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DOW : The Great Dow Highs of Summer 2007

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Will the FTSE turn down shortly from the upper trendline area? - today the trendline is about 5563 - and the market was just 10 points below this 20 mins ago. Today is a major Bradley turn date. If instead it powers through this area, then the upper trend line shown on the chart below around 5800 should contain it.

 

FTSE2011Chart.png

 

So far so good, the FTSE spiked higher yesterday shortly after posting the above and hit 5567 before promptly reversing to this morning's low just below 5500. The US markets too appear to have traced out a small 5 wave pattern down and so after a small bounce further selling pressure is likely. I took out some shorts at yesterday's highs and will look to add to them if the bounce stays below those highs. A nice low risk high reward bet given the upside is limited on this count and the downside potential massive.

 

I forgot to add the head and shoulders labels on the above chart of the FTSE - if the right shoulder is now finished as my above wave count suggests then we could see some swift falls in January.

 

My silver short continues to do nicely and I added a US/Can$ long at yesterday's lows. I note Martin Armstrong has the same view as me in his latest missive

 

I may be the only long-term bullish analyst who is bearish on gold near-term. It is often hard to explain to people all the nonsense surrounding gold is just that – nonsense. Everything from fiat to the

predictions we will head into hyperinflation are just so wrong, yet to say that guarantees 100 emails of

pure hate.

 

Let me explain one more time why there is no inflation NOW despite the fact the Fed created almost $3

trillion of elastic money. When you have almost $60 trillion in debt, forget the derivatives and the

unfunded liabilities, that contraction is far greater than the $3 trillion the Fed created. At the very least, there is a bare minimum of $15 trillion that evaporated in the deleveraging in debt on top of all the extreme numbers on derivatives. The efforts of QE1 and QE2 failed to stimulate and they failed to create inflation. We are suffering from DEFLATION at this time that is not yet over.

At the most extreme, gold could even collapse back to retest the 1980 high of $875 if we were to see a

Quarterly closing BELOW 1113.

 

http://armstrongeconomics.com/martin_armstrong_writings/

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My silver short continues to do nicely and I added a US/Can$ long at yesterday's lows. I note Martin Armstrong has the same view as me in his latest missive

 

Good call D.D, forgot to ask before what are you using for this short?

 

As for the FTSE, the santa rally looks weak this year, but there has been one since mid dec of a couple of hundred points as it stands.

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Good call D.D, forgot to ask before what are you using for this short?

 

As for the FTSE, the santa rally looks weak this year, but there has been one since mid dec of a couple of hundred points as it stands.

 

Cheers. Yup, this week is traditionally a bullish one for stocks and so whilst i am looking for a top either at current levels or at the next trendline a few percent above (as set out above), any real downside action will likely wait till the year end, month beginning is behind us (unless Greece decides to take the opportunity of the long weekend to get out of the euro!!).

 

Just been shorting silver through the spreadbetters. Didn't add to my silver shorts in the end as didn't get a price i wanted so will wait for more of the current bounce to complete before adding.

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My thoughts on 2012 FWIW.

 

Long term i am very bearish, looking for the major stock markets to make new lows (over the next year or two) to below their early 2009 lows.

 

I think this major multi-year down leg started in May of 2011 and will likely last at least as long as the big down wave that took place from late 2007 to early 2009, suggesting a bottom is at least 10 months away and more likely stretching into 2013. It will also likely be at least as explosive at times, so i expect to see another collapse/crash like we saw in autumn 2008, most likely this year, when we reach the middle of the 3rd wave lower.

 

Medium term, i think we completed wave 1 down of this expected large 5 wave move in early October 2011, with wave 2 either recently ended where i have a c? on the S&P chart below, or requiring one more leg up to the area i first mentioned about a month ago shown on the chart by two parallel lines that corresponds with the upward sloping trendline and the late Oct highs.

 

As you can see on both charts, the markets have been tracing out a large contracting triangle over the last few months which should resolve one way or the other very shorlty, most likely in the next few days. This same pattern is common for most of the world's stock markets it seems at the moment, and suggests we are about to see an rapid move up or down out of these converging lines. There was a small move out (up) by the S&P last week and if this is not just a false break then we need to see a rapid reversal down this week, otherwise we will likely see the 1293 to 1310 area being hit in short time. I am currently positioned for the move to be down, but with fairly tight stops in case it busts to the upside, which given the small break last week is looking increasingly likely. If it does rise i shall look to re-short at the higher target levels (around 5800 on the FTSE). Either way, this is or should soon be a shorting opportunity of a lifetime.

 

Gold and Silver IMO will likely follow stocks in the near term, so if we do bust to the upside then expect the same for the metals and vice versa. Am medium term bearish these metals, looking for significantly lower prices than the current $1563 and $28.7 before a final low is put in.

 

Looking for big dollar strength coinciding with falls stocks, with the dollar reaching the highs of early 2009 as stocks reach the lows of early 2009.

 

The 3rd wave lower in stocks when it gets going will likely be a BIG event, with stock market performamce regularly featuring on newspaper front pages. It will also likely coincide with a major eurozone event, such as Greece leaving the euro. I really would not be surprised to see a last throw of the dice too with Germany signing up to the ECB opening up the print presses, which could cause some wild swings with record market rises (lasting a day or so) within the context of a collasping stock mrket.

 

In summary, i am expecting a nasty year with a lot of misery. There isn't a lot we can do as some politicians seem hell bent on taking down their people with them and anyway this is sadly the price of soo many years of excess, so strap in and try to minimise the damage to ourselves and loved ones is my view.

 

S&P 2011 (closed 2011 on 1257)

SAPtoend2011.png

 

FTSE 2011 (closed 2011 on 5572)

FTSEtoend2011.png

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Got very close to your target area yesterday - SPX got as high as 1285.

 

VIX is way down in the low 20s again - complacency is back.

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