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Are Stocks Posed For a Gold-Type Crash?

Phoenix Capital Research's picture




 

 

The markets rallied hard yesterday, thanks to promises of more from Europe. However, the global economy is once again contracting with the bad data coming out of both China and Germany: two of the biggest exporters in the world.

 

With that in mind, the S&P 500 looks as though its initial jump to the upside from its rising wedge pattern could have been a false breakout: a move was not sustained. These developments are usually followed by VIOLENT swings in the opposite direction.

 

 

Indeed, Gold showed us how these developments work.  In mid-2012, it broke upwards from a falling wedge. A lot of traders, myself included, thought this would indicate new highs were on the horizon.

 

Instead, Gold languished and the breakout proved to be false. And when the reversal came, it was VIOLENT:

 

 

Investors take note, a false breakout is an extremely dangerous thing. If the stock market is in fact failing to maintain its upward breakout, we could see a sharp reversal similar to that of Gold (Gold has lead stocks for much of the post-2008 period).

For more market commentary and insights visit us at www.gainspainscapital.com

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

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Wed, 04/24/2013 - 13:24 | 3493496 andyupnorth
andyupnorth's picture

Canadian stock market (TSX) has decoupled from the American stock market (DOW, S&P500...).

Will the TSX crash without its southern neighbour?

Wed, 04/24/2013 - 13:10 | 3493413 MGA_1
MGA_1's picture

And we know they'll go up now...

Wed, 04/24/2013 - 12:56 | 3493364 bardot63
bardot63's picture

Fortunately, I don't read Phoenix Capital anymore, so skipping it saved me some time this go-round.

Wed, 04/24/2013 - 12:34 | 3493277 the grateful un...
the grateful unemployed's picture

 

FOMC minutes, unexpurgated

1) For every $100 worth of physical gold the public buys, that not only adds to savings, which is bad enough, it takes money out of circulation. We have to buy gold to keep the price high enough to discourage consumption.

2) All assets move together. gold tanks, there goes the MBS on our balance sheet.

3) This presidency moves closer to being a lame duck (figuratively) every day. We have to think about what the next president wants? (moans)

4) Our gold purchases must not be less than opaque, hence we set off another wave of private gold purchases. Yes, gold was overleveraged, but that doesn't mean we can't use a fractional reserve method through the national reserve, and some state gold reserves to lend them money based on what gold they have. Texas takes their gold back, we lend them money based on that gold. They in turn lend the money out, and so on. Ideally a dollar of fiat will be worth a dollar of gold, that's not happening right now. People are willing to trade at an NAV greater than 1! someone says get the tranquilzer gun

5) The charter banks will become bullion depositories. We issue long term bonds backed by gold, which cannot be redeemed for physical gold until maturity. We promise more gold than we have. We can buy all the gold we need by printing money to buy that gold.

 

at that moment a tranquillizer dart hits the Fed chief in the neck.

Wed, 04/24/2013 - 12:41 | 3493259 Quinvarius
Quinvarius's picture

I think the bankers want to get out, but they can't because there is nothing under their bid but stops.  So they will sell into the crash, when they are forced to, as bankers always do.  We all know that GS is just sitting their ready to turn on their cap and slam algo to slap the shit out the stock market.  That is where the fast money is made.  And unlike gold, there is no real uncounterfeitable supply issue.  They can sell the paper stock market 1000x over with no delivery issue whatsoever.

And gold's breakout wasn't false.  I can see from the charts exactly where the takedown started.  It is plain as day looking at session volume.  There was a clear point where thin night market night volume ballooned.  It was over 1750, not under 1600.  The physical market will crush their nards.  They will be 30 days behind the 8-ball before they can get the committe together to change gears.  By then, they will be bone dry. 

Wed, 04/24/2013 - 12:10 | 3493199 s2man
s2man's picture

No, Stocks are poised for a crash.

 

3.  teetering or wavering: to be poised on the brink of disaster.
Wed, 04/24/2013 - 12:07 | 3493184 screw face
screw face's picture

We await the next black-swan pin prick, or reprogram and reboot, it's all the same out come, what goes up must come down.

Standby with your flotation devices, when it goes, it will be deep.

rosta

Wed, 04/24/2013 - 11:56 | 3493127 CDNX fan
CDNX fan's picture

Same drivel since 666 on the S&P - sell! sell! sell! 

 

Never underestimate the replacement power of stocks within a reflationary spiral.

Wed, 04/24/2013 - 11:46 | 3493085 TheMayor
TheMayor's picture

Sell the F'n Rally

Wed, 04/24/2013 - 11:47 | 3493080 GoldForCash
GoldForCash's picture

It's too soon to let the market crash. We could recover. Gotta get everyone invested first. Then steal their money, hopes and dreams.

Wed, 04/24/2013 - 12:07 | 3493173 andrewp111
andrewp111's picture

The optimum time is summer of 2014. Bernanke will be gone, and a big crash will maximally favor Obama's chances of retaking the House of Representatives - which is the only thing he cares about right now. It is too early for a crash to help Obama. He needs  fear, panic, and a MSM narrative blaming the GOP to peak in Nov 2014.

However, a sharp correction now followed by a surge to greater heights, and a crash a year and 3 months from now is what Obama needs.

Wed, 04/24/2013 - 12:47 | 3493317 reload
reload's picture

makes sense to me - I was out in the Glitzy, moneyed zone of London last night (not my normal habbitat) with a couple of big money manager types. They are long and only worried about not being long enough. Both these lads are smart, one did very well on the decline of Apple recently, the other saved his firm a fortune in lost fees, by loading up on puts in 2008 and hedging the firm against a loss of fees for declining money under management (and this is moral ? how?). Anyway, they are not by nature entirely long only types. They admit the world ecconomy is in the tank, but see no end to the printing and so are scared of missing moves to ever increasing highs.

We talked about the jobs market: what I took was that they think the US is doing really well (compared to Europe) - when I said`what do you think the average hourly wage is for all these wonderful new jobs` they admit `not good` but were resolute that the point is this: `the US has made a start at adding jobs while nowhere else has - the better paying jobs follow the lower paying`

Not saying they are right - just anecdotal colour from a couple of successfull paper shufflers.

Wed, 04/24/2013 - 11:35 | 3493035 rsnoble
rsnoble's picture

Rising wedge = bad.  But see now you can redraw the trendlines to the upper and lower most recent points and with FED trillions the intersection can be extended even further.

For people that don't think t/a matters rather interested that the FED has the best.  Obvious breakdown points are negated over and over and just in the nick of time.  So it matters for them, but not so much for you lmao.

Wed, 04/24/2013 - 11:49 | 3493070 Ham-bone
Ham-bone's picture

Fed and it's agents are playing TA wonderfully in concert with "rumor" releases, leaked memo's at critical TA points to fully engage HFT'ing platforms to their advantage.  TA is being used to amplify desired results. 

However, Graham if by this point you haven't realized the "market" is a political propaganda tool and immune from organic market fundamentals...well god bless you that you still wanna believe.

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