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Stocks Are Poised For a Serious Collapse
The bounce in stocks over the last week has mirrored the bounce in Oil. Indeed, both assets bottomed to the day: January 29th.
With that in mind, it’s worth looking at Oil’s chart.
From July 2014, until last week Oil has lost nearly 60%. Those who are betting on a significant rebound should consider that we have yet to break above even the first real line of resistance at $55.
The real story for Oil is not Saudi Arabia, Oil shale or anything along those lines (they matter, but they're not the most critical item). The real story concerns the US Dollar rally that began in July 2014: the exact moment when Oil began to collapse.
The below chart shows the price of Oil against an inverted chart of the US Dollar (meaning, when the Dollar rallies, the blue line falls). Note how closely the US Dollar’s rally mirrors the plunge in Oil.
Now, consider the US Dollar’s chart. Not the 1-year chart, but the LONG-TERM chart.
You are looking at the single largest falling wedge pattern in modern financial history. The move started in July 2014, broke this pattern. So while we may get a brief correction here (the reason for Oil and Stocks bouncing the last few days), we are truly only just getting started here: the above chart predicts the US Dollar moving to 120 on the next move.
A move like this would demolish stocks. During the last two US Dollar bull markets, stocks fell 30%. This, incidentally, is roughly how stretched stocks are from the long-term trendline of this latest bull market.
In plain terms, the point is not to focus on how stocks bounced the last few days, but how susceptible they are to a very serious collapse occurring when the US Dollar begins its next leg up. Everyone knows stocks are in a bubble. What they don’t realize is that it is the US Dollar that will burst it.
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Oh boy...another "Graham Summers" is clogging the lew again! This one is a whopper and will take a professional to take care of.
Let's see...how about the really sloppy line you drew that includes about a quarter inch above the actual top in '86? Adjust that and it is not clear to me we have had a break out that is for real.
Maybe we will. Maybe we won't. Maybe it wont matter.
Enough with these silly 2 minute analysis! Who let's this joker keep posting?
Yet the markets refuse to plunge. PPT is poised and ready. I've been reading this shit for years. Yet the markets go up and the true price of PM's stays range-bound. Frustrating as hell to watch. I know the markets are rigged. You know the markets are rigged. The regulators know the markets are rigged. Insiders know the markets are rigged. Yet ZH readers continually say the markets are gonna crash. I believe you but those in ultimate power say otherwise. Until these ass holes start going to prison, I see no change...
EURO qe AND JAPANESE qe are pouring forth in unlimited amounts over the next 2 years.
money is being showered everywhere until 2016.
this article is nonense.
That graph of the dollar is depressing. Look how valuable it was in 1985.
Stocks are going to collapse, dollar is going to collapse, oil is going to collapse, gold and silver are going to collapse ....... ad nauseum. Starting to sound like the boy who cried wolf. You got a specific day and time on this "collapse" ???
/off soapbox
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Correlations may be drawn from comparisons, but extrapolations cannot be predicted by past charts for many reasons.
I hate that charting bullshit.
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V-V
Some day Phoenix will be right.
Oil started up with QE1 from Ben in 2009, and collapsed when Janet took it away. Hot money was flowing into oil futures, now it has dried up. Maybe the Euro QE will juice it back when it starts?
QE and ZIRP were supposed to be temporary emergency stimulus.
Yes....HAHAHAHAHAHAHA! Our economy is so strong! Just like a junkie with a baggie full of smack. Some day the junk is going to run out and that junkie is going to go into withdrawls...the only other outcome is that the junkie OD's. I just want this shit to end. Hit the big reset and lets clean up the trash and arrest the corrupt politicians and bankers (I said corrupt - not all of them are corrupt) and start over on the right foot...
Be cautious about what you wish for ... the Big Reset will only strengthen the "the corrupt politicians and bankers" and the only ones to be arrested will be you and me and those who disagree with the cronies.
Where will the new liquidity come from to drive stocks higher?
QE4 is coming.
Perhaps QE4 will not come, and the rug will be pulled out to simply buy everything for cents, or even fractions of a cent, on the dollar.
Why go through the trouble of having to confiscate things (stocks, land, etc) when one can do it perfectly legally, and everyone would just blame "the market" for the collapse in value, and then run everything back up into orbit.
Give us a date, please. Make it plus or minus two months to make it easy.
The date if you listened to these pundits is 2/28/15 the day Greece defaults but they are full of shit like they have been there will be NO collapse ntill he people wake up and no real sign of that eventhough I will benefit greatly if that would happen hence will NEVER happen cause I am prepared
Hmmmm......I agree with everything here accept a stock crash. Right now capital is looking for a place to hide. Bonds are horribly overbought (arguably more than stocks) and the US markets are the only ones really showing any promise in the near term. Those capital flows are/will continue to pump the market regardless of fundamentals (see DAX), because its the last best bad bet. IMHO bonds have a better chance of popping, before the stock market does. There's a very good chance that the Fed will have to raise rates due to the explosion of the doller and corresponding explosion of the stock market. Once that happends, pop goes the bond market.
Been listening to this crystal ball bullshit since 08.. Between the Fed & PPT & the HFT/Algo twins it isn't gonna change anytime soon. So enough with these Bullshit headliners.
Seems to me the last dip suckered in enough shorts to push the S&P through 2100
Naja , those by FED/BOJ/GS and Co fundet HFT operators are losing BIG in the fx lately..: EURCHF,.. and in the JPY cross,..the main tool used for buying futures,rigging stocks..
Means a epic crash is just a matter of weeks,not months..
Because it's important to plan ahead, I am already looking forward to a massive, insane head & shoulders off the 1560 SPX neckline.
The current tape has another week to run up, looking for a final high @2080 SPX followed by an overnight gap down.
GLTA!
Stocks will fall soon due to the left over QE3 gambling money is almost run out.
The Fed's "primary dealer" banks are scrambling for new liquidity.