Trade of the Week: How to Profit if the Wheels Come Off...

I have been warning you for the past few weeks that mid-September looks to get ugly unless you plan on being short the market -- which is my plan.

Below is my time-cycle forecast for the S&P 500 for the next few weeks:

This coming week looks to be a shorting opportunity. I will be selling into an expected rally that will last only until either the end of this week or early next week. Then, as you can see, if the time-cycle forecast proves to be correct, the market could begin a stair-step move from about 1120 to near 1020 -- a decent opportunity to make money if the trend holds.

I prefer to buy inverse exchange-traded funds (ETFs) in falling markets, rather than shorting individual stocks. The reason is entirely due to risk. A positive exogenous event can occur at any time with any individual company that could push it from a declining trend to a spike higher. It is the risk of these potential upward spikes that put more risk on an individual short trade than I normally like. (more)

Thunder Road Report On The Imminent Surge In Silver, And Much More

From the just released Thunder Road Report:

I can’t remember a time in my 23 years in the market when there was so much confusion and uncertainty about the outlook. As the monetary catastrophe unfolds gradually, some days things look a little brighter, then the sheer enormity of the problem becomes only too apparent once again. Sentiment keeps flipping between optimism and pessimism, but the debt bubble just gets bigger! Noel Gallagher wrote “These are crazy days, but they make me shine”, and that sounds like a good enough motto for trying to invest right now (fingers crossed). The silver price has started to trade differently and it appears that BIG MONEY is moving in to the metal (at long last) and fighting the Cartel. There is evidence that the supply of physical silver is getting tight and it could be the beginning of a major upward move in the price.

This and much more in the full report:

TRReport21

World Indexes Since 2000

Jay Taylor: Turning Hard Times Into Good Times

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HUMOR

Comparing Historical Bond Yields to the S&P Composite Dividend and Earnings Yields; and Is Silver Breaking Out?

The following chart compares Moody’s Aaa bond yields with the dividend yield of the S&P Composite. Notice that stock yields remained above bond yields from 1929 until the mid 1950’s.

Click picture for sharper image

The following chart compares Moody’s Baa bond yields with the dividend yield of the S&P Composite. Notice that here, too, stock yields remained above bond yields from 1928 until the mid 1950’s. Stocks were considered to be more risky than bonds in those days.

Click picture for sharper image

The next two charts compare Long-term U.S. Treasury and 10 year U.S. Treasury bond yields with the dividend yield of the S&P Composite. In both cases, stock yields remained above bond yields from 1928 until the late 1950’s. (more)

Matterhorn Asset Management Sets Three Gold Price Targets: $6,000 – $7,000 – $10,000

From Egon von Greyerz of Matterhorn Asset Management

GOLD ENTERING A VIRTUOUS CIRCLE

Fundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.

• It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualised.
• It is a fact that the US dollar has declined 80% in value against gold since 1999.
• It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
• It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
• It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.

(more)