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We're Rapidly Approaching the Crisis to Which 2008 Was a Warm Up
Stocks broke
down in a big way this week, falling below the trendline that has supported
them since late August. Indeed, it looks as though we not only broke below this
line but have since rallied to retest it: a classic pattern during corrections.
The question
now is if this is just a minor correction or the start of something more. The
S&P 500 appears to have formed a rising bearish wedge pattern (see above),
which usually is a termination pattern that results in the underlying security
falling to retest its base (in this case 1050 or so on the S&P 500).
However,
with Government intervention in the markets being what it is, we could also
simply see a minor correction here followed by yet another ramp job. Indeed,
this is exactly what happened in 2009 when stocks broke a near perfect rising
bearish pattern only to bounce back and begin yet another ramp job:
Thus, the
BIG question for US stocks is whether the market has already digested all the
QE hype to the point that threats of additional liquidity does nothing, OR if
the Bernanke “Put” is still in play.
While this
might not seem like a big deal, I can assure it is THE most significant issue
the financial markets face right now. The reason for this is that IF the
Bernanke “Put” is no longer relevant, that is additional liquidity and
bailouts, doesn’t actually induce a rally anymore… then the entire financial
system will collapse in one form or another.
Remember,
the only thing that pulled us from the brink in 2008 was Bernanke printing like
a lunatic. It’s the ONLY thing that has held the market together. And while it
may have kicked off a major rally in stocks… it FAILED to address the underlying
issues that caused the Crisis in the first place: namely excessive debt and
leverage.
In fact,
Bernanke has made the financial system even MORE leveraged than it was in 2008.
So if the Fed’s moves no longer have an effect on the markets, then it’s time
for the REAL Crisis… the Crisis to which 2008 was a warm up.
Why?
Because when
the stuff hits the fan this time around, the Fed will be powerless to do
anything. Bernanke’s already shot every bullet he’s got. So when he loses
control this time around, not only will the market crater, but the belief that
has kept the financial system afloat through every Crisis of the last 30 years
(namely that the Fed can always save the day) will shatter.
And when
that happens it will be the US financial system, NOT just stocks that goes
down.
Prepare Now!
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
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have all already SOARED as a result of the Fed’s monetary policy.
You can
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Did you happen to read the article about an agreement between the USA and Canada, allowing the use of Canadian troops in the US, and vice versa, for "civil emergencies"? I always wondered how they would get our neighbors to hold a gun to our heads, and now that notion of Marshal Law isn't such a far fetched idea.
As far as "market analysis" these days, IMO, it's a "keep your eye on the shell with the pea.... place your bets suckers, place your bets.... just keep you eye on the pea". Keep a positive message going so the buzzards have enough time to strip the bones clean.
[Did you happen to read the article about an agreement between the USA and Canada, allowing the use of Canadian troops in the US...]---falardea
Thanks for your thoughtful Reply.
No, I have not read about the agreement. Thanks for mentioning it. I will keep it in mind.
I did happen to read that and my first thoughts were about the same as yours. There is one problem; No where in the constitution can I find any mention of Martial Law. Who would call it, the president, congress?remember our forfathers never contemplated a standing army.
Any move by a foreign army, regardless of any "civil emergency" would be viewed, quite properly, as an invasion by a foreign power and would be crushed. Hell Canada could not occupy and control Detroit. It would, in my opinion, unite americans against the Elite probably more than anything else they could do.
Sheer idiocy by Bammy. Milestones
"No where in the constitution can I find any mention of Martial Law. "
How many ways does the federal govt exceed their constitutional authority? I lost count a long time ago.
Constitution no longer matters. They do what they want.
Canadians are more patriotic about the US than US citizens.
Humanity needs to resist this anachronistic sense of blind nationalism. What is this thing called "patriotism" anyway? It seems to require that one swear fidelity to a non-representative, centralized system of government. For what and to whose benefit?
The concept that many Westerners think of as "patriotism" is just a means to enslave and subjugate the masses.
ponder how a "national emergency" that would necessitate "continuity of government" - and surrender those powers to FEMA, which was created to protect the government - might "introduce" Canadian troops (and NATO, etc.) into the States, and once there, how easy it would be to "leave them" in place.
http://educate-yourself.org/cn/femaoverview06sep05.shtml
Yep, it's not a matter of opinion whether printing money will drive up market prices...the only question important for those wondering if the melt-up will continue is "will Bernanke keep printing" and the only answer conceivable is "yes, because he won't let Treasury default."
Ironically, if we had some really good fundemental news, some strong organic growth, and Bernanke stopped printing, THEN the markets would fall IMO...as they are so massively overvalued already with respect to fundementals. BTFD
Large caps are still cheap. Very. And the S&P has a 14X multiple. That really isn't overvalued if you consider the historical average is 15 times. Maybe the current economic environment demands a smaller market multiple but you can find that multiple in the multinational large caps. And pretty much all of healthcare.
You guys are wrong. BB has to pull back, he has no choice. He will pull the plug soon. Then technicals will be more relevant, not that down isn't down, down, down.
You guys are wrong. BB has to pull back, he has no choice.
Benny will print and print and print and there is nothing to stop him. The idea that he has no choice is ludicrous. Who or what is to stop him? Obama? Congress? Don't be ridiculous. When he is no longer associated with the Fed, when the Fed's mandates are redefined...maybe the printing will stop. Otherwise it will be the same old -- same old.
sunny
I agree.
I would further suppose that technicals apply even now, as they measure psychology, and the stumblebums at the Fed and their stooges are as human as less corrupt traders (however amusing it may be to describe them otherwise). As, in fact, are the guys who programmed HFT. So I'll stick with my technicals, thank you.
As for the post below, claiming that technicals died in 2008, let me remind your that alleged "permabear" (he is nothing of the kind) Robert Prechter called the bottom in 2009. So reports of the demise of technical analysis in 2008 are premature.
the only organic growth is the total rotting of this country.. this decade is for the hippies. Tour on the road, make your flatbread sandwiches and take those drugs the K-Daffy warned us about
I'm with you. I bought a patch of dirt this year so I can at least grow food when a wheel barrow of money can't buy it. As for touring on the road, I think the hippies won't be able to afford the gas prices.
maybe they'll figure out how to convert to water for fuel
http://www.youtube.com/watch?v=Py8QYt54EpE&feature=player_embedded
How about Air for Fuel?
http://www.mdi.lu/english/
You should add, AND GO BANKRUPT DOING IT! Take 10$ worth of electricity and turn it into .05 worth of hydrogen ha! HENRY C AVENDISH having first isolated and studied hydrogen as a true element in 1766.