What’s Next?

by JDH on October 19, 2019

What is next?  We have a federal election in Canada this week, but I don’t expect that will have any impact on the markets, unless perhaps the NDP gets a majority government which would tank the Canadian dollar, but I don’t see that happening.

In the U.S., Trump is Trump, but he is also a politician, and he knows he has to keep the stock market inflated until the election in a year, so I don’t foresee any interest rate increases.  Quite the contrary; further reductions, stimulus, QE, money printing, whatever you want to call it, are likely.

INDU

The DOW, after cratering at Christmas last year, has had a great run, going from 22,000 to almost 27,500 in the summer, and has now settled in to a trading range between 25,500 and 27,500.  What’s the next move?  Probably down towards the lower end of the trading range, but I don’t see as low as 25,000 in the near future, so any drops to those levels would likely be a buy.

Gold

Of greater interest to me is gold (because I’m not playing the Dow).  Gold bottomed in November, 2018, about a month and a half earlier than the stock market, and then had a decent consolidation period until the summer, and then a rocket ride from June to September, rising from $1,275 to over $1,550, for a bump of well over 20%.

Gold has since corrected back to under $1,500, but this correction appears to be a pause, not a technically-significant crash, so it would appear that gold is building a base for the next run.

This has implications for NUGT, whose chart is similar but more pronounced than gold’s, so I’m holding, awaiting the turn around.

Let’s hope I don’t have a long wait.

Fortunately, I’m not doing this on margin, and I’m not “betting the farm”, so I can wait.

Stay tuned, and have a great week.