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Graham Summers’ Weekly Market Forecast (Flashback Thanksgiving 2009? Edition)
Stocks broke down in a big way last week as the situation in Europe has become truly dire. I’ll be addressing that situation in greater detail tomorrow, but for now, you should know that there are truly only two possibly outcomes for the Euro:
1) The ECB prints money and Germany leaves the EU
2) Germany remains in the EU but moves to kick other countries out as the defaults start coming fast
The market has already proven that the EFSF won’t save the Euro. And Italy, the third largest bond market in the world, is creeping towards a default by the minute. So the above options are the only realistic options that are left. And both of them will send the Euro, and stocks, lower in a big way.
On that note, the S&P 500 broke down last week as the descending trendline (black line) from the July top proved to be too much for this latest rally to overcome. We’ve now taken out the lower trendline (green line) that supported stocks since October as well as critical support (red line) formed by the trading range than dominated the market’s action from August through October.
Once we get a definitive move below the red line in the chart above, then the door is open for us to test support at 1,175 and possibly even 1,125 in short order.
This is a holiday week so trading volume will be light. However, recall that it was during Thanksgiving 2009 that the sovereign defaults first started when Dubai asked for an extension on $60 billion in debt it owed. Will we get a European version of the Thanksgiving day collapse this time around with Italy? It’s definitely possible as the ECB is now intervening on a daily basis to slow down the bond implosion over there.
On that note, both Gold and Silver are looking deflationary… or at least undergoing liquidations.
Remember, defaults are deflationary in nature, and given that Europe is literally on the brink of systemic failure, Gold and Silver’s recent action may be hinting that we’re about to see another round of defaults/ another round of deflation in the markets.
After all, when you combine the situation in Europe, along with the ongoing Depression in the US, MF Global’s bankruptcy, and the fact that most institutional investors remain heavily invested to the long-side (opening the door to intense selling pressure as everyone has gone “all in”), you’ve got a recipe for a REAL collapse.
So, just be aware that if things get messy, the markets could get downright UGLY fast. Leverage levels today exceed those of the Tech bubble. And we’ve already had one player taken out by bad bets (MF Global).
And if you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com.
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I haven't paid for Graham's newsletter, but enjoy his succinct posts.
When I get to the "And if you’re looking for specific ideas to profit from this mess..." part I just stop reading.
Nice charts.
Germany will not participate in funding France or Spain, and would be in the best position to maintain their people's wealth by getting out of the Euro and back to the Deutschmark. France and the other Euro countries are screwed. Hats of to Britain for not converting to the Euro; prescient decision.
http://www.debka.com/article/21504/
The EU has been a sweet ride for Germany as it provides enhanced access to international markets, allowing German corporations to decimate the competition. So why in the hell would Germany leave the EU or force anyone else out of the EU? That makes no sense at all.
Because the free ride is over. They've had the benefits, but the cost of bailing out the countries that took the deficit side of Germany's trade surplus is, shall we say, 'Unattractive' to the Germans now.
Better to keep their money, capitalise their banks to withstand the wave of defaults, then buy up every industrial asset and natural resource of any interest to them from the smouldering ruins of their European neighbours' economies.
Completely agree with the mechanism of your perspective, but I don't think we're there....yet (but eventually will be). There's still plenty of juice to be sucked out of the EU, I'm looking at you France.
Tyler,
Please shut this shithead down. He brings absolutely no value to ZH is his "posts".
Send ME $10k and I'll pander to your pathetic little ego AND have a hooker suck you off while I tell you what a wise investor you are.
What a joke.
Help , help...the world is ending..we will weak up tomorrow with no food, no air to breat...no water.....worst of all the earth is disappearing into a black hole...
But there is a solution! And I have it for you.
Read my free report, just 3 pages, which nare the hystory of what has happened...then, send me $ 100 and I will tell you what to do.
PS: you must have a trading account of $ 250 K, have 3 decades of trading experience and be willing to absorbe a temporary loss of 85% of your capital
Yeah, I have to say I'm way unimpressed, going to your site is a pain, the free reports are impossible to access freely, and in general you just seem to be selling fear - all of which leaves a bad taste when there are such exceptional voices showcased here.
Hey Graham,
Ever thought of actually sending out market updates to your paid subscribers (as you promised to them) as opposed to continually advertising your free reports here to try and drum up more business for yourself? You are no different that these con artists that run this market.
Unbelievable! Less than 30 Minutes of my countdown from Reggie's post in predicting Phoenix to put out their "free report" laden advertisement!
Also, follow the money! I BET you that Reggie and Phoenix are biggest contributors to Tyler....it's exactly how Obama got his money...donations! The the mutual back scatches.