I hope you paid attention to the market action this past week. The significance of it all is crucial to not only understanding what is going on, but also to protecting and growing your wealth.
First, the stock market has topped. All the evidence I am studying tells me we are now in a bear market that could last anywhere from three to 10 months.
The reason the market has finally topped is simple. It got stretched too high for too long and it needs to pullback and take a break. Much like trying to hold your arm up by your side for as long as you can, at some point, it’s going to feel like a lead weight and you’re going to have to drop your arm to recover. It’s that simple.
Analysts will tell you that corporate earnings for the second quarter are going to disappoint, or some other nonsense. But the fact of the matter is that the stock market needs a break … it needs to pullback and wash out some diehard bulls … and refresh itself before heading any higher.
|Gold is soaring again, along with a stronger dollar.|
How low can the Dow go? Not all that much lower. Worse case, 13,937. Best case: 14,687.05. But it won’t be a vertical drop. There are bound to be some sharp rallies and zigzags along the way lower.
Second, gold is soaring again. Since the first of June, gold is now up almost $100. And the thing is that gold’s recent rally has occurred along with a stronger dollar, something I’ve been warning you would happen.
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So why is the dollar stronger when the U.S. economy is weak at the knees and the U.S. stock market is falling? That’s simple to understand too:
A. Domestic U.S. investors who are selling stocks are moving back to cash, which is bullish for the U.S. dollar. And more forcefully …
B. European investors are still flooding into the dollar, fearing a collapse in the euro (which has now started) and all the hair-brained schemes European leaders are devising to try and save the single-currency experiment.
Like raising taxes to insane levels. Like embracing a European Union-wide policy of confiscating depositor money should another European bank fail. And more, much more, including bickering with British authorities now to try and get the U.K. to adopt the euro, which Britain has rejected from the outset of the currency.
And then there are the war cycles I have been warning you about, which are ramping up at a feverish pitch. Ukraine crumbling. Israel and Hamas literally now at war. Japan changing its 60-year nonaggression pact, freeing up its military to confront China. And more. Which is precisely why …
Third, crude oil is now building a stronger base than I had expected, and will likely soon launch higher. I do expect one more pullback in the price of oil, which we are getting now. But soon, oil could jump to $112, then even higher, to $124, before it takes another breather.
Fourth, mining shares — also as I have warned you — are now soaring like a rocket. Some mining shares are up 20 percent in just the past week. Thirty percent, even 40 percent over the past month. Don’t say I didn’t tell you so. I did.
But don’t worry. Mining shares are among the most undervalued equities on the planet. Over the next few years, I see many of them (not all), doubling and then doubling again, while others soar 500 percent, 600 percent and more.
Meanwhile, while all this is happening …
Fifth, deflation has now migrated to the food sector, with the prices of soybeans, wheat, corn, and soybean oil literally collapsing. Corn prices have shed 25 percent since April. Beans, 18 percent since May 23. Wheat, 26 percent since May 9.
Crazy markets you say? They’re not crazy at all. They are doing exactly what they should be doing, exactly what I have forecast and expected.
Sure, my timing has been off a bit on some markets, like the stock market, but the correction appears to be finally here …
And more importantly, once it ends, you will be able to get on board at much cheaper prices … and watch your equity investments grow like crazy as the Dow heads toward 31,000 over the next few years …
Not despite all the problems in the world today — but because of them!
My best counsel right now:
A. Don’t expect your typical summer doldrums for any financial market this year. Instead, expect more fireworks.
B. Don’t accept any common wisdom about the markets, like gold must go down if the dollar is strengthening. Or that mining shares must fall if the broad market slides.
C. Don’t buy into all the garbage out there that these markets are manipulated, and that you don’t have a fair chance at making money as a result. That too is pure hogwash. Both parts of it.
And instead, think for yourself, think out of the box, question everything you hear and read …
Or else you will end up one of the sheep in a pack unknowingly on your way to the slaughterhouse.
Until next week …