Tag Archives: 2018 May 16

This Day In Market History: Fed Chair Martin Issues Warning About Too Much Stock Market Speculation

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened?

On this day 51 years ago, Federal Reserve chair William McChesney Martin warned about an overheated stock market in a speech commemorating the 175th anniversary of the New York Stock Exchange.

Where The Market Was

The Dow finished the day at 885.80. The S&P 500 traded at 93.14. Today, the Dow is trading at 24,768.55 and the S&P 500 is trading at 2,718.23.

What Else Was Going On In The World?

In 1967, Dr. Christian Barnard completed the first successful human-to-human heart transplant on 53-year-old patient Louis Washkansy in South Africa. Thurgood Marshall became the first African American U.S. Supreme Court justice. A movie ticket cost $1.25.

A Word Of Warning

Martin’s speech at a Lincoln Center Luncheon in New York took a bleak tone for such a celebratory event. Martin said market speculation had gotten out of control and that type of speculative trading could essentially corner the market for certain individual stocks.

Those who ignored Martin’s warning lived to regret the decision. In the three years leading up to Martin’s speech, the S&P 500 surged more than 14.8 percent. Three years later, the S&P 500 was down 17.4 percent.

History seemed to repeat itself in 1996 when Fed chain Alan Greenspan warned of “irrational exuberance” in the stock market within four years of the bursting of the Dot Com Bubble.

Related Links:

This Day In Market History: Amazon Goes Public At $18 Per Share

The 'Irrational Exuberance' Of 1996, And How You'll Know It Has Returned

This Day In Market History: Fed Chair Martin Issues Warning About Too Much Stock Market Speculation

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened?

On this day 51 years ago, Federal Reserve chair William McChesney Martin warned about an overheated stock market in a speech commemorating the 175th anniversary of the New York Stock Exchange.

Where The Market Was

The Dow finished the day at 885.80. The S&P 500 traded at 93.14. Today, the Dow is trading at 24,768.55 and the S&P 500 is trading at 2,718.23.

What Else Was Going On In The World?

In 1967, Dr. Christian Barnard completed the first successful human-to-human heart transplant on 53-year-old patient Louis Washkansy in South Africa. Thurgood Marshall became the first African American U.S. Supreme Court justice. A movie ticket cost $1.25.

A Word Of Warning

Martin’s speech at a Lincoln Center Luncheon in New York took a bleak tone for such a celebratory event. Martin said market speculation had gotten out of control and that type of speculative trading could essentially corner the market for certain individual stocks.

Those who ignored Martin’s warning lived to regret the decision. In the three years leading up to Martin’s speech, the S&P 500 surged more than 14.8 percent. Three years later, the S&P 500 was down 17.4 percent.

History seemed to repeat itself in 1996 when Fed chain Alan Greenspan warned of “irrational exuberance” in the stock market within four years of the bursting of the Dot Com Bubble.

Related Links:

This Day In Market History: Amazon Goes Public At $18 Per Share

The 'Irrational Exuberance' Of 1996, And How You'll Know It Has Returned

Gold Price Forecast: Bears In Control, Eyes $1,240

This article originally appeared on FXStreet.

A double top breakdown is seen on the weekly chart.
Adds credence to repeated bull failure seen on the monthly chart.

Gold (XAU/USD) fell to $1,287 yesterday – the lowest level since late December, courtesy of the uptick in the treasury yields and the resulting rally in the US dollar.

The zero-yielding yellow metal could drop further to $1,240 in the near-term, the technical charts indicate.

Weekly chart

xauusd_weekly-636620485611544722.jpg

Chart Source: Netstation

Repeated bull failure pushed the yellow metal below $1,302 (double top neckline) as expected. A weekly close below the neckline looks like a done deal.

The relative strength index (RSI) is biased bearish  – below 50.00 and trending south in favor of the bears. Further, the 5-week moving average (MA) and 10-week MA are sloping downwards in favor of the bears.

So, the metal looks could slide to $1,240 – double top breakdown target as per the measured height method.

The bearish setup on the weekly chart only adds credence to the repeated bull failure seen in the monthly chart and the bearish breakdown in the monthly RSI

Monthly chart

xauusd_monthly-636620486528594353.jpg

Chart Source: Netstation

Gold bulls failed to cut through the triangle resistance and the 100-month moving average for four straight months before falling below $1,200. The RSI has breached the ascending triangle to the downside, signaling a bull-to-bear trend change.

Thus, prices could slide to triangle support seen at $1,230 in the next few months.

Only a convincing break above the 100-month MA, currently seen at $1,352, would revive the bullish outlook.