Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks Bear Market Rally, Debt Is Your Worst Enemy

Stock-Markets / Stocks Bear Market Jun 01, 2009 - 12:11 PM GMT

By: Captain_Hook

Stock-Markets

Best Financial Markets Analysis ArticleDebt is your worst enemy right now – make no mistake about it. And the reasons for this understanding are plain for all to see, with the most profound being the next round of deleveraging might be just around the corner, meaning worsening asset price deflation would make it impossible for most to ever escape the debt death trap outside of a jubilee, which is the last thing our blood sucking financial institutions want. No, no, no. They are all for usury and kicking the little guy when he’s down however, with the most blatant example of this being credit card issuers (banks) jacking interest rates to exorbitant levels not just for those who miss a payment, but for everybody with an outstanding balance. What’s worse of course is this is being done in the face of a collapsing economy that greedy bankers are all too aware of, and despite evidence such policy could tip the economy over on its head.


The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, May 19th, 2009.

And while it may be true this is now being recognized by officials for the dangerous threat to the economy it could be, and undoubtedly is to the sane, one does need to ask the question, is it too late anyway, even if they cap the loan sharks down at the bank? You see, in an effort to avoid collapse and a de facto jubilee in the process, meaning one need not pay back debts to defunct banks within the context of a shattered monetary system, the industry called on their politician buddies to bail them out last year, which they did led by Henry Paulson. The question now however is at what real cost, and is the fix sustainable with the consumer buckling and unable to pay lower interest, never mind more? Or in other words, does it matter if the banks were made whole in effect, but the consumer is squeezed even more within a deteriorating economy?

Even a weak-minded first year economics student should be able to figure this out, right? So, it makes you wonder why the bank’s MBA’s who go to school all those years can’t put two and two together in this regard. If you asked a loan shark with no formal education I’m sure he could tell you however. He’d say ‘it’s the greed and not wanting to loose their jobs.’ And he would be right. This is of course why a great deal of bad business decisions are made these days, self interest and lack of respect for the public on the part of bankers and politicians alike, working together to preserve their respective empires. As with Rome however, and all the others which have come and gone, the American Empire will also fall, and all of its elite, which will ultimately be marked by an end to the confidence game that is US Dollar ($) domination, and the debt pyramid that has been built on a now rotting corpse of a system filled with corruption and decay.

To be clear then, what we are saying here is the way the system was bailed out last year did not bail out the system at all, with bailouts never working ultimately anyway, but instead just the banks were bailed out to prevent a de facto jubilee, and loss of business by the present day powers that be – politicians included. Furthermore, because of such an improper response to the situation in putting the yoke of burden on an already ravaged and unwitting public, there is a very good chance such narrow-minded and improper policy will end up backfiring on the powers that be sooner than later, which brings us to the realization that if this is likely the case, then an outcome in US equity markets similar to that experienced during the 1929 to 1932 episode becomes more probable. (See the first figure attached here.)

What’s more, this means that the sluggish performance of money supply measures is forecasting trouble for the markets and economy, and that the bounces in coincident / lagging indicators should soon follow stocks lower. All we need to see are leading indicators, like the Canadian Dollar (C$), break supports such as the 200-day moving average, and this would signal a possible test of the lows is on. Here, the only way such a test could be avoided is if investor sentiment turned decided bearish on stocks and monetary authorities began to print money with abandon that actually gets to the consumer. If this fiat currency monetary system is to survive the banks can’t continue to hoard all the money. The consumer needs a bailout too even though this goes against the grain of bankers and business types who apparently think such a privilege is reserved just for them. 

So, it will be interesting to watch how things unfold in coming days now that a new monthly options cycle has begun, meaning stocks have lost this support mechanism for the next few weeks in an extended (5-week) cycle. I see that a favorable election result in India has sparked quite a rally in the Sensex, which in looking at things the other way, will also not hold things back from an options / sentiment related perspective. This is ultimately negative from another perspective in my opinion however, the perspective that strength early in the monthly cycle would prevent a recovery in collapsing US index open interest put / call ratios, with a post expiry update attached here for your review. Here, if stocks go to new highs some time over the next week or so, prior to month’s end, then all of the requirements for the cyclical countertrend rally will have been met with an a – b – c sequence complete, opening the door for the larger secular forces to re-exert their influence on the longer-term trend. (i.e. think reaccelerating deleveraging brought about by a shift in betting practices on the part of speculators that causes equity prices to collapse once again.)

Not surprisingly, this is the message many of the long dated charts we follow in the Chart Room are giving us right now. With respect to the S&P 500 (SPX), they are saying after one more push towards the large round number at 1,000, they would be in a vulnerable technical position once again, if not before. In terms of the daily chart pictured below, all we would need to see is an RSI test failure, and subsequent plunge back to the lows such an outcome would involve. Here, it’s important you understand that if the SPX were to take out last weeks lows (880ish) decisively, such a development would likely not entail a move down to 850 in further correcting the move off the bottom since March, but something potentially far worse, such as a resumption of the 1929 to 1932 episode that saw the Dow plunge 90% before the larger degree crash was complete. (See Figure 1)

Figure 1

Is this impossible today with all the financial engineering to prevent such an outcome, and Bernanke, whose stated objective is to overt this result, at the helm? You bet it is. In fact the narrow policy measures designed to save the banks at the expense of the public discussed above almost guarantees such an outcome in my opinion. The consumer is two thirds of the economy, and throwing him to the wolves as the powers that be have done is an act of lunacy. There alone, how can an economy survive with a bunch of lunatics in charge? What’s more, the lunacy does not stop there, but is pervasive within our society, and can be quantifiably measured by the worsening crash signature in the weekly SPX plot below, where the desire to accumulated expensive stocks by fools has never been greater than at present, and the ability to sustain the trend never more in question with the divergence set against On Balance Volume (OBV) never greater. (See Figure 2)

Figure 2

As you can see both above and below on the monthly plot however, there is more potential room to run in this corrective rally, with the present options / sentiment related timing window a perfect opportunity for such an occurrence, so either way, don’t be surprised if stocks remain buoyant a bit longer here. In terms of the moving averages and Fibonacci metrics on the monthly, now that the 233 exponential moving average (EMA) has been bettered to the upside and tested, a move all the way up to 1,000 is now possible. Such a move is not likely in my opinion now with this sudden shift in sentiment, however anything is possible over the next two weeks with options expiry so far away, where I am keeping an open mind to all the possibilities. Naturally, if the put / call ratio profile is predominantly unchanged between now and month’s end my opinion as to a positive outcome at options expiry would be quite different of course, which is what we will keep our eye(s) on in continuing to weigh probabilities. (See Figure 3)

Figure 3

And a look at the monthly Dow yields a similar picture, with a worsening crash signature also apparent. The big difference here however is that unlike the SPX, the 200-month moving average MA is already being tested on the Dow, making the probability of a lasting penetration to the upside unlikely given the sentiment backdrop. But hey, what do I know? As soon as one starts thinking such thoughts a whole bunch of new fools show up to prove you wrong, so again, I would caution you from both sentiment and strategy related perspectives, don’t be surprised at any outcome in coming weeks, until month’s end is passed, along with the potential for a hedge fund sponsored month end ‘jam job’. (i.e. window dressing.) This means that anybody putting on short positions here might have to live through a few weeks worth of angst, but in my opinion, by feathering into position throughout this window, it will be worth it in the end as long as a bunch of bears don’t show up between now and then, driving put / call ratios back up again. (See Figure 4)

Figure 4

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

© 2005-2019 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