Financial Markets Waiting to Change Direction?
Stock-Markets / Financial Markets 2009 Oct 25, 2009 - 08:14 AMBy: Nadeem_Walayat
Britain's Great Depression caught the mainstream commentators and academic economists off guard (again), as the UK economy failed to grow by 0.2% in the third quarter as widely expected but rather contracted by another 0.4%. However the trend remains inline with my analysis and forecast of February 2009 that called for a low in the third quarter of 2009 followed by a small increase in GDP for the fourth quarter of 2009.
July's analysis (Engineering a Strong UK Economic Recovery into a May 2010 General Election ) suggested that a lower starting base for the economy sets up for a stronger statistical economic recovery into a May 2010 General Election as 1st quarter 2010 data is released during late April 2010 and revised yet higher during May 2010. That an unemployment starting to converge towards my lower unemployment target of 2.60 million by April 2010 rather than the 3.2 million mainstream view that will likely be revised lower in the coming months.
The bankster's that caused the Economic Pearl Harbour have been completely and utterly let off the hook by inept, incompetent mainstream politicians that are still more interested in seeking to maximise the amount they can defraud tax payers of in expenses, the price for which is being paid in Britain by the rise of the far-right which has risen in support from 3% of the electorate to about 8% today. During the week the far-right were given airtime on the BBC flagship political debate programme Question Time. Britains Great Double Dip Depression ensures the next few years are going to be tough both economically and socially as governments fight to prevent the OTC Derivatives Pyramid from Imploding into Financial Armageddon.
Financial Markets
The Dow, Gold, U.S. Dollar and Crude Oil all ended little changed on the week.
The Dow has given a strong performance from the March bear market lows confounding relentless bearish commentary that saw every dip as the start of THE CRASH!, and Gold which remains hinged to the outcome of the U.S. Dollar that still clings on by its finger nails to the earlier bull market scenario, though which implies an inter market relationship that says a higher dollar 'should' result in gold and stock market weakness, as ever timing will be in the detail especially as Octobers stock market correction was much weaker than expected, about half that which was required to correct the preceding advance to the 9,750 target which has not put the subsequent break above 10,000 on a particularly strong footing, therefore I remain skeptical of the current phase of the stocks bull market rally being sustainable, more on this on in depth analysis in the coming days.
Trading Lesson - Forecasting and Trading
Over time one learns the important difference between forecasting, which is scenario building and trading, which is reacting to price movements in real time. Why forecast ?
There is the incentive to stay attuned with the market mentally because the act of trading is not intellectually stimulating it is more akin to repetitive action akin to a martial art or sport where practice rules supreme, whereas forecasting is intellectually stimulating and aimed at giving insight into the mega-trends against which major corrections, even bear markets (with hedging) can be ridden out i.e. the peak oil mega-trend, the climate change mega trend, the population growth mega trend impact on agri-food's, the fresh water mega-trend and the emerging asian middle class mega-trend on consumer consumption and innovation. Therefore the primary purpose of forecasting is to arrive at a firm conclusion in the present that enables one to commit to a trend without which all we would be doing is looking back at what has happened and wishing we had par-taken in a particular investment trend.
However those that blindly believe their forecasts to be absolute after the fact i.e. even if they are going belly up are setting themselves up for an inevitable fall, as all forecasts at the end of the day are only educated best guesses at a particular point in time and must have a mechanism to negate the scenario's. Ironically recognising this fact can lead to the generation of more accurate forecasts as one is not psychologically committed to ones forecasts which is the downfall of many analysts that cling on to trends that have long since been negated by price action as we have observed this year with the stocks bull market rally, which IF a new bear market soon starts will conveniently be erased from the record.
Source: http://www.marketoracle.co.uk/Article14488.html
Nadeem Walayat
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