Phase Transition – Cycle Inversion
QUESTION: Marty, you have said that the turning points are just that, turning points. So if we get a high or double top the first week of September, will the market still rally thereafter? Are we looking at a cycle inversion here, where the ECM begins to rise while the market declines sharply? If not, then what do you think will happen?
Thanks!
EH
ANSWER: Yes, these are turning points and they do not always reflect the direction because some markets are peaking while others bottom at these turning points are on a global scale since this is a world model. The 1987 turning point was to the day, but it picked the low of the crash not the high. The US share markets was not the focus but a reflection of the real change underlying everything – capital flows.
It was Japan and its share market that was in a perfect alignment with the ECM. The capital flows shifted with the ECM and became focused on Japan for the 1989.95 turning point. True, we stated there would be a crash in the USA and I even warned the White House of that 2 years in advance in 1985 because they were forming G5 to manipulate the dollar lower to reverse the trade deficit. That reversed the capital flows and the US share market was simply the casualty of war – collateral damage. That is why the day of the low we said that was it, the low would hold, and that new highs would be seen in sympathy with Tokyo going into 1989.
The US new high came the week of July 24, 1989. The first Weekly Bullish Reversal was elected the week of April 10, 1989, which was 77 weeks from the low. The US market followed the overall trend, but it was not the primary focus. Why did it bottom with the ECM? It was not the actual share market that was the driving force, it was the G5 manipulation of the dollar and the fear the dollar would fall another 40%. It was an exodus of foreign capital, not ONLY the share market.
The capital flows during the crash sent the yen soaring, but it then backed off into 1988 with the capital flows. Then the trend reversed and capital poured into Japan for 1989 as all foreigners then were buying Japan creating the bubble.
Currently, liquidity remains very low – still at about 50% of 2007 levels. The retail market is not in the US shares so we do not yet have the froth foaming. Once again, the forecast is NOT about the share market – it is concerning capital flows. The US share market is the only game in town for big money that is smelling a problem in the debt markets. We have Germany wanting to impose a 5% surcharge tax to bail out municipal debt and confiscate 10% of your bank account to bail out the banks. Hollande in France is firing everyone but himself and he is taking France down the tubes.
This is NOT the bull market of old. This is all about capital flows. That is what will start the turn here the first week of September. We have been stating that for a couple of years now and going into October/November has not changed.
Here is the monthly array from last year. This was showing the change in trend in July and then September. So nothing has changed from that perspective. We have the same problem right now. The US share market is NOT lined up with this wave of the ECM. This warns we are dealing with a casualty of war and the focus again is the shift in capital flows thanks to war, collapse of Euro, and the Sovereign Debt Crisis.
Looking at the current Array, we still see October November as rising volatility and December year-end remains a target. We still see the risk of a high 2015-2016 with exceptionally high volatility in 2017-2018.
The question we will address at an upcoming live internet conference will be this critical issue. Are we moving for a Phase Transition now, or are we extending the entire cycle because everything is crumbling around us even geopolitically?
We have been warning of a potential cycle inversion caused by all these trends converging. We have been warning this could not be determined until September.
QUESTION: Marty, you have said that the turning points are just that, turning points. So if we get a high or double top the first week of September, will the market still rally thereafter? Are we looking at a cycle inversion here, where the ECM begins to rise while the market declines sharply? If not, then what do you think will happen?
Thanks!
EH
ANSWER: Yes, these are turning points and they do not always reflect the direction because some markets are peaking while others bottom at these turning points are on a global scale since this is a world model. The 1987 turning point was to the day, but it picked the low of the crash not the high. The US share markets was not the focus but a reflection of the real change underlying everything – capital flows.
It was Japan and its share market that was in a perfect alignment with the ECM. The capital flows shifted with the ECM and became focused on Japan for the 1989.95 turning point. True, we stated there would be a crash in the USA and I even warned the White House of that 2 years in advance in 1985 because they were forming G5 to manipulate the dollar lower to reverse the trade deficit. That reversed the capital flows and the US share market was simply the casualty of war – collateral damage. That is why the day of the low we said that was it, the low would hold, and that new highs would be seen in sympathy with Tokyo going into 1989.
The US new high came the week of July 24, 1989. The first Weekly Bullish Reversal was elected the week of April 10, 1989, which was 77 weeks from the low. The US market followed the overall trend, but it was not the primary focus. Why did it bottom with the ECM? It was not the actual share market that was the driving force, it was the G5 manipulation of the dollar and the fear the dollar would fall another 40%. It was an exodus of foreign capital, not ONLY the share market.
