Falling Silver And Oil Prices Take Stocks Lower Suggesting A Financial Market Turn From Bull To Bear

By: Jan Allen | Tue, Dec 19, 2006
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Silver and oil prices took the stock market lower suggesting that that the stock market has turned from bull to bear.


Silver as traded by the ETF (SLV) fell for the third straight day

Oil as traded by the ETF (USO) took the energy stocks and the energy service stocks lower

Energy stocks as traded by (XLE) fell

Oil service stocks as traded by (OIH) suffered a fractal break

Continuous contract gold ($GOLD) closed down $1.20 at $617.90.

The ETF (GLD) closed marginally up at 61.04

The ($HUI) index of mining stocks fell to its 50 day moving average

The ($XAU) index of mining stocks fell; Tim Knight provides a chart of the $XAU showing today's fall.

(XEG.TO) suffered a fractal break to close at its 50 moving day average

(XGD.TO) suffered a fractal break; note how this chart and that of XEG.TO both manifested a bearish engulfing pattern the day before warning investors of a likely change.

The gold stock based ETF (GDX) fell below its support level of $40.40.

The weekly chart of mutual fund U.S. Global Investors Gold Shares (USERX) fell confirming that its recent high is a 'dark cloud cover pattern' and that this investment should be sold immediately.

Tim Knight provides the daily chart of the Nasdaq's falling today out of its channel.

The Russell 2000 ($RUT) closed down 1.35% with Tim Knight providing an impressive chart; of significant note, its candlestick is bearish engulfing.

The government bond ETF (TLT) manifested a compressed and small doji indicating that the opening and closing price were virtually unchanged; and indicating a quiescence, rest or indecision in the bond marketplace.

Google Google (GOOG) as shown in Tim Knight's chart fell nearly twenty points today

Internet Infrastructure HOLDRs (IIH) closed at 5.61 down 0.10 (1.75%).

Internet HOLDRs (HHH) closed at 54.02 down 0.68 (1.24%).

iShares Goldman Sachs Software Index (IGV) closed at 44.91 down 0.64 (1.41%).

First Trust Dow Jones Internet Index (FDN) closed at 23.17 down 0.27 (1.15%).

The bearish engulfing candlestick in DR Horton's (DHI), America's Home Builder's chart suggests not only a downturn in the homebuilding stock sector but also the stock market as a whole.

The chart of the Philadelphia Housing Index ($HGX) suggests that the July through December rally is over! Look at the "small-v" from December 6th to December 15, 2006: this is a double market top; note also the ominous black filled candlestick and down turn to today, December 16, suggesting a market top was completed last Friday.

Investment mania continued on unbridled in the leisure and entertainment sector and some Asian markets

Harrah's (HET) accepted a $90 per share buyout offer from private equity buyers; news of the development sent the capital markets ETF KCE up 0.26, 0.39% to close at 67.66 and inducing Goldman Sachs Group Inc. (GS) higher to close at 203.24 near its December 8, 2006 high of 205.10.

Both the weekly chart and the daily chart of the ETF (PEJ) manifested a gravestone doji.

The Chinese ETF iShares FTSE/Xinhua China 25 Index (FXI) continued on in all mania rising $1.25, 1.24%, to close at 102.25. Things that go up parabolically also go down parabolically.


Last Friday, December 15, 2006 was most likely a stock market high.

Today's significantly lower prices in speculative investments such as silver and internet stocks signals a market turn as does lower oil prices and energy share prices. The chart for S&P trendsetter Exxon Mobil (XOM) portends bearishly: note Friday's bearish engulfing candlestick and today's close at 75.51 which is below support at 76.00.

Note the filled black candlesticks in the (XOM:$WTIC) chart and also its curved and rounded top indicating a gradually diminishing desire for stocks compared to oil; in other words, there is a diminishing investor enthusiasm.

I have left the five most bearish of bearish charts for last: the Bombay stock exchange ($BSE) closed manifesting a dragon fly doji after having completed three white soldiers.

The chart of the Canadian iUnits Income Trust Sector Index Fund (XTR.TO) manifested a bearish engulfing candlestick pattern as Finance Minister Jim Flaherty announced he will stick to plans to tax the high-yielding securities for the first time in four years.

The chart of Skyworks Solutions Inc. (SWKS), manifested a dark cloud cover pattern; I hope their investors have a parachute!

And the chart of Amazon manifested a dark cloud cover as well; I presented the weekly chart to present an idea of the fractal break that is coming here; better call the financial paramedics if you or your friends are invested in Amazon

The chart of Korea fund (KF) manifested an evening star

Permabear Tim Knight in today's article Bears and Atheism proselytizes the Church of the Bear and presents the S&P's chart which I believe visually presents a pivot point marking the passing from 'the age of financial prosperity' where fiat assets are used to garner wealth to 'the age of financial ruin' where fiat assets such as currencies, stocks and bonds become worthless; and gold and gold alone is the de facto means of wealth accumulation and preservation.

The fact that the $HUI and $XAU gold mining stocks fell more on a percentage basis than did Continuous Contract Gold and the gold based ETF (GLD) serves ominous warning: precious metal mining stocks have detached from the price of gold; the $HUI indexed gold mining stocks have failed in their capability to accumulate and preserve wealth; this being confirmed in the weekly $HUI:$GOLD chart.

The 'age of prosperity' created by the HUI gold bugs mining stocks is over. The (^HUI) closed on 12-18-2006 at 332.34 down 7.01.

Watch for these mining stocks and mining funds to fall quickly with the rest of the stock market.

I recommend gold and gold and gold alone as the means of wealth accumulation and preservation.

The fact that the commodity ETF (GSP) and the stock ETF (SPY) both closed lower underscores an important principle: in the age of 'financial ruin' both commodity wealth and stock wealth become extinguished.

Suggested Investments

I believe that the world has reached a significant juncture: I recommend gold and gold and gold alone as the means of wealth accumulation and preservation.

Many, many thanks to Stockcharts.com; I have learned a great deal from their service and from those who take the time to post charts in Public Charts Program. I am not an investment professional; I do not offer investment advice; I do not expect or take payment for anything written in this blog; one trades investments at his own risk.



Jan Allen

Author: Jan Allen

Jan Allen
Prospering Bear

Jan Allen is an analyst and journalist with Prospering Bear, a website providing thoughtful information on how to prosper in the coming Bear financial market.

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