Stock Market SELL Signals and Inflation Missing from 2010
Stock-Markets / Financial Markets 2009 Sep 26, 2009 - 10:13 AMBy: Nadeem_Walayat
Early in the week I went hunting for signs for high UK inflation in the analysis -UK Inflation Forecast, Will RPI Deflation Return to Inflation? However despite zero interest rates and all the money printing to date, I was surprised not to find it, not for 2009 and not for the whole of 2010! and given the double dip depression (more on this tomorrow), probably beyond. What does this mean ? It means the Bank of England NEEDS to act to CREATE inflation AHEAD of the double dip Depression (again more on this tomorrow).
What implications does this have for the stock indices ?
Answer - NONE! You see this is where many widely followed and quite rigorous analysts such as John Mauldin are going wrong by trying to fit this that and the other onto the stock market indices and then scratching their heads and wonder why is it doing the complete opposite. I was there following the 1987 Crash (which I caught), but I missed that bull run back to Dow 2,700 because I LISTENED to what 'SHOULD' happen, rather than WHAT IS happening, Luckily I learn from my mistakes.
Stock Market Initial SELL Signals
If you follow my analysis then you will know that I have been strongly bullish on stocks since early March with analysis of the past 2 months converging towards a significant correction to begin late Sept / Early October from stock market targets for 2009 of Dow 9,750 to 10,000 and FTSE 5,000.
- 15 Mar 2009 - Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470
- 23 Jul 2009 - Vicious Stocks Stealth Bull Market Eats the Bears Alive!, What's Next?
- 29 Aug 2009 - Stocks Bull Market 50% Advance Signals September Opportunity for Deluded Bears
- 07 Sep 2009 - The Crumbliest Flakiest Stocks Bull Market Never Tasted Before
Both indices fulfilled these targets and this week BOTH indices gave sell signals, triggering SHORT positions (trading will eventually be covered at walayatstreet.com). The indices this close to the swing peaks means that the initial stops NEED Room to BREATH, hence Dow 10,050 and FTSE 5200.
The initial short triggers need secondary and tertiary confirming triggers to be hit before a target can be better determined. However earlier analysis had penciled in Dow 8900 from Dow 9750 and FTSE 4,500. The only negative will be highly perma bears who failed to capitalise on the 55% or so bull market to date will now crow loudly "I told you so!" with the 10% or so of crumbs that are likely to be offered.
LESSON for Today - The further you deviate from the present the more likely you are to be wrong! Forget trying to compare today to the charts of the 1930's, or even last year. Therefore train yourself to react to price movements in real time. (I am sure I have said this before a few times already).
Your stock index futures trading analyst taking each swing at a time.
By Nadeem Walayat http://www.marketoracle.co.uk
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