The capital flows during the crash sent the yen soaring, but it then backed off into 1988 with the capital flows. Then the trend reversed and capital poured into Japan for 1989 as all foreigners then were buying Japan creating the bubble.
Currently, liquidity remains very low – still at about 50% of 2007 levels. The retail market is not in the US shares so we do not yet have the froth foaming. Once again, the forecast is NOT about the share market – it is concerning capital flows. The US share market is the only game in town for big money that is smelling a problem in the debt markets. We have Germany wanting to impose a 5% surcharge tax to bail out municipal debt and confiscate 10% of your bank account to bail out the banks. Hollande in France is firing everyone but himself and he is taking France down the tubes.
This is NOT the bull market of old. This is all about capital flows. That is what will start the turn here the first week of September. We have been stating that for a couple of years now and going into October/November has not changed.
Here is the monthly array from last year. This was showing the change in trend in July and then September. So nothing has changed from that perspective. We have the same problem right now. The US share market is NOT lined up with this wave of the ECM. This warns we are dealing with a casualty of war and the focus again is the shift in capital flows thanks to war, collapse of Euro, and the Sovereign Debt Crisis.
Looking at the current Array, we still see October November as rising volatility and December year-end remains a target. We still see the risk of a high 2015-2016 with exceptionally high volatility in 2017-2018.
The question we will address at an upcoming live internet conference will be this critical issue. Are we moving for a Phase Transition now, or are we extending the entire cycle because everything is crumbling around us even geopolitically?
We have been warning of a potential cycle inversion caused by all these trends converging. We have been warning this could not be determined until September.
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Margin Debt & Trends
The debate over the pending crash in the stock market seems endless. Whether or not margin debt as reported by the NYSE has relevance any more is an interesting question in a world in which the retail investor has abandoned investing (decline in liquidity). The real marginal buyers are hedge funds and some banks while the cash buyers remain central banks. The make-up of the market has changed and the interest rates are well below even many dividends. So talking about total margin debt nearing $500 billion cannot be compared just on a nominal basis.
Yes, we may yet see the correction from the first week of September. It would be fantastic to see all the talking heads claim they called the all-time high. That will feed the pool of bears and that is what we need to reverse the market upward for a real breakout. Markets decline not because of bears, but because of tired bulls. We lack this excessive bullishness at this time especially within the retail segment. This remains a positive development for the reversal to the upside following a shallow correction. As long as the talking heads keep calling for a high – the game is still afoot.
The debate over the pending crash in the stock market seems endless. Whether or not margin debt as reported by the NYSE has relevance any more is an interesting question in a world in which the retail investor has abandoned investing (decline in liquidity). The real marginal buyers are hedge funds and some banks while the cash buyers remain central banks. The make-up of the market has changed and the interest rates are well below even many dividends. So talking about total margin debt nearing $500 billion cannot be compared just on a nominal basis.
Yes, we may yet see the correction from the first week of September. It would be fantastic to see all the talking heads claim they called the all-time high. That will feed the pool of bears and that is what we need to reverse the market upward for a real breakout. Markets decline not because of bears, but because of tired bulls. We lack this excessive bullishness at this time especially within the retail segment. This remains a positive development for the reversal to the upside following a shallow correction. As long as the talking heads keep calling for a high – the game is still afoot.
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Ukraine Dividing in Two?
Behind the curtain there is a growing opinion that Ukraine should just be split in two and hand the East to Russia and call it a day. This is starting to come down the pipeline and we may see this develop into open debate soon. Not everyone in the East speaks Russian. Donetsk is by far the majority. Nevertheless, it appears that the odds are rising in favor of a split and we will see how things unfold by November. Hot water is produced centrally and that has been turned off in Kiev to save money. This leaves people using stingers (electric rods) to heat the water.
Behind the curtain there is a growing opinion that Ukraine should just be split in two and hand the East to Russia and call it a day. This is starting to come down the pipeline and we may see this develop into open debate soon. Not everyone in the East speaks Russian. Donetsk is by far the majority. Nevertheless, it appears that the odds are rising in favor of a split and we will see how things unfold by November. Hot water is produced centrally and that has been turned off in Kiev to save money. This leaves people using stingers (electric rods) to heat the water.
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French New Government – Same Direction – Death of Europe?
François Hollande’s new government only stifled voices of dissent from the left wing of his Socialist Party. These marginal changes simply mean that France is headed down the dark path to meet its destiny and as the second largest economy after Germany, France will take Europe as a whole with it. Hollande’s already unbelievable weak political standing both in France and his diminished respect within the wider European economy, will only have a very chilling impact that dooms France in the future. We are watching live how empires, nations, and city states die.
