US Share Market Update
The primary difference between the DOW, S&P500 and the NASDAQ is not truly what composes each index, it is about capital flows. All the way up, it was the DOW which made new highs first with the other two following the Dow’s lead. Now, the cash flows are showing a broader diversification with the S&P500 a touch stronger. Here the Daily Bullish stands at 212850. It has been the NASDAQ making new highs and taking the lead. The Daily Bullish Reversal here stands at 516440 and the intraday high is clearly in June compared to May for the Dow and the S&P500. The Daily Bullish in the Dow stands at 18233 and 18371.
A closing today ABOVE 1788900 in the Dow today will keep it positive for now. However, we need a closing ABOVE 18243 to imply a continued immediate rally. In the S&P500, we did achieve a minor Weekly Bullish last week but here we need a closing on our weekly mode ABOVE 211510 to signal an immediate continued rally. In the NASDAQ, a weekly closing ABOVE 514335 is required for a breakout to the upside.
The DOW tends to reflect international big money. The S&P500 tends to reflect general broad institutional investment where as the NASDAQ tends to imply more retail. This is simply a general rule that distinguishes the players and capital flows. There are exceptions at times, but this is just a general guideline rather than a black & white rule.
Donald Trump Now #1 in Polls
Trump is hitting very hard, clearly tapping into the emerging anti-establishment politician trend. He bluntly states, “Who do you want negotiating with China? Trump or Bush?” You could expand that to Hillary. Her negotiations amount to how much they are willing to donate to her questionable charity. People setup such charities because they have money to give back TO society, like Bill Gates. The Clintons started their charity when they were broke. Who is the charity really benefiting and why did Hillary shakedown countries as Secretary of State to pile in money to their questionable charity?
MSNBC keeps trying to focus on Trump’s comments on Mexico. They give him tons of airtime in an attempt to discourage people from voting for him, but they may be creating the exact opposite. Despite what everyone says, he is tapping into the increasingly popular view that everyone is starting to feel, having had enough of politicians, or at least the ones with a brain. This is definitely the PEAK in government: 2015.75. Indeed, the mood for 2016 is going to be very interesting.
When the economy turns down after 2015.75, it should impact the public at large and we should see a surge in people going to vote for 2016.
Farage on Europe at the Heritage Foundation
Nigel Farage may be the only practical politician these days because he came from the trading sector. He explains the Euro-Project and its failures. He makes it clear that the Greek people never voted to enter the euro, and explains that it was forced upon them by Goldman Sachs and their politicians. Nigel also explains that the Euro project idea that a trade and economic union would then magically produce a political union – the United States of Europe and eliminate war.
He has warned that the idea of a political union would end European wars has actually turned Europe into a rising resentment in where there is now a new Berlin Wall emerging between Northern and Southern Europe.
The Euro project was a delusional dream for it was never designed to succeed but to cut corners all in hope of creating the United States of Europe to challenge the USA and dethrone the dollar, That dream has turned into a nightmare and will never raise Europe to that lofty goal of the financial capitol of the world.
The IMF acts as a member of the Troika, yet has no elected position whatsoever. The second unelected member is Mario Draghai of the ECB. Then the head of Europe is also unelected by the people. The entire government design is totally un-Democratic and therein lies the crisis. Not a single member of the Troika ever needs to worry about polls since they do not have to worry about elections. This is authoritarian government if we have ever seen one.
The ECB attempts by sheer force to manipulate the economy with zero chance of success employing negative interest rates and defending banks as the (former?) Goldman Sachs man Mario Draghai dictates.
Now, far too many political jobs have been created in Brussels. This is no longer about what is best for Europe, it is what is necessary to retain government jobs. The Invisible Hand of Adam Smith works even in this instance – those in power are only interested in their self-interest and will risk war and civil unrest to maintain their failed dreams of power.
So Who is Still Long in Gold?
As you move into a major low, it is not about who is still long, it is who is short. As gold capitulates and spirals lower, the gold promoters are running out of nonsense to justify it rising while the world is declining. What happens is two aspects. Those who have been long lose their shirt, pants, house, wife, kids, the car, and the dog. The buy-every-dip-average-in advice becomes toxic, just as it did during the Great Depression in stocks – hold now for new highs by year-end is always the prediction. So yes, the investors married to the trade typically lose everything and when the cycle changes, they likely will not buy again unless new highs come into play for they will say, “No thanks, been there done that.” Any rational person can analyze the sales-pitch about fiat and hyperinflation and see that they existed for 19 years as gold declined. Such fundamental analysis scenarios always crumble to dust and fall to the ground for they are never true to the history of events.
At the top, the majority is long and they become the fuel to make any market crash and burn. Shorts and conspiracies do not force markets to decline; it is always the LONGS themselves. Someone whom is long sells because he cannot hold and each has a different pain threshold. The market crashes for there is no bid. It takes courage to try to catch a falling knife. Again, this applies to ALL markets.
At the bottom, the opposite unfolds for everyone will be short. They will pile on looking for $600 gold and will count their profits upon entering the trade. They become the fuel to send the market higher for it always begins with a short-cover rally; people continually try to sell each rally, looking for that new low, just as the people at the top remain convinced that a decline would follow with new highs.
So yes, the majority must always be wrong. That is how highs and lows are established. Going into the low, the vast majority of analysts will flip to bearish. Even the gold promoters will fade for nobody will listen to them again. Look, in 2011 when we warned gold would crash to under $1,000, every name in the book was hurled at us. Gold promoters refused to interview us or report the forecast. Many spent hours trying to say that they were right and we would be dead wrong. It was always casted as a war against fiat. Every excuse from no gold in Fort Knox, to market manipulation by banks, to China would be a real market and make its currency backed by gold as Shanghai destroyed paper gold. The scenarios were endless, but never realistic. Not one stitch of proof exists to point to such a scenario ever taking place in history. Yet they seriously hurt the market and ruined the financial future of many innocent people who trusted them.
ONLY when the majority becomes bearish at the low do we reach that sweet spot, and it becomes time for a reversal of fortune. Then on the initial rally out of the ashes, nobody will believe it. Just look at Barron’s and how they reported our forecast back in 2011, stating that the stock market would make new highs. They did not believe that we would be correct because the majority was looking for new lows. When we predicted that the stock market would exceed the 2007 high, many laughed at us, just as they did when we predicted that the gold crash would unfold for 3 to 5 years.
CalPERS Posts Gain of Just 2.4%
CalPERS (California Public Employees’ Retirement System) posted a profit of just 2.4% for its fiscal year (which ended on June 30) that was well below its 7.5% investment target. This is illustrating the crisis emerging in pensions. Even the pensions that were funded are now underfunded because they counted for so long on 8% bond yields. Interest rates were lowered to help banks and this set the stage for the next real crisis post-2015.75. You cannot manipulate interest rates to help banks without screwing someone else.
Now the pension crisis looming on the horizon is becoming a major concern for the future. The pension funds are either not funded or seriously underfunded. Either way, when it comes to government workers we will see tax increases that will destroy the economy, transforming many cities into the next Detroit. What really crushed Detroit was when the pension payment exceeded 50% of total revenue. Pensions will continue to rise, crowding out current expenses.
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