Video Transcript

Good morning! This is Larry Edelson with my Uncommon Wisdom video market update for Monday, November 26.

First, I hope you all had a wonderful holiday. I certainly did — enjoying some time off with friends and family, and also taking some time to look at the longer-term trends in these markets.

Last week before the holiday began, we saw some violent moves mostly on rumors about a compromise having been reached on the fiscal cliff situation. But there are no details yet to emerge thus far, at least as I’m recording this video. So let’s take a look at the longer-term trends.

There’s no change in these trends. By longer-term trends I actually mean the short- and intermediate-term trends. The long-term trends for almost all markets are substantially higher but we’re not at that point yet.

Let’s take a look at gold. This is an interesting daily chart on gold.

You can see here that gold has fallen quite substantially since Mr. Bernanke announced his QE III back in September, his infinity money-printing operation.

We’ve had a recent rally snapback, but we are coming into some system resistance that isn’t showing on this chart here that’s on my trading models — right around the $1,740, $1,735 level, up to $1,755 or so — give or take a couple of dollars.

I do expect gold to turn back down sharply and head toward the $1,600 level in the short term.

Let’s take look at the S&P 500 or the broader stock market. Pretty much the same thing here.

You can see we move down to this support level on this rising channel here. I do expect stocks to break this trendline here and, in the S&P 500, to move down to 1,286, even 1,280, and perhaps even a little bit lower heading into year-end — mostly on nervousness about the fiscal cliff.

There will be a fiscal cliff resolution, a compromise of some sort, but I don’t think the markets are going to like anything except no hike in tax increases and no spending cuts.

So it’s hard to say right now because that’s really what is driving the stock market. But technically and cyclically, I believe we’re heading lower in the stock market. And I believe that’s an indication that, whatever resolution comes out of the fiscal cliff, the market is not going to like it.

Next up, the U.S. Dollar Index. This is a longer-term daily chart of the Dollar Index.

I put this note on here, this is back in September when Mr. Bernanke announced again money-printing to infinity. And look what the dollar’s done: It’s largely rallied.

The dollar is in a nice uptrend here. There will be pullbacks along the way. I expect the Dollar Index to get up to around 83, 84 over the weeks ahead in the dollar largely against the euro. And again, no matter what happens with the fiscal cliff situation.

The reason the dollar is rallying is because disinflation is overpowering inflation in the short term.

Let’s take a look at the euro, which is really the converse of the dollar. You can see here that the euro is hanging in there. We did get up to the resistance provided by this red downtrend line from earlier in the year. But we’ve been unable to break it.

I do expect the euro to slide quite sharply heading into year-end. And as I just mentioned, (for) the dollar to rally pretty sharply heading into year-end, with the euro trading down around the 117, 115 level heading into year-end.

Again, the euro crisis is not over. It has seemed a little bit quiet recently, but there’s a lot happening behind the scenes with Greece and Spain.

France was just downgraded again by Moody’s. So there’s a lot happening there and there’s going to be a lot of downside pressure on the euro in the weeks ahead.

That’s it for this week’s video update. Please stay tuned to everything I publish. The market moves we’re going to see between now and the end of the year should be very important for setting the stage for trading opportunities, not only now, but also as the new year comes upon us in just a few short weeks.

Have a good week!

Larry