Market Analysis Vis-à-vis Uncertainty

September 15, 2016
Technical Analyst & Author

The markets don’t like uncertainty – and that’s what we’ve got until the next Fed meeting on 20th – 21st of this month, a week from now. So despite various Fed regional governors trying to talk the market up in the meantime, there is likely to be a downward bias. On the 3-month chart for the S&P500 index, a small bearish Descending Triangle seems to be forming above a line of support at 2120, so if it breaks below this level it is likely to drop quite steeply again towards the 200-day moving average.

Meanwhile, on the 6-month chart for the GDX, we can see that, although there is some chance that it is forming a Double Bottom here with its late August lows, it is not going to hold up if the broad market breaks lower again short-term, as looks likely, in which case it too will continue to drop towards its 200-day moving average.

This evening I want to draw your attention to a range of interesting and, in the case of the first two, relevant articles that are a MUST READ. Note that I don’t necessarily agree with all that is set out in these.

The first is US Dollar Will Strengthen As Fed Funds Rate Rises by I M Vronsky of Gold Eagle, the takeaways from which are that the Fed looks set to rise rates at least once before the end of the year, and possibly twice, which would certainly come as a big shock to the majority, driving the dollar higher and tanking the overvalued stock market.

The next is not an article, but an interview with Louis Cammarosano, entitled The Central Banks Agenda for the World is much Darker and Devious. While rather long, it doesn’t feel like it as you listen to it, because it is very interesting and puts forward the notion that we are truly entering a new paradigm, where the government basically prints whatever money it wants and intervenes to keep the markets propped up in perpetuity. They have already started to do this quite a while back, which is why a bull market that should have ended several years ago is still going. In this Brave New World, asset markets stay high while the masses becoming increasingly disenfranchised and enslaved. The way it works is that every time the markets start to stutter, they simply do another few trillion of QE, and buy across the board. An interesting point made in this interview is that, as a result of this, companies end up being answerable to the government who are their major shareholder. This is what is known as a “command economy” and more senior subscribers will recall that this is what existed in the Soviet Union. The person who forwarded me this interview had the following apposite remarks to make about it…

”This is how you take over and own everything in the economy as the Central Banks buy the bloody lot with Monopoly Money and keep the markets on an iron lung for the foreseeable future!!!..............it's what's happening and simply fantastic. There are no real markets left at all. Amazing stuff!”

The truth of what may be able to transpire over the medium-term may lie between what is set out in the article above and the interview, in which case markets drop hard and this is then used as justification for another massive round of QE, which drives them back up again.

We end with this insightful article by Dr Housing Bubble of California about the idiotic super commutes undertaken by huge numbers of people in southern California, entitled The high cost of commuting from the Inland Empire. The reason for these commutes appears to be lifestyle – the ability to live in McMansions in leafy suburbs that would otherwise be unaffordable, but the costs are huge, to the environment in wasted gasoline and car power, and in wasted time – many of these commutes involve sitting in a car for 2 or 3 hours a day, which cumulatively must have serious health consequences.

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Courtesy of Courtesy of  http://www.clivemaund.com

Clive Maund

Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.

Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.

The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.

Visit Clive at his website: CliveMaund.com

The Federal Reserve Bank of New York holds the world's largest accumulation of monetary gold.

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