NEW YORK (TheGoldAndOilGuy.com) -- While trend lines are a great tool for identifying a weakening movement and reversals in the market, I don't put a lot of my analysis weighting on them.
Most of my timing and trading is based around what I call inner-market analysis (market stages, cycles, momentum and sentiment). Using these data, we can diagnose the overall health of the market. Knowing the strength of the market, we can then forecast short-term trend reversals with a high degree of accuracy.
In this report, I keep things clean and simple by using just trend lines. During the last three weeks, we have seen the price of stocks pull back. And because 2013 was such a strong year for stocks, most participants are expecting a sharp market correction to take place anytime now.
So with the recent price correction, fear is starting to enter the market, and money is rotating out of stocks and into the risk-off assets like gold and bonds.
Stocks tend to fall in times of economic uncertainty or fear. These same factors push investors toward the safety trades, or risk-off: high-quality bonds and precious metals. As more money goes from risk-on to risk-off, stocks will continue to fall and the safety trades will rise. The move by investors to select the safety of gold and bonds, compared with the volatility of stocks, will result in these risk plays moving in opposite directions.
Let's take a look at the chart below for a visual of what seems to be unfolding.
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics
while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a
reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a
comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and
strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV