The Dow has been hit hard with selling, breaking through the key 11,600 support level I’ve been warning about. I said that once the Dow breaks 11,600, the bear is back in control and much lower prices are to come. That means U.S. stocks, and by default the U.S. economy, are going over the cliff.
How low will it go? We need more fear in the market before a bottom comes and I see the Dow dropping to as low as 9,200 before a turnaround starts to take hold.
Of course, it won't be a straight-down affair. There will be a lot of fake-out moves and with all the uncertainty out there, there will be a lot of volatility. The economic news is not good, and a lot of investors are very, very nervous, and rightfully so.
What should you do? Be cautious. Stick to plays in natural resources and make sure your gold portfolio is up to snuff.
Posted by: Ryan Trask on Friday, July 11, 2008
Larry, in your opinion, how will the 2008 Presidential Election on Nov 4th effect the Dow? Will the election be a temporary distraction from bad economic news and actually make the market and Dow shift up temporarily and be a "fake-out" move?
Posted by: David Bueche on Monday, July 14, 2008
Larry, I had no idea that tiny little Vietnam was the #1 importer of gold. Do you see their recent move to block new gold imports as damper on gold prices? http://seekingalpha.com/article/83772-vietnam-suspends-gold-imports-follows-fdr-s-great-depression-lead -David
Posted by: Larry on Monday, July 14, 2008
I don’t think it’s a factor at all. The major trends were set in motion well before this election year, and they’re not about to change, no matter who wins the White House.
Posted by: Larry on Tuesday, July 15, 2008
Yes, Vietnam is a big importer, but largely because there’s hardly any gold in the country to begin with – due to the Communist regime there and ongoing confiscation. As opposed to say India, where gold has been circulating for thousands of years.