Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Summer Crash Forecast

Stock-Markets / Financial Crash Jun 29, 2009 - 11:14 AM GMT

By: Captain_Hook

Stock-Markets

Best Financial Markets Analysis ArticleA skyrocketing yield curve is normally a sign the economy is dangerously heating up, and that market rates in fixed income securities are signaling the likelihood of higher administered rates soon as well. Along these lines then, short-term rates have been rising on the expectation that the Fed will need to talk about higher rates at its next meeting on July 22nd, with a corresponding collapse in both the yield curve and gold. It should be noted gold is tracing out an exact pattern match on the yield curve, and rate expectations.


The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, June 12th, 2009.

Of course whether the Fed actually acts responsibly at its next meeting is another thing all together, where in fact if the Fed were to actually mumble a few stern words at this point in double speak form, it would not be surprising to see them follow up with an announcement regarding ramped up quantitative easing (QE) plans a few days later, especially if equities came under attack. They would be justified to do so in their own minds this way you see, because in their own self-important view, the end of the world would be near.

So, this is why gold and equities might see some volatility in coming days, hinging off expectations and realities related to the Fed’s moves in coming weeks. And in this regard one must remember the Fed wants a lower dollar ($) moving forward to continue spurring a sputtering economy; so again, if the markets develop a hawkish predisposition prior to their next meeting we would have a potential set-up for a head fake move in any $ strength. The only question would be whether such efforts were trumped due to a renewed collapse in credit markets out of the Fed’s control, stepped up QE or not, with the $ telling the story in this regard.

What I mean here is if for example the Fed came out and said ‘hey guys, we’re going to spend another trillion monetizing Treasuries, and the $ did not immediately break back below the monthly swing line (21 EMA) at approximately 81 right away, then Huston, we would have a problem’. This would be a signal the next phase of credit contraction within the larger (secular) cycle was underway, and to prepare for the second round of collapsing equity markets that is customary within an a – b – c patterning, which by the way MUST be in the cards at some point.

How can we say this so confidently, with a plethora of knuckleheads out there talking of ‘green shoots’ and such folly? Easy, because major stock averages fell in five-wave sequences from their respective tops in 2007, and after some form of a – b – c correction / retrace higher here, they necessarily must fall one more time before long-term recoveries can be contemplated. This is a standard wave principal that must be adhered to at some point. And while such an episode might take more time to unfold, with the next meaningful round of mortgage defaults not slatted to kick in until next year, the point is it’s coming, so be prepared. (See Figure 1)

Figure 1


 Above you see what is anticipated from a more elongated recovery pattern, the likes of which would match the rekindling mortgage related credit problems next year discussed in the blog attached above. The question is does the second leg of the stock market discounting a more significant slowing wait for this, or does some other element of the larger credit picture, like rising bond yields, bring an increasingly frail sovereign debt into the picture before hand. Anyway you slice it, market internals are not good with stocks rising on declining volume, so the situation remains tenuous to say the least.

One needs to consider such circumstances carefully when owning equities right now, because when the next round of deleveraging takes place, like the last one, it will take everything with it, including precious metals stocks initially. In fact, unless we see a more elongated recovery pattern in the stock market like the one pictured above, the highs in precious metals stocks witnessed last week could prove to be more important than many think. I am not forecasting this, as the long-term charts paint a optimistically bullish picture for precious metals equities moving for, however such an outcome is possible.

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover.

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Good investing all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2009 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in