Feb 21st 2013 8:30 est
MAJOR TOP IN STOCKS & MAJOR BOTTOM IN GOLD The breakdown after the QE4 announcement, and now the extreme move into a yearly cycle low has, I daresay, convinced everyone that the gold bull is over. I would argue that it is impossible for the gold bull to be over as long as central banks around the world continue to debase their currencies. Gold is just creating the conditions necessary for its next leg up, similar to what oil did in early 2007.
For months and months now I’ve been warning traders that QE3&4 were going to have a major effect on stocks. I knew that analysts claiming that each new QE was having less and less affect would not apply to this latest round of quantitative easing. I was confident the latest counterfeiting operation by the Fed would push stocks to at least test the 2007 highs, and I really expect we will see a marginal break above that level sometime this year. Probably by the end of the month. My current guess is that we will get a sell the news type of event as soon as the sequestration can is kicked down the road and that will mark the top of this particular intermediate cycle. Make no mistake though we are still in a secular bear market. Stocks are testing their all-time highs at the same time earnings are in decline, GDP has turned negative, and unemployment is starting to tick up. It has been my expectation that the stock market would put in a final top sometime this year. I also expect this will be a very extended and difficult topping process lasting months if not a year or more.