Job Numbers Tell The Story & What's Happening With Gold?Emanuel Balarie This past week we saw an expected
bounce in the stock market. But per my last
commentary, we are not out of the woods when it comes to
this sell-off. I typically have CNBC on in my office, and it
never ceases to amaze me the continual assertion by pundits that
we are in the midst of a goldilocks economy and that the stock
market is undoubtedly going to head higher over the next several
months. Whether or not you subscribe with my 20%+ decline in
the market, you have to at least understand that we do not have
a goldilocks economy. What you will notice about the above chart is that in the past, declining home prices have signaled an increase in the unemployment rate. And of course, this makes perfect and logical sense. Not only will the investor's psyche (once they see falling home prices) translate into less spending, but job loss will weigh heavily on the US economy. Thus, if you want to keep an eye on which direction the economy is heading, focus on the job numbers in the housing and manufacturing industries. What's Going On With Gold? What exactly is going on with
gold? Several weeks ago I mentioned that gold's decline was fundamentally
unwarranted. I continue to believe this is the case. I sent this
comment to several reporters earlier this week: In a couple short weeks, the price of gold went from an overbought situation to an oversold situation. One of the indicators that I use to determine whether a market is overbought or oversold is the relative strength index or RSI. Take a look on the daily chart on April Gold futures contract. As you can see from the above chart, whenever the RSI has moved towards an extreme oversold position, gold has responded with a rally. However, it is important to note that this is just one indicator. Also, there can be situations where a market which is oversold can continue to be oversold. My outlook, however, is that gold's oversold position coupled with the above mentioned fundamental bullish factors, will likely result in a sharp move up within the next week or so. There are a number of different ways that you can participate in the gold market. If you are interested in learning more about gold futures and options on gold futures, I am offering a free educational brochure to anyone who asks. You can request one HERE. Additionally, you can also subscribe to Wisdom Commodity Weekly, a free weekly newsletter that provides commentary, outlook, and market analysis on a wide variety of markets. You can do so here: Futures and options trading involves substantial risk and is not suitable for everyone. Emanuel Balarie email: ebalarie@commoditynewscenter.com Emanuel Balarie is President and CEO of Jabez Capital Management. In addition, he is also editor of www.commoditynewscenter.com and the author of Commodities For Every Portfolio: How To Profit From The Long-Term Commodity Boom. Mr. Balarie's industry experience ranges from commodity stocks to futures to alternative investments. He is a highly regarded advisor to clients and institutions on the commodity markets, and has had his research published all over the world. In addition to being a regular guest on CNBC, Balarie is frequently quoted in financial publications such as, The Wall Street Journal, Reuters, Marketwatch from Dow Jones, and Barrons. Mr. Balarie is a graduate of UC Berkeley. For more information on Emanuel Balarie you can visit www.commoditynewscenter.com or email him at ebalarie@commoditynewscenter.com |