Beware financial advisors trying to lure investors into emerging markets. They make a convincing case. It is not hard when emerging markets have delivered such outstanding performance. But beware. You should always buy at the start of a bubble, not after it.

Unscrupulous investment advisers do not worry about such trifles. Their only concern is to get a fat commission on your investment.

It is not as if the warning signs are not obvious. The boom in Chinese stocks has been breaking down since mid-August when astrologers had pointed to a coming crash, and there was indeed a major correction in China. Is that the start of a downtrend? Well, what has gone up usually comes down in stock markets.

How interesting that Jim Cramer chose the end of last week to wage war against short ETFs just a day before investors filed a class action against the financial short fund SKF.

You just know this has to be a signal to buy the offending asset class. It is a neat contrarian moment backed up by some hugely obvious market information that is not a secret to anybody: stocks are massively overvalued in a historically far too long rally, and the traditional month for crashes is October, and we are almost there.

Now I can understand the anti-short ETF case. They can point to the poor tracking record of these ETFs at certain points, their very raison d’etre. And holding these instruments for too long is not recommended because leverage costs money.

This week was the anniversary of the Lehman bankruptcy and financial collapse of last autumn and it was curious to hear the financial pundits talking as though this problem is fully behind us.

There were also some widely trumpeted figures about the success of the Chinese mega-stimulus (equivalent to 50 per cent of GDP in the first half) in sustaining GDP growth around eight per cent.

Gold prices sprinted past the $1,000 an ounce mark this morning, and silver climbed even faster to approach $17. But this might also be taken as a warning that investors are about to shift out of stocks which are looking very overbought.

Shares have enjoyed a huge rally in most markets since the lows of March and have been riding for a fall for more than a month. Last week investors also ominously moved money heavily into bonds, depressing yields, and the gold and silver price surge may represent another shift to risk aversion.

Will the gold and silver price rises hold this time? Gold has challenged the $1,000 barrier several times over the past year only to fall back.

With gold apparently making another attempt to reach $1,000 an ounce this might seem an odd moment to reflect on the broader outlook for financial markets and what that means for gold and silver.

But if you accept that financial markets are at the start of a correction after their historic rally – and September and October are the traditional down months – then things do not look too bright for the precious metals.

The US stock market appeared to take a decisive change of direction last night with the S&P closing under 1,000 points and the Nasdaq under 2,000. Short ETFs jumped, particularly the leveraged variety.

But tonight will be eagerly watched by the shorts for confirmation of a major change of direction – from a bear market rally of 51 per cent to a market correction, at best, or serious crash, at worst.

Will there be a sudden plunge on financial markets on Monday as the month of August comes to a close? Markets do seem to be riding for a fall.

Certainly a bout of end of month profit taking can be anticipated after a record rally from the lows of March. It would not take much more logic to conclude that this long rally is also coming to an end and that a renewed plunge in markets is inevitable.

It was a bit uncanny when the Dow dropped suddenly on the opening Friday. It almost seemed that astrologers might be proven right after all in pointing to August 14th as an auspicious day for global stock markets.

But if a crash did not follow, the markets did move low enough to leave many down for the week, the first break in this long bear market rally. Is that it? The S&P and Nasdaq have rallied by 50 per cent from the March lows, making this rally unusually long and strong.

OK this is a story for the silly season, perhaps. But if you do a Google search ’stock market crash astrology 2009′ then an article appears that claims the author first forecast August 14th for a big stock market crash as long ago as July 1996.'

It is but a year ago that I scoffed at another astrological prediction about a coming autumn stock market crash, although I did write a number of articles at that time endorsing this view. That said, I was far too positive about oil, gold and Dubai property last summer and would have been better off listening to the astrologers.

The strength of this bear market rally is considerable and last night the psychologically significant 1,000 barrier was broken on the S&P, and bonds and the dollar weakened.

