Monday, September 22, 2014
One for the Record Books
This juncture is one for the record books. Extremes in stock market optimism with the largest IPO in history, record low volume advances, weakening technicals, commodities breaking down under deflationary pressures with Gold and Silver near multi-year low;. Interest rates set to explode higher as debtors default on the mountain of unpayable debts worldwide, and the extremely stretched nature of this rally that began in March 2009, all point to a truly horrific financial crash and resulting economic depression, the likes of which we have never seen. It is truly amazing to me how long this market has held up. But the fact that it has gone on so long, and gone so far, only portends an even bigger collapse once the market tops. This time there will be no second chance, no bailouts, as it will be the entities at the very core of this decades long credit expansion that will need to be rescued this time around. The central banks, the commercial banks, and governments themselves will find themselves in deep financial straits once social mood turns down in earnest. Nature is comprised of cycles, of ebbing and flowing, expansion and contraction. The stock market is a reflection of the ebb and flow of collective human psychology, as it swings from one extreme to the other. Nature's laws apply to financial markets, too, and once the top is confirmed, the natural forces of the market will indeed assert themselves once again, and the entire house of cards credit structure will come collapsing down, correcting the excesses of the past 82 years since the 1932 Supercycle Low. This rally has gone on for far longer than most anyone anticipated, and is the most stretched rally in stock market history. The leverage in the system has reached absolutely unprecedented levels. This all being the case however, nothing has changed with respect to bear market phasing. The Grand Supercycle Bull Market in stock valuations topped in 2000, as I have reiterated many times before, and the past two reflationary periods have been nothing but credit induced, bear market rallies. This one is no different, but only of higher degree than the reflation that lasted from October 2002 until October 2007. So, it is no surprise that given this degree labeling, the rally has lasted longer and advanced further in percentage terms.
The Supercycle Decline that began in January/March 2000 is not over, and while anyone saying this is still just a bear market rally is questioned for their sanity, I still firmly maintain, This entire rally from March 2009 has been a giant, bear market rally, and will result in a decline to new bear market lows as the Grand Supercycle Bear Market enters the next phase of decline.