Monday, August 8, 2011

Brazilian Bovespa Double Top.....looks extremely negative long term

The Brazilian Bovespa Index has risen from a low of 23.70 in April 1993 to 73,920.30 in May 2008. It has now rallied up basically to that high and formed a double top...the implications of such a formation are extremely negative....considering the magnitude of the rise from April 1993.

In addition, The index has negative divergence on a quarterly chart.. further adding evidence that long term top is in place. I expect this index along with all the other commodity driven indexes and currencies to decline for many years while the biggest margin call in history comes due and the U.S. Dollar takes off in a Bull Market...while commodities and almost every U.S. Dollar denominated asset decline in bear markets.

Thursday, August 4, 2011

A brief review of bear market targets

The action in the market today helped solidify the case that the bear market rally is over and the bear market that began in 2007 has resumed. Whether or not this was the actual top to this bear market rally I think is immaterial. What is important is that people keep their wealth intact by getting out of all traditional investments, so that when the final bottom does come, people will have the money to capitalize on it. That being said, I want to briefly go over my target levels for the bear market low. My first target (which could very well be the bottom, let's hope it is) is below 800, and ideally at DOW 770, the 1982 low. If that fails to hold the next target would be the 1974 bear market low at DOW 570. If that fails we are likely looking at a move below 400. The target range there would be 40-386, the range of the 1929-1932 bear market. Whichever of these levels the DOW finds support at, I expect it to be undercut slightly in a capitulatory move to the final low before a new Bull Market begins. As I have stated before Banks are going to ZERO and I am sticking with that target.

The Stock Market almost made a new bear market Real terms

The "real dow", which almost nobody talks about, and which was crashing even as nominal values were going up in 2003-2007, has just about made a new bear market low today, at 6.89 ounces of Gold. Compaire this to over 40 ounces of Gold in 1999. I expect this ratio to go to 1 or lower. This means Gold will be worth as much, if not more, than the DOW at the bear market low. I expect this to be between 400-1000. It is going to be a long way down, even in nominal terms.