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Is Gold Losing Its Glitter?

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    September 11, 2013

    Gold just about reached our initial upside target at its intermediate-term 30-week moving average 10 days ago, and has been pulling back from that resistance since.

    Is it just a short-term pullback to retest the short-term support at its 30-day m.a., or the end of its bear market rally already?


    Global news takes over.

    In this week of no economic reports in the U.S. to be concerned about, markets are getting news from outside the U.S. – and its all good.

    It was reported last night that China’s industrial output was up 10.4% in August, while the country’s retail sales were up 13.4%. The reports have economists raising their outlook for China’s economy.

    And the reports that all sides are agreeing to a plan to put Syria’s chemical weapons under international control is certainly good news. 

    More changes in the Dow Index.

    One of the many problems with buy & hold investing is its premise that “The market always comes back.”

    As I’ve often noted, the market that goes away is not the same one that comes back, so the phrase is meaningless as to whether an investor’s portfolio comes back.

    For instance, 23% of the stocks that were in the DJIA at the market peak in 1999 were no longer in that index by 2004, just five years later. They had been replaced a few at a time by stocks of newer, stronger companies. Chevron, Goodyear Tire, Union Carbide and Sears Roebuck were replaced by Microsoft, Intel, SBC Communications and Home Depot. AT&T was replaced by Verizon. Eastman Kodak was replaced by Pfizer. International Paper was replaced by AIG Group.

    In just the seven years from 1999 to 2006 there were 109 changes in the stocks that comprise the Nasdaq 100, an index that only contains 100 stocks.

    In just 11 years from 1988 to 1999 there were 256 changes made in the stocks that comprise the S&P 500, an index of only 500 stocks. More recently in the 3 years from 2010 through 2012 there were 47 more changes made in the stocks that comprise the S&P 500.

    And now this morning it was announced that three more poor performing stocks in the Dow, still way below their 2000 peaks, are being replaced with strong stocks.

    Alcoa, Bank of America, and Hewlett Packard are coming out of the index. Goldman Sachs, Nike, and Visa are going in.

    To read my weekend newspaper column click here:   No Clarity Provided For Investors Or The Fed

    Subscribers to Street Smart Report: In addition to the charts and recommendations in your secure area of this blog, there is a hotline from this morning in your secure area of Street Smart Report.com And the new issue of the newsletter will be out tomorrow.

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more.