
Our advice is to maintain higher than normal cash positions at this time, accumulate Gold on large dips, and wade into Gold Stocks on a big drop as well. We also plan to recommend the occasional use of Bear ETF’s for defense and insurance on our portfolios.
Dave Banister is the CIO and founder of Active Trading Partners, LLC. David has been often quoted on 321Gold.com, The AUreport.com, Stockhouse.com, Ticker Trax, and other advisory venues. His activetradingpartners.com service advises subscribers in real time with frequent updates on managing portfolios through various market conditions. You can learn more at www.activetradingpartners.com and reach Dave at [email protected]