Thursday, January 19, 2012

Huge Bull Trap Setting up

While the major indexes are closing in on their 52-week highs.... and are likely to exceed them as we await this cyclical setup identified by Tim Wood as occurring at EVERY major top since 1896...the bears are all but disappearing. The following chart by Sentimentrader shows how few bears there are left.

Meanwhile, as I have stated before, Tim Wood's cyclical DNA marker setup will mark the top of this bear market rally that started in March 2009. Despite all the bulls that are coming out saying its a new bull market....its still just a bear market rally that will serve to trap the bulls in that buy on a "breakout". the Nasdaq 100 index (NDX) has broken out to a new 52-week high today, and the other indexes are likely to follow shortly....but once we get this setup....its game over. I do not see the S&P getting much higher than 1440-1462. One thing I can say with certainty is the higher this bear market rally goes, the more people it is going to fool.....and the more pain will ultimately be felt as the next leg of this bear market takes hold and deflation collapses asset prices. If people think 2008 was something....this next leg of the bear market is going to make 2008 look like a Sunday School Picnic.

Monday, January 9, 2012

Very exciting Juncture in the U.S. Dollar

I have maintained a solidly bullish long-term stance on the U.S. Dollar on this blog since its inception (first post on U.S. Dollar in November 2009). However, I thought there was a chance the U.S. Dollar index could take out its 70.70 March 2008 low before starting its massive Bull Market. Very Recently, Objective Elliott Wave (OEW) developed by Tony Caldaro has confirmed a long-term uptrend in the U.S. Dollar. This suggests the Dollar bottomed in 2008 and has been basing since. This is the original stance I took, however I started to entertain the idea that the U.S. Dollar needed another all-time low first. However, with the OEW long-term uptrend confirmation in the USD and long-term downtrend confirmation in the EUR/USD currency pair, the odds now shift to that the Dollar bottomed in 2008. Tony expects the U.S. Dollar index to reach 140 by 2018.....I expect much higher than that...possibly to 300 or higher. However, it will likely continue to base until the Gold market tops out in 2013-2014. In my view, this is all a topping process. With the bearish expanding wedge pattern developing in the DOW going back to the late 1990's, the foreign currencies topping out in 2012, the USD cycles bottoming in 2012, and commodities due to top out completely by 2014. It seems as if Deflation is about to come back with a vengeance. The safest place to be is cash as I have reiterated many times before...and with all these cyclical events happening.....people need to act now to get liquid and stay that way until the deflationary storm is over.

Just as an FYI: this chart IS drawn to scale....yes I expect the DXY to hit 300 before the end of the decade.

Thursday, January 5, 2012

Gold Silver and Commodities are NOT crisis hedges

Many analysts on Wall Street take Gold, Silver and commodities to be hedges against financial turmoil. The reality is that they are just assets that are sold to generate cash in economic contractions. Additionally, the entire time that Gold and Silver have been in bull markets since 2001, the stock market has held up and, in my view, been in a gigantic topping process. When this topping process ends, and the real financial collapse happens, which I believe is very soon, all of these markets should collapse with it. Gold and Silver will likely initially be viewed as hedges, and will likely be the last markets to top. But in the worst portion of the deflation, they will top out and collapse along with everything else as the 80-year credit bubble comes unwound along with the debt-money system. Dollars are is scarce supply and will be in great demand as the credit system collapses. Here is a great clip by Robert Prechter in which he illustrates how Gold and Silver go DOWN in bad economic times, not up.These markets may have a little more upside left, and the Dollar a little more downside, but 2012 is going to be a MAJOR bottom for the U.S. Dollar. I expect the USD to soar as the financial environment gets worse, as the margin calls come in and the USD shortage takes hold. The key to the end of this bear market rally, and ultimately I believe a decade long topping process, will be the appearance of certain cyclical DNA markers that have occurred at EVERY major top since 1896, discovered by Tim Wood. Once we get this setup, financial hell will break loose, and the U.S. Dollar should launch its greatest bull market of all time.