Stock Market Santa Rally and Election Weapons of Mass Deception
Stock-Markets / Financial Markets 2009 Dec 13, 2009 - 02:27 AM GMTBy: Nadeem_Walayat
Alistair Darling delivered his final pre-budget / pre-election report on Wednesday, which was pretty much inline with my earlier expectations namely to hit bankster's with a 50% tax, delayed tax rises and above all to continue spending like there is no tomorrow therefore fulfilling the Labour party strategy of delivering a scorched earth economy to the next Conservative Government. It only remains to be seen what more nightmare policies Labour has in store to completely wreck the British economy in its final few months of government as per my inflationary mega-trend's scenario (to be completed this month), I suspect inflation will make an appearance virtually within days of Labour being dumped at the polls.
My election forecast of 2nd June 2009 still stands that projects an outcome of Conservatives on 343 seats, Labour 225 and Lib Dems on 40. Though Labour's strategy of bankrupting Britain to maximises it chances at the election does mean that by the time the Election is actually called the forecast may need to be revised in Labours favour i.e. the chances of a hung parliament look set to increase markedly.
Meanwhile Tony Bliar popped up Satuday in an attempt to drive a final nail into Gordon Browns election prospects coffin by attempting to cover his back in advance of an appearance at the white-wash Iraq Inquiry next week, he is basically now allegedly admitting to lying to Parliament about the primary reason for invading and occupying Iraq, and also stated that if the 45 minute WMD lie had not worked, then he would have kept trying with more lies until he got his way. It is very easy for politicians such as Bliar to send the sons of others off to die on the basis of lies whilst his own sons never would be allowed to do so.
Financial Markets Quick Update
Stocks - As anticipated the Dow fell to the expanding triangle target and bounced. The subsequent bounce has been quite strong and illustrates the difficulty in trading this type of pattern that includes higher highs and lower lows. To fulfill the pattern objectives the Dow should now enter into the final swing lower, however against this we have the imminent strong seasonal santa rally pulling in the opposite direction higher. My concluding thought, we get the santa rally to a new 2009 high for the Dow into the last few days of December and then the market starts the significant correction, and I'll try and get my forecast for 2010 completed before it begins!
Gold - Gold is now down near 10% and close to the target of a move back through $1,100, next target lower would be $1,050 as at this point in time there is no sign of a bottom to this correction, however in the immediate future we may see a bounce higher early next week.
U.S. Dollar- Has the dollar finally bottomed after many false dawns? 76.60 puts it within touching distance of the 77.00 initial Buy trigger that remains unfilled. The fundamental picture of increasing risks of sovereign debt defaults does favour the worlds reserve currency. Gold and other commodities are acting as expected by falling against a rallying dollar, however not stocks as mentioned above and as I warned of way back in November 2nd. Immediate future could see the dollar trade lower which would be healthy as it would generate a higher low pattern to act as a spring board for the rally.
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By Nadeem Walayat
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