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What Have We Done?

3/26/2016

1 Comment

 
I've done an incredible amount of Macro Research. I think this market is going down & going down hard!
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It's got to be a Debt Deleveraging Cycle. The Magic Ratio Shows it is Deflation
Note on that Magic Ratio Chart: The WLSH bounces off and is trading at the same levels it was at when the dollar-bull run started taking off (slightly before end QE) I think that almost everything is riding on what this dollar does. Like I've been saying I still think that we may not see the Bear Show Up for the Kill until the Dollar Breaks Out Higher..
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The Worse-Off these Countries Become: The Stronger the Dollar Will be as companies scramble to pay off Dollar Denominated Debt
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Unsold Inventory is Spiking
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Corporate Profits are Declining
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Cash Assets of Commercial Banks Have Peaked & are Declining. Look at the big Spikes down. What is causing them? What is going on that is causing Banks to sell-off their cash assets?
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The Dollar is at levels essentially unchanged in 25 years.
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Homeownership unchanged in 25 years. Clearly in a downtrend.
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I think we need to watch Japan Closely & possibly even short them. Japan Proves that Extreme CB Policy Does Not Work. On 550dma. Huge!
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I was looking at these Markets in the scope of my lifetime & I think it is interesting how Both the Dollar & Oil are around the same level they were when I was born. Oil Went on a Super-Boom thanks to the Bush Corruption. (I've only seen government become more corrupt & incompetent) Look at that incredible run in stocks though! You know, the Russell has Negative Earnings. This is a lot of fluff in the equity markets that probably should go BK. I wonder if just like oil, we see WLSH go back to the levels of 1990...
Also rates have only gone down! Even I remember being taught the important of compound interest when I was very young. If rates reverted back to 1990 levels: Chaos!
​Because governments own the bonds means that they are unlikely to ever sell them. However, by purchasing the entire market, don't they essentially drain the liquidity right out of it? Seems to me, all you need is a third party panicking & 1 trade sets the price of a market.. If people decide that the bonds are worthless & Japanaese, European, Italian, Spanish, American Debt is only worth taking the risk for a much higher yield. I think that rates could theoretically spike like crazy & destroy highly leveraged banks/speculators who use these bonds as bedrock collateral for $trillions of derivatives bets in all markets..
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Government Debt is a ticking time-bomb but I believe it will be Corporate Debt that will take down the stock market. Note what happened to B Corporate Debt Yield during the Great Depression.
Watch the Credit Markets Closely. I suspect this Deflationary Bear Market (If that's what's coming) is going to be all about Defaults.
1 Comment
Abe Arbull
4/1/2016 08:06:48 pm

R J, Please subscribe swing trade online (swingtradeonline.com) which is complimentary. Jack is a great technician and he is as frustrated as you are. Best, Abe
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April,01, 2016 Market Wrap
The market day started with some nasty futures as the overbought, daily index charts were finally about to unwind some. That would have been great news. An hour before the market opened we got the much anticipated Jobs Report. Overall, it was in line, but it did little to nothing to help the market rally off the lows. The day started out with a gap down, and after being down as much as fifteen points on the S&P 500, we started to slowly, but surely, rally back up a bit, but remained in the red. The market was anticipating a more important event than the jobs number, the ISM Manufacturing Report. It was more important because jobs had already recovered, but the manufacturing number had been in decline for a long time. Would we finally get a number showing expansion and improvement, is what the market wanted to know. The market is not ready to fully move lower until it had more evidence that economy was slipping further still.

The number came out, and it was exactly as the bulls had hoped it would be. A strong improvement with the reading finally above 50, which shows things are getting better. We had been below 50 for quite some time. The market liked the number, and the rally into the green was on, and was on mostly in the land of froth, or the Nasdaq, which is what you want to see in a bull market. If dividend stocks are leading up, you're in an agnostic environment. But when froth leads things are good. When risk is part of the show, you know things are good for the bulls, and today risk was clearly part of the show in a way it needed to be for the bulls to feel more confident about things. The bulls can feel good about today. Yes, we are overbought again, but overbought is not a sell signal. It warns us of a pullback, but is not a sell signal. A small, negative divergence is still on the daily index charts, but, for now, the market is fighting it off due to the happy tidings from the fed and the manufacturing report. Again, it was a solid day for the bulls.

The reason the stock market is so tough for people is because it's such an emotional game and folks get stuck in a belief system as to what's happening in the real world and how that should apply to the stock market. That's just not the way it works. Rarely, if almost ever, does the real world play into the stock market. A lot of people get stubborn and won't adapt or adjust to the game. They may recognize things aren't going their way, but they don't care. They will stick with their belief system until it's too late. I learned a long time ago that it's all about Disneyland, and not about truth.

That doesn't mean truth never comes to town to pay a visit. Every once in a while it does, and then there's a major price to pay, but it doesn't stay long. The key to this whole game is recognizing when truth is coming to town. It usually stays between six months and a year and a half. It then leaves as fast as it came, and as unexpectedly, as well. You never expect it to come, but once it's here you never expect it to leave. The market is full of hundreds of head fakes to make you feel something else is happening, but it usually is nothing from nothing. Yours truly of dumping plays too soon. Bottom line is we're in a bull market until proven otherwise.

We always have to take notice of potential problems. If we let our guard down completely that would not be a wise thing to do. We have negative divergences on the monthly charts. Slight on the daily charts. We have overbought conditions on the daily charts. It's not an open field of freedom for the market. Never look the other way when there are potential problems. Do not get complacent. If we clear trend line resistance at 2075, then we're looking at 2104. You can see that chart this evening. 2000 is strong support on any selling. It would take a forceful move below 2000 for this market to turn more bearish.

For now, the trend is up. Not every day. The trend. We still haven't broken out, and the Nasdaq is still red for the year. We take it a day at a time, and, if something sets up, you play it.


Peace,

Jack
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Jack Steiman is author of SwingTradeOnline, a journal of his market analysis and stock trading alerts. Sign Up for a Free 15-Day Trial!

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    R. J. Sullivan IV

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