Phoenix Capital Research's blog

Few analysts know or admit it, but the only thing that held Europe (and ultimately the financial system) together since May 2012 was the promise of unlimited bond purchases from the ECB.

Given that the Fed is openly citing the stock market as an indication that QE is working… and given that every other metric shows QE is a total failure…

This is coming our way, whether investors like it or not. The signs are all in place with the economy weakening, corporate profits set to fall, multiple Hindenberg omens and more.

If we take out this trendline, stocks could easily go to 1,450. And if things get really ugly we could even see a Crash (though that would likely come later in the Autumn based on historic patterns).

Given that ALL of the stock market gains since 2008 were based on Fed money printing… what do you think will happen when the Fed tries to taper QE?

The latest ISM reading came in at 49. Any reading below 50 is considered recessionary. And an ISM of 49 is the worst in four years.

Technically we’re all poorer than we were before 2008 happened. Most of us are making less money. And we’re spending more just trying to get by thanks to higher food, energy, and healthcare prices. Heck, housing is now even soaring again, pricing most beginning homebuyers out of the market.

This confluence of indicators tells us point blank that stocks are in a bubble. If I know this, I can assure you that Ben Bernanke and the Fed know it. And this is why the Fed is in deep trouble. I guarantee you Bernanke is hoping he can get to the exit as Fed Chairman before the stuff hits the fan.

Investors take note, the market has numeous red flags for stocks. If you're not prepared for a correction, now is the time to do so. 

Definitely a sector to watch. Given the record number of Gold shorts outstanding, it the precious metal begins to pick up again, the rally could be absolutely explosive.

A false breakout occurs when the market breaks out of a technical formation in one direction then fails to follow through on the move. Looking at the rising wedge pattern in the S&P 500 this appears to be happening now.

Based on over 100 years’ worth of data, anyone who is looking to invest for the long term by buying the market today can expect, at best, a 4% real return per year over the next 20 years (this includes both dividends and capital appreciation after inflation).

Against this economic slowdown, stocks are priced quite richly. There is a word for when markets are totally disconnected from reality: it’s a bubble.

So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.

As Japan has indicated, when bonds start to plunge, it’s not good for stocks. Today the Japanese Bond market fell and the Nikkei plunged 7%. The entire market down 7%... despite the Bank of Japan funneling $19 billion into it to hold things together.