Graham Summers’ Free Weekly Market Forecast (Emerging Market Bloodbath Edition)

For months
now I’ve been warning of a serious correction hitting the markets. Looking at
last week’s action it looks as though it’s begun. And it may very well prove to
be far greater than just a mere correction.

For
starters, the Emerging Markets (which have lead US stocks since the 2008 Crash)
have collapsed, breaking below the trendline that sustained them from their
2008 lows…

Throughout
all the insanity of the last two years… the Emerging Markets have never once
broken below this line before. Moreover, the fact that this line has held for
not a few months but 24+ indicates that breaking below this line was a MAJOR
trend change.

Indeed, the
last time the Emerging Markets broke below their multi-year trendline, things
got “interesting” really fast:

In light of
this, the fact the Emerging Markets have broken multi-year trend support now is
a MAJOR warning sign that we should all be on RED ALERT. Remember Emerging Markets
have lead the S&P 500 on EVERY MAJOR turn of the last four years.

This
definitely opens the door for a Crash similar to the one that hit in 2008
occurring. However, before we get there, we need to break initial support at
45. If we take that out, then we’ve got MAJOR support at 42.5. A break there
would mean we’re not just having your garden variety 10% correction. And if we
take out 37.5… WATCH OUT.

In plain
terms, the Emerging Market space could rapidly turn into a bloodbath for the
markets (in Egypt and other places it’s already a literal bloodbath). So be on
watch for these support lines.

Another
major item to watch for is the US Dollar. Earlier last week the US currency
broke below CRITICAL support at 78. The Dollar is now trying to reclaim this
line, which it NEEDS to do if the US currency is not set to enter a MAJOR
inflationary (and potentially HYPER-inflationary) collapse within the next
year.

As you can
see, if the US Dollar DOESN’T reclaim 78 NOW, it’s but a mere few ticks away
from taking out its MULTI-year trendline. This would be absolutely DISASTROUS
for the US currency and would mean the world is heading into an inflationary
collapse (markets AND the US Dollar drop) as opposed to another round of
deflation (the US Dollar rallies while “risk” assets such as stocks fall).

Thus, we
could very well be on the verge of one of two MAJOR Crisis:

1)   An
inflationary death spiral.

2)   Another
round of Deflation similar to that of 2008.

I’ve laid
out the lines for determining which one of these it is. But either way it’s
time to buckle up and start preparing for what could be a REALLY rough time in
the markets.

Good
Investing!

Graham
Summers

PS. If
you’re getting worried about the future of the stock market and have yet to
take steps to prepare for the Second Round of the Financial Crisis… I highly
suggest you download my FREE Special Report specifying exactly how to prepare
for what’s to come.

I call it The Financial Crisis “Round Two” Survival
Kit. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
of 2008).

Again, this
is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com
and click on FREE REPORTS.

PPS. We ALSO
publish a FREE Special Report on Inflation detailing three investments that
have all already SOARED as a result of the Fed’s monetary policy.

You can
access this Report at the link above.

Comments

[Geoff-UK]

Bring out your dead.

[Hedgetard55]

Damn, HamyWanger has this site pwned.

Bernanke will eventually get what is coming to him  either a cushy Wall Street job with big salary like Greenscam, or being fed to the Nile crocs at the Bronx Zoo.

[Kristian]

QE2 isn't finished yet, and isn't QE3 rumoured...

[CEOoftheSOFA]

Can't we just lower the trend line?

[BearOfNH]

Then it wouldn't be a trend line.

[Yancey Ward]

A giant double top forming?

[whatz that smell]

jared says: Graham Summers is a human.

jared says: Graham Summers is not a machine.

jared says: therefore, Graham Summers does not compute.

jared says: buy the f----- dip.

[pat53]

"EEM collapsed" ? From $48 to $46 is a collapse?...  hardly  LOL

[covert]

the taipan club started this political and economic instability, by using the same principles of covert market influence, after buying large blocks of exxon mobil stock.

http://covert2.wordpress.com

[66Sexy]

Damn. Red or Black. I appreciate the analysis, but... inflation or deflation?

thanks for nothin'.