Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Tuesday, the 26th of March.
Goodbye Yellow Gold, Hello Black Gold
The gold market continues to frustrate the bulls and confound conventional wisdom. The market action yesterday and early today can only be seen as negative. With both our weekly and monthly Trade Triangles red, we see no reason to get excited about gold moving higher at the moment, so for now say goodbye to yellow gold.
On the other side of the ledger, say hello to black gold. Yesterday our weekly green Trade Triangle kicked in and gave a buy signal in the crude oil market. Yesterday's buy signal was in line with the longer-term monthly Trade Triangle, which has been bullish and in place for quite some time. We see the renewed bull market in crude oil continuing from here based on our Trade Triangle technology. With gasoline and crude oil prices moving higher, it does raise concerns about gas prices. If gas prices become so expensive, is that going to derail the economy?
Perception and Belief is Everything for the Markets
If we start believing collectively that things will get better, will they in fact, get better? President Roosevelt gave a famous speech at the height of the depression in the 30s and said, "The only thing we have to fear is fear itself." In those eight words, the 32nd President of the United States summed up everything we need to know about perception and the markets. The economy improved rapidly from 1933 to 1937, but then relapsed into a deep recession. Does history repeat itself, and is 2009 to 2013 the same time frame as 1933 to 1937? Only time will tell.
It's Not Over, 'Til It's Over
Let's face it, anyone who thinks that the problems in Europe or Cyprus are solved is dreaming. There are still massive problems in Europe and those problems are going to rear their ugly head again sometime in the future. Europe, unlike the United States and China, is a massive mismatch of countries stitched together by politicians to make a unified front. It was a classic mistake that bureaucrats make and continue to make. The concept looked good on paper to the bureaucrats, but the reality is, it just doesn't work with a diverse group of countries with different value structures. That is what we see as the underlying problem in Europe.
We are going to continue to monitor Europe and keep it on our radar screen until all the excesses are finally wrung out of the system. I think there is still a 70% chance Cyprus is asked to leave the Euro in the next 12 months.
One Stock on the Move Today:
DISH NETWORK (DISH)
POTENTIAL CHAOS AHEAD
March 27th - Budget Resolution Expires (SOLVED - Maybe can kicked down the road until September)
May 19th - Debt Ceiling Suspension Expires
Have a great trading day,