RawGreed midday update and market prediction

Posted on December 8, 2005 , filed under Stocks | Print This Post

The market is struggling to find its direction in December. I’m sure I’m not alone in saying that these fluctuations are nauseating. A few day’s ago we are on the verge of breaking 11,000 on the Dow. Today we are struggling to close above 10,800. It seems that the market is having a hard time digesting December’s economic data. The dollar is strong, job data is strong, and oil is hovering at or under $60. These are all positive points for a continued rally. The bears see an anticipated weak housing market, a mortgage market crash, continued interest rate hikes and fears over a bird flu pandemic. I can call this, the uncertainty of everything. The market sustaining a rally really is a toss up depending on who you speak with. This creates a market ripe with speculation and large price swings. There is one positive after effect of the confusion, gold has continued to rise. Gold promoters tout the metal as an alternative currency and safe bet if a bird flu pandemic strikes. I tend to agree.

I expect that we will see a December rally in the market. Longer term I expect that the market will continue to fluctuate around the current 4 1/2 year high’s. We probably won’t see a bull run like the .com days for quite some time. I simply don’t see a catalyst to create such a mania. Gold has a shot of producing the same type of .com mentality that drove herds of investors to lose their fortunes. Analysts are backing gold’s continued rise and there is enough economic uncertainty and global fears from terrorism and bird flu, that I don’t see the metal crashing in the near term. I will continue to watch the stocks on my gold watchlist and will likely buy a few if a pullback occurs. At the moment I believe the general public is beginning to take notice of the gold rush. Institutional investors are still building their positions. I believe we are in the beginning of the third phase of a normal bull run. Gold passing $500 is an important public psychological milestone. If gold can maintain above $500 levels for another 3-6 months, we should see the start of a gold mania.

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