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They – the conventional markets – all look at scary highs though Gary.
I know that you think that we are still to see the NASDAQ go parabolic but, gee, they look as if they are about to roll over any minute now.
Having said that, it seems that a true black swan is needed to make them go down.
Certainly due for an intermediate degree correction once the Naz hits 5132 or higher, but definitely not a parabolic bubble yet. I’m looking for the S&P stretched at least 30% above the 200 DMA (currently 5%) and IBB at least 60-100% before I call a bubble.
Thanks Gary.
What about oil.
http://scharts.co/1aP9uIj
I like the action i n oil. I think the rally continues for a while yet. Maybe even reaching $65.
No. What I ment was what about oil for deflation.
We have Stagflation right now. The Gold price is in a tug-pf-war between bull and bear and I think the bulls will come out on top 🙂 a brave call? No I dont think so… we will watch and see for another week or 2.
Maybe a Bear Squeeze on it’s way and then a strong period for gold stocks until Sept-Oct.
Ok you think that the bear run in gold is coming to an end and there won’t be any new lows. Gold has been falling since 2011 what has changed which will allow gold to rise. What makes you so convinced that the bear run is over, i can’t see any change, if anything the dollar is getting stronger, money is continuing to migrate to stock markets. I agree there could be small reversals on the way, maybe in the next couple of weeks, i just don’t see a bullish scenario at the moment.
Regarding the deflation/inflation argument, money is moving into equities and the dollar purely because there are no alternatives. Equities are rising because there is a race to devalue currencies. If you had a choice would you hold your wealth in currency which is being devalued, hold it in a -interest rate, or move it somewhere else. Government bonds maybe(too risky), banks rapidly loosing confidence. So what are you left with the equity markets, this is why the threat of the crash hasn’t materialised, and stocks continue to rise. It is the movement of capital from bonds and risky currencies to the market place because there are no alternatives. In order for one market to rise another has to fall, the bigger picture.. You say that inflation is being mistaken for deflation, because the focus only on commodities. In my opinion the rising stock markets indicate a lack of alternatives.
Not to mention the unabated and the most dangerous inflation in the number of human beings on this planet which I understand the correct number lies around 8.5 billion as opposed to the world-compiled government statistics of over one billion less than that. We know how we can trust govy stats! 🙂
The true measure of an economy lies in agriculture and education because those are the foundations. Deflation is rampant. Money most go somewhere and in 2008-2010 it went to pay off debts. Since then it has gone into the stock market and into banks storage. All anyone has to do is look at the books of the major banks, and this is one reason they have all passed the stress tests. Just because money is flowing into the stock market doesn’t mean deflation is absent. Its quite the contrary.
That’s my point. Inflation is an expansion money supply significantly beyond GDP. There is no doubt the money supply is skyrocketing. It’s just that the banks are focusing that inflation into the stock market. Once stocks quit going up then the inflation will have to flow somewhere else. That’s when I think it starts to bleed into the commodity markets and show up as the kind of inflation everyone normally labels “inflation”.
make sense , but when
And there the Bull got a kick in the teeth by the Bear 😛 Have a nice weekend !
Yes the bear scenario is playing out. I said in my last article that it was the higher odds scenario. New lows by May or June, but not big new lows. Maybe only 1100 or 1050 at the most.
Yes there is support(not a lot) at $1050, then at roughly $930, and then $700. I wouldn’t like to make an exact call on the bottom or how long the deflationary(sorry Bearish) forces will last, it’s anyones guess. Patience required. The bear will be over this summer,….no sorry November….no sorry definitely March 2016…..and so on….
ALL ABOUT $USD & $XEU
Unfortunately, agree with Bob, the grind lower could last longer and IMO will continue to make less and less sense along the way. My prediction is the physical market will continue to get stronger and stronger along the way as all forms of physical continue to pass from weak to strong hands. We hear and read about the so called transfer from “West” to “East”, I personally think the more interesting component of future transfer will be the moment the USD joins all the other jokers in this insane house of cards. As Gary says, when the USD and other inflated markets hit pivots and finally cycle, Katy bar the door, all that money will be going somewhere. What’s left after stock and bond debts, losses, and derivatives, will leak back into the only real money left standing. Rest assured that most of the villains in charge of today’s house of cards will be sitting on their fair share when the cycles return.
Great analysis bob davis I am impressed!
Gold is toast. We’ll soon find out where the next support level is. I won’t be buying when it hits it. It will be a great buy one day… just not one day soon.
The broad market is setting up another spectacular buying opportunity. Look for the bull trap at the 50 DMA. Then it will mess around for a little while. Then a move to a lower low nearer the 200 DMA in 15 days or so. That will be the buying oportunity. Maybe that will be an ICL, who knows. One day it will no longer be safe to buy the broad market willy-nilly with both hands and your eyes closed at every cycle low… just not one day soon.
Well, not very very soon. Maybe sooner than well-trained permabulls think, though.
Maybe this is a good time to check out the Elliott Wave Diagonal Triangle. Could take the SPX down to 1750 – quick! and you don’t have to fret over inflation, deflation, oil, gold, cycles or the FED.
I have my doubts that the S&P would go to 1750. The intermediate cycle is clearly right translated and right translated cycles don’t usually go below the previous cycle bottom. In this case it would be the Oct. low. My guess if we get an intermediate degree decline would be maybe a 50% retracement and even that is questionable as the European markets are not showing any weakness at all.
I feel you’re making the mistake of focusing only on stock markets for inflation. Stocks are rising on a flight-to-quality and a once in a generation move from government assets. On a ground level there is no inflation because it’s mostly the 1% who own stocks now.
I’ll point out that inflation is always an increase in the money supply. Where that money flows to is determined by multiple factors. When it flows to the commodity markets we label it “inflation”.
When it flows into the stock markets we call it a party.
But it’s still inflation.