These governmental changes leave the direction of Hollande’s policy intact. Hollande is desperately trying to hold on to the theories of Marx that were born there in France. Hollande cannot connect the dots that socialism and communism failed for freedom belongs inherently to the people. He cannot grasp that if you told students in school they will all get the same grade regardless of their effort, you would soon destroy the purpose of education. Individual self-worth and achievement may invoke envy in the slackers, but it creates great civilizations among the enlightened. Hollande does not understand that this same basic concept applies in economics. We are people with equal right – not equal abilities or desires.
France is collapsing and there is no possible way this country can be saved in its present economic state. If nothing else, the crisis has made the entire world look closer at France even though Hollande cannot understand that his ideas are simply dead wrong and have proven to be dangerous.The collapse of communism was far less detrimental than the collapse we are witnessing in socialism. Under communism, people distrusted government as a whole and were more self-reliant. Under socialism, people expect to be taken care of by government. They are totally unprepared for what happens when government cannot honor its debts and promises.
Hollande, since the beginning of his term in 2012, has taken the country from bad to worse. He has no effective policy tools available to him in an atmosphere within France that is simply unbearable. He has alienated the very people who create jobs and the unions who see nothing wrong about kidnapping a boss and his family until they get their demands cannot understand why nobody will build plants there with such practices.
France is actually worse than Spain and Greece and its policies are even more detrimental for the French people have depended on a greater degree of government services and aid. In Spain, Greece, and Italy, the attitudes have been to most ignore government retaining a higher degree of self-reliance.
The problem for Europe is France’s high public debt, persistent unemployment and stagnant growth that now threatens to transform the five-year euro crisis into a chronic economic death for Europe. There is nobody left to bailout France. This will ultimately split Germany apart from France even though the politicians will not admit the error of their ways.
European culture now hangs in the balance. Is it too late to save Europe? Well, it might take a benevolent dictator to save the day and there does not seem to be anyone on the horizon no less with the expertise of knowing how the reverse the fortunes for Europe.
François Hollande’s new government only stifled voices of dissent from the left wing of his Socialist Party. These marginal changes simply mean that France is headed down the dark path to meet its destiny and as the second largest economy after Germany, France will take Europe as a whole with it. Hollande’s already unbelievable weak political standing both in France and his diminished respect within the wider European economy, will only have a very chilling impact that dooms France in the future. We are watching live how empires, nations, and city states die.
These governmental changes leave the direction of Hollande’s policy intact. Hollande is desperately trying to hold on to the theories of Marx that were born there in France. Hollande cannot connect the dots that socialism and communism failed for freedom belongs inherently to the people. He cannot grasp that if you told students in school they will all get the same grade regardless of their effort, you would soon destroy the purpose of education. Individual self-worth and achievement may invoke envy in the slackers, but it creates great civilizations among the enlightened. Hollande does not understand that this same basic concept applies in economics. We are people with equal right – not equal abilities or desires.
France is collapsing and there is no possible way this country can be saved in its present economic state. If nothing else, the crisis has made the entire world look closer at France even though Hollande cannot understand that his ideas are simply dead wrong and have proven to be dangerous.The collapse of communism was far less detrimental than the collapse we are witnessing in socialism. Under communism, people distrusted government as a whole and were more self-reliant. Under socialism, people expect to be taken care of by government. They are totally unprepared for what happens when government cannot honor its debts and promises.
Hollande, since the beginning of his term in 2012, has taken the country from bad to worse. He has no effective policy tools available to him in an atmosphere within France that is simply unbearable. He has alienated the very people who create jobs and the unions who see nothing wrong about kidnapping a boss and his family until they get their demands cannot understand why nobody will build plants there with such practices.
France is actually worse than Spain and Greece and its policies are even more detrimental for the French people have depended on a greater degree of government services and aid. In Spain, Greece, and Italy, the attitudes have been to most ignore government retaining a higher degree of self-reliance.
The problem for Europe is France’s high public debt, persistent unemployment and stagnant growth that now threatens to transform the five-year euro crisis into a chronic economic death for Europe. There is nobody left to bailout France. This will ultimately split Germany apart from France even though the politicians will not admit the error of their ways.
European culture now hangs in the balance. Is it too late to save Europe? Well, it might take a benevolent dictator to save the day and there does not seem to be anyone on the horizon no less with the expertise of knowing how the reverse the fortunes for Europe.