Friday’s downdraft on the heels of Egypt’s riots was the excuse U.S. markets needed to correct. I’m not looking for a huge correction but something that takes the S&P 500 down to the low 1200s wouldn’t be out of order.
Roger Nausbound, a smart blogger I follow, had a good column in Seeking Alpha this morning. It fairly well sums up my view of the stock market going forward.
John Roque, my buddy over at WJB Capital Group, is also cautious on the markets with the same low 1200s as a possible short-tem price target on the S&P. He also had some encouraging words for those holding gold and gold shares.
“The people who are quickest to conclude that gold is finished have, for the most part, never owned any gold. For every year from 2002 to2010 gold has, at least, corrected to its 40-week moving average and been down, peak to trough on average 15.6% (see table). In fact, every year since gold’s bottom in 2001 it has worked through consolidation phases and we think the recent price action is a part of such a consolidation phase. Gold is still above its upward-sloping 40-week/200-day moving average and we think there is support at $1300. Admittedly, gold stocks have corrected sharply and their downside has been stomach churning, but the Phila. Gold and Silver Index is also into support at its upward-sloping 40-week/200-day moving average.”
Finally, there was an interesting article in the “Telegraph” by Ambrose Evans-Pritchard which underscores my forecasts on commodities, especially food.