This page has been archived and commenting is disabled.
Graham Summers’ Free Weekly Market Forecast (Hold the Line Edition)
The first
item to note is that the Euro bounced off of support to end 2010. It’s
difficult to tell if this was a REAL development or just a kind of end of the
year “window dressing.” I say this because the blizzard in New York made
holiday trading even lower than usual, allowing for even more gaming.
This week
will determine the deal. As the below chart shows, the Euro is now coming up
against resistance at 134.2. If we break above here, then the Euro is starting
another leg up which could take it to 136. This move would be accompanied by
additional gains in stocks and Gold and Silver.
The US
Dollar is giving us a hint that this may in fact prove to be the case. Indeed,
while the Euro has yet to break out above resistance, the US Dollar has taken
out support establishing a series of lower lows as it builds a clear downward
trading channel.
Of course,
we could see a bounce here which
would correlate with the Euro dropping. However, if this is going to happen it
needs to start in the next few days.
Elsewhere in
the financial markets, Treasuries have staged a bounce. It’s truly staggering
to think that Bernanke and pals can claim with a straight face that
Quantitative Easing will lower interest rates when long-term Treasuries have
dropped 10% in just four months since the Fed’s QE lite and QE 2 programs were
announced.
Indeed, the
technical picture for Treasuries going forward is decidedly ugly as we’re
getting darn close to breaking the
28-year old bull market in bonds.
The above
chart is a MAJOR warning of what’s to come to the US when this latest bounce in
Treasuries ends. Once we take out this trendline we’re going to see interest
rates spike in a BIG way. This in turn will push the US economy into an even
deeper Depression and renew the debt deleveraging the financial system began in
2008 (which the Fed has done everything in its power to try and stop).
In plain
terms, the markets are officially on “borrowed time.” The three key charts for
determining when things get ugly again are the Euro, US Dollar, and long-term
US Treasuries. At some point one
of these is going to breakdown in MAJOR way. When it does, it’s going to drag us
back into Crisis mode.
Thus, the
question is, what Crisis will it be?
1) A
Euro banking system Crisis?
2) A
US Dollar collapse Crisis?
3) A
US debt collapse Crisis?
4) Some
combination of the above?
Personally,
I believe we’ll be entering an inflationary death spiral for the US Dollar at
some point in the next year or so. When this happens inflation hedges across
the board will explode higher.
Some, like
the most popular picks (Gold an Silver bullion) will records strong gains.
However, others, (the ones that 99.9% of the investment world are currently clueless
about), will go absolutely parabolic.
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.
- advertisements -
Time to own up? Doubtful as the social cost to pay upfront cannot be sold and no one is buying.
If the premis of your argument holds water and the 30 UST breaks the UT support line decisively the social shit hits the fan.
The FED knows that. The ECB knows it. The Chinese know it.
Keep the music playing.
Pretty simple
I suspect the outcome will depend on which crisis hits first: the sovereign debt crisis in Europe or the debt ceiling crisis in the U.S. We know the timing of the latter, March. So the only question is whether the euro will stand up longer than the Republicans in Congress.
"Borrowed time"? Is this like borrowed money? Since there's no longer any requirement to pay back what you owe, borrowed time can last forever.
Great insight, Professor!
Looking at your three scenarios ; I would probably choose Europe as the one most likely to cause problems. the new Banking regulation just passed here in Ireland suggest that this Government is positioning for Armagedion BIG TIME and the sheepel here are oblivious; Complacency is far superior than ignorance!
Looking at your three scenarios ; I would probably choose Europe as the one most likely to cause problems. the new Banking regulation just passed here in Ireland suggest that this Government is positioning for Armagedion BIG TIME and the sheepel here are oblivious; Complacency is far superior than ignorance!
Watch the video “Economy Stage 4 Cancer Patient ~ Stocks Rigged” at (http://www.youtube.com/watch?v=BrXcpWKRDf8).
Anonymous –
It’s unbelievable that it has gotten to the stage where we actually know without a shadow of a doubt that the U.S. economy is RIGGED! I can’t wait for the PONZI scheme to continue!!
No worries, bond prices will go higher as interest rates on US debt go negative. <sarcasm off>
I guess that's what bond buyers are planning on, however. Is it?