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Gold, Silver, and Stock Prices at Their Tipping Points


The market is ripe for another leg higher because decisions are being made across the pond to deal with Europe's financial issues.

Over the past year we have been learning more about the financial situations across the pond in Europe. With international issues on the rise, investors are panicking to find the safest haven for their capital. This money has been bouncing from one investment to another, hoping to avoid the next major crash in stocks, bonds, currencies and commodities. It seems every six months there's a new headline news issue at hand, forcing the smart money to withdraw from one investment class to another in order to avoid the next meltdown.

To make a long story short, I feel the markets (stocks, bonds, currencies and commodities) are about to see another major shift that will either make you a boatload of money or lose you a ton if you are not positioned properly.

So the big question is: Which direction will these investments move?

Let's take a look at the charts.

Gold Weekly Chart -- Long-Term Outlook

Gold just saw a strong wave of selling this summer, so it's a bit early to give any real forecast for what is next. That being said, this long-term chart may be telling us that gold's rally could be nearing an end, or a 12-month-plus pause could take place. If you have followed the market long enough then you realize that when everyone is in the same trade/position, the market has a way of redistributing the wealth to savvy investors. Over the next four to six weeks there should be more price action which will allow me to get a better read for what is going to happen next.

Silver Weekly Chart -- Long-Term Outlook

Silver has been showing strong signs of distribution selling. Meaning the big money is moving out of this industrial and highly speculative metal. The interesting part here is that silver topped out much sooner than gold. Many times in the past silver has topped and/or bottomed before the rest of the market reverses direction. So it is important to keep an eye on silver as we go forward in time because it tends to lead the market one to two months in advance sometimes.

S&P 500 Weekly Chart -- Long-Term Outlook

Stocks in general are still looking ripe for another major bull market rally. But if we do not get some follow-through in the coming one to two months, then this almost three-year bull market could be coming an end.

Mid-Week Trend Trading Conclusion

In short, the market as a whole is trying to recover from a strong bout of selling over the past few months. In my opinion the market is ripe for another leg higher. The reason I see higher stock prices is because decisions are being made across the pond to deal with their issues. Looking back, it is similar to what the United States did in late 2008 - early 2009 just before the market bottomed.

Everyone right now seems to be saying Europe is in big trouble and that they are going about things in the wrong way, but if you think back, that is exactly what took place in America not that long ago. And back then it was all over the news that the resolutions to fix the US would not work. In the end, life continued, businesses continued to operate. Soon after decisions were made, the stock market and commodities rallied and are still holding strong today.

Editor's Note: Chris Vermeulen offers more content at his site,

No positions in stocks mentioned.

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