But while I concede that the bulls have been proven right about the duration and strength of the stock market rally, it is still just a rally and not a new bull market.

How can we have a new bull market with global trade in a deeper depression than the 1930s? India just posted export figures down for a ninth month in a row, 28 percent lower than a year ago. Globally the World Trade Organization forecasts a greater than 10 percent fall in world trade this year, an astonishingly bad year for business.

The US housing downturn which drove the world into recession is showing signs of bottoming out. But a long period of slight or flat growth looks far more likely than anything worthy of the name recovery.

Since then end of 2006, an amazing $4 trillion in US home equity has vanished. Home prices edged up in May, bringing renewed hope that the 40 per cent plunge in house prices might be coming to an end.

In any falling market there has to be a bottom. Housing generally takes longer than a stock market to find a bottom because homes are illiquid and people also live in them.

With the S&P up 46 percent from its March low, a typical 50 percent retracement is almost complete ready for the next plunge lower in this bear market.

Unless you are a born-again-bull or have shut yourself in a cupboard for the past two years, I do not understand how anybody can see a further upside in markets; at this point, the risk is all to the downside.

Shorting US bonds and abandoning the US dollar is just too easy to be the correct strategy, remarked Bill Bonner, President and Founder of Agora Financial at its 10th annual symposium in Vancouver last week.

Black Swan Capital was on hand to present an alternative scenario for the US currency which I thought seemed pretty convincing, although currencies are always the hardest call in financial markets.

This is not an article to explain the leverage that junior exploration stocks offer to the precious metal price. Suffice to point out that last autumn’s stock market crash has left juniors offering arguably their biggest leverage to gold and silver in history.

It is always tough to buy shares at bargain prices because that means investors are either scared by recent news, or have already lost a lot of money in a price sell down. But buying junior exploration stocks is basically an option on a rising gold price that never expires. Is that not what you want in an unpredictable gold bull market?

Three years ago when I visited North America, it was the television commercials for flipping and re-mortgaging houses that caught my eye as a worrying sign. This year, watching TV at night in Vancouver, it is the advertising for commodity exchange traded funds that catch my attention.

Commodity ETFs are an attractive way to hold financial exposure to anything from oil to gold and agriculture. They are relatively cheap as a financial vehicle and very liquid. But you are still making a bet on the direction of these markets, and that is all that really matters.

Why is it that UK house prices have remained so expensive despite the gloom-and-doom circling the British economy about debt levels and rising unemployment?

Two historic factors are usually cited: a relative shortage of property in the UK due to under building for a generation; and the strong local mortgage industry that keeps pumping money into this asset class.

Buried in a corner of the back page of my Gulf News Saturday morning was a news item about the latest Organization for Economic Cooperation and Development comments on global trade figures showing ‘a remarkably similar… synchronized trade collapse… across countries’.

Indeed G7 exports were down 22.8 per cent in the first quarter of 2009 against the same months in 2008, while imports fell by 16.8 per cent. The only good news was that the speed of contraction since July 2008 appeared to be slowing down.

Traders with long experience of bear market rallies inform me that it is usual to see a final spike at the end of a long rally like the one we have had since the lows of March.

Is that what we are now seeing in US stocks? This is summertime and trading is very thin but the sudden upward moves in the S&P look like a last hurrah.

Gulf stocks have taken a beating over the past week with pressure on hydrocarbon prices giving investors packing up for the summer another reason to sell.

Oil prices could move even lower. After all, $60 would have been considered a very good price 18 months ago and the global economy has changed dramatically for the worse since then.

There seems a pretty universal consensus that somehow the autumn will produce a recovery in economic activity that will at least justify present optimism about the outlook for share prices, or more accurately universal indifference and a feeling that they are unlikely to go any lower now.

This is what the great voting machine of the modern stock market is telling us. But has the market got it right or is it wrong as it was last summer? Let us not forget the market was wrong last summer, seriously wrong.