Dow Array Still on Track
QUESTION: Marty; At the conference you stated that 2016 should be the major turning point in deflation. Do you still see this concluding for the first quarter?
Thanks
HG
ANSWER: The monthly array in the Dow published here back in July appears to be working on target. November was the reaction high where the Dow reached 1721043 intraday. It picked the May high for 2015 correctly and we still have the first quarter as the main target to pay attention. Not much has changed. Socrateswarned that if we closed lower at year-end 2015 then we would see a correction.
We may yet get that Sling-Shot Move where you take out last year’s low and then swing to new highs. The only difference that seems to be shaping up is that instead of a conclusion for 2017, we may be looking at an extension into 2020 and the general public becomes aware of the crisis in government.
We have to pay close attention now to the Weekly and Monthly Bearish Reversals. It is the monthly which will signal if we are going to get a Sling-Shot and extend this entire mess beyond 2017.
The numbers are the numbers and the arrays are the arrays. My personal opinion does not really matter for it is always the computer which does a far better job than I could do on a personal level.
Market Talk — January 7, 2016
For the second time this week, China’s stock exchange saw a closing due to limit down (7% move). It happened early in the day (actually, only half an hour into the trading day) which spread an uneasy tension to the Nikkei and Heng Seng. The Nikkei lost 2.33% (as the JPY strengthened), whilst the HSI closed down 3.1%.
Europe stood no chance with all core markets opening lower. All markets finished off of their day’s low (each hit within the first couple of hours trading) but despite the bounce, all still closed lower. DAX, despite an afternoon rally, closed -2.3%. FTSE closed -2% despite trading close to the green, whilst the CAC closed -1.8%.
The U.S. also opened lower (around 1.5%) then saw a rally on the news that China is to suspend its circuit breakers (which limit the daily move to 7% – actually, upon a 5% move, the markets close for 15 minutes then re-open with an additional 2% limit). The U.S. market took this as good news when announced and saw rallies for all core U.S. markets. However, by the close, this optimism had waned and we were selling off again. By the close, the DOW had lost 2.3%, the broader S&P -2.4%, and the NASDAQ -3.0%. It is worth noting that Asian futures saw China bouncing 1.8% this evening while the Nikkei lost an additional 1.1%, trading at 17,575 (around 200pts lower).
Again, the flight to quality took place and we saw healthy bounces in Fixed-Income Government Bonds and Precious Metals. Gold has rallied $16 today and was last seen at $1108 (+1.5%) with Silver following up at $14.30 (+2.3%). US Bonds rallied and was last seen trading 10’s at 2.14% (around 10bp better than yesterday). The US curve saw better performance in the belly with 5’s outperforming the wings. In Europe we did not see the Bond rally survive as long as the US Treasury market so subsequently saw the 10yr spread tighten. Last seen at 0.55% in Germany puts the gap at +159bp. 10yr BTP (Italy) was last seen at 1.56% (5bp higher on the day as flight to quality does not include the peripherals).
USD did not do so well today with the DXY losing 1% to close at 98.26. The JPY (+0.75%), the Euro (+1.4%) and 1.5% against the SEK, DKK and PLN. Lots of talk of houses unwinding carry trades (as stocks fell) and Oil fell. Oil saw 12 year lows today for WTI and Brent when price traded close to the $32 mark – their lowest since early 2004. Prices did bounce into the close but the sentiment remains weak – dealers were remarking.
DOW & the Decline
The U.S. share market has fallen following the problems in China. We elected the Daily Bearish Reversal at the 16933 level and this warned of a test of the next important support zone. A daily closing below 15980 will warn that we may in fact penetrate last year’s low and pull off a slingshot move. We previously warned:“We have initial support forming at the 16886 level and a weekly closing below that will confirm a continued decline. Our daily models warn of important support starting at 16930.”
Our Panic Cycles began to turn up this week moving into next week. If we penetrate last year’s low of 15370, then we may see a drop to retest the major support area in the 12875-13100 area. We should break the market FIRST and this appears to be setting up for the extension beyond 2017. A monthly closing below 16013 will signal that the market should crack and then we will be set up for a really wild rise.
Contribution from Norway — War & Money
COMMENT:
Good morning, Martin.
Yesterday I bought an old booklet printed for 10 NoK at the Armed Forces Museum: “Laws, resolutions and prescripts due to circumstances of war”, by the Justice Department, printed in Kristiania (now Oslo) in 1917. I thought I there would find the outline of a recipe for what may come here this time around. Here are the highlights (in addition to an ever growing list of goods that are temporarily forbidden to export):
3. August 1914: Telegram from the Finance dept, ordering all major banks to execute the bank-plan restricting withdrawals from accounts, and immediately order all banks to stop any withdrawal not in accordance with the plan.
4. August 1914: Maximum prices to be imposed on certain goods
4. August 1914: Payment of expireing government paper will be postponed one month, ordinary interest rate applies. For paper without interest rates, 5% p.a. will be paid during the posponment period.
5. August 1914: Bank of Norway is temporarily not obliged to exchange its notes with gold.
15. August 1914: Since there was no bank run, the bank-plan is relaxed, but banks shall only allow withdrawals to companies to pay salaries etc. Private persons are allowed to withdraw what the bank think they will need for one week at the time. Under no circumstances must the banking restrictions come in the way of companies/private persons paying taxes to state/munis.
18. August 1914: Gold and silver in any form is for the time being prohibited to export from Norway.
18. September 1914: International private telegrams are to be in Norwegian, Swedish, Danish, German, English, French or Russian, and be written in a clear way that gives meaning to the operators. If not, the telegrams will not be forwarded and no notification given. International phonecalls are to be in Norwegian, Swedish or Danish. Non- compliance leads to termination of the conversation.
20. August 2015: Increased taxes on income generated due to the war business cycle: 5% on first 5000 NoK increased income (based on tax declaration 1914) assumed to be due to the war. 15% on 20 000 NoK and above.
15. April 1916: Bank of Norway is temporarily no longer obliged to exchange into notes gold handed in, nor is the State Mint obliged to mint coins from gold handed in.
Happy New Year Martin, and all fellow readers of this blog.
REPLY: War and money has always been a politically sanctioned marriage. Trying to force the federalization of Europe to end war is like advocating that had Hitler or Napoleon conquered all of Europe, then they would have ended European wars. The EU in Brussels is trying to conquer Europe and they are using politicians to betray their own people. This has always been the goal. The euro was indeed the federalization of Europe through the back door, as Margaret Thatcher said.
2015.75: The Start of Sovereign Debt Crisis
We warned that 2015.75 was the turning point to the start of BIG BANG. As we now have entered the down wave on the Economic Confidence Model, things will begin to heat up.
I have warned that our current crisis in 2016 has been created by the total mismanagement of government by politicians. This year will mark the beginning of the problem of governments NEVER paying off debt. Instead, they roll it and add to it year after year. Well, 2016 will mark an outrageous roll as the equivalent of nearly half of the USA’s national debt has to be refunded. Major economies need to raise about $7.1 trillion U.S. dollars to refinance debt. Germany alone has around €203 billion euros of new debt that it has to sell, which is a considerable challenge in view of the fragile global economy. Welcome to BIG BANG.
U.S. Armed Confrontations With Government
Reuters has put together a catalogue of armed confrontations with the U.S. government over the past few decades. Interesting review
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