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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Economic Recovery Follows Stealth Stocks Bull Market, BlogosFear Cry's Manipulated Markets

Stock-Markets / Financial Markets 2010 Apr 04, 2010 - 09:01 PM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleThe economic recovery continues to manifest itself in the real world as this week both UK GDP was revised higher to 0.4% for Q4 2009 and Fridays U.S. Jobs reported 162k of new Jobs added to the economy, the economic recovery has long since been led by the stocks stealth bull market that has risen by more than 70% since the March 2009 low.


Even this positive economic data is NOT convincing the blogosFear and Perma-crowd that there is in actual fact an economic recovery underway, instead the reasoning is that the markets and economic data are manipulated into an illusion of recovery, this to me sounds like wishful thinking in wanting stocks to revisit the March lows because they missed the boat. However this ship sailed over a year ago and isn't returning to pick up new passengers at Dow 6,470!

There is no point crying market manipulation because, YES the markets ARE manipulated! This is something that has been apparent to me from very early in my trading career, in fact the day after the 1987 crash (19 Oct 2007 - How a Newbie Beat the Great Crash!), so probably also for many, many decades before then. So what ? In fact it makes it easier to arrive at firm conclusions such as that March 2009 was the TIME to buy BECAUSE the markets ARE manipulated, it IS because the SMART money (the dark pools of capital) which is doing the manipulations, however they CANNOT hide their manipulation from the price charts which is why one can rely on experience and on going analysis to GUESS as to why markets will enter into a bull market, but the reasons only become obvious AFTER the market has risen by more than 50%, as I warned off in Mid March 2009 - (15 Mar 2009 - Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470).

Q. How can you be bullish on stocks and bearish on the Economy.

A. The markets move ahead of the economy, whilst I don't profess to know the EXACT reasons of why they will move AHEAD until that becomes apparent AFTER the market has already moved, however I do have some reasoning in that INFLATION, Zero Interest Rates (Forcing savers / financial institutions to take risks) Quantitative Easing (money printing), and HUGE Fiscal stimulus packages that are laying all of the ground work for the next bubble regardless of how bad things appear as any outcome that prevents another Great Depression will be seen as bullish! i.e. even a low growth high inflation stagflationary environment WILL be seen as a positive outcome against the present day data that points to a collapse of global demand on a scale not seen since the Great Depression. The governments HAVE learned the lessons from the Great Depression and WILL succeed in inflating the asset prices and ignite the next perhaps even bigger bubble, meanwhile the stealth bull market will continue which by the time everyone realizes what's going on stocks will already by up by perhaps more than 50% from the low.

I see much of the above recently being mentioned by many BlogosFear sites such as ZeroHedge after the markets have risen, though tainted with conclusions that it is unsustainable, however missing the whole point that the rally in asset prices is in actual fact the TRIGGER for the economic recovery as the above indicates.

So dear reader, Yes, not just the markets, but EVERYTHING that involves human activity is MANIPULATED, EVERYTHING, that is how we have grown to number 7 billion manipulators across the globe, it is imprinted in our genes to manipulate our environment either as individuals or groups, countries, continents and even the sum of the whole through mechanisms that humans have put into place. Where humans are concerned there is no natural order, natures law, we have long since left environmental pressures that impact on other Earth creatures long since behind and live in a bubble of human created reality.

Realise this and you will stop worrying about the obvious such as why Gold prices are not already at $5,000, because there is a greater weight of human manipulation depressing Gold prices than that countered by gold bugs wanting to manipulate gold prices higher through their own propaganda and buying pressure.

We take mainstream press, media and politicians manipulating public opinion as a done deal, but market manipulation is still vague and the most are blind to the recent development of the manipulation from the internet BlogosFear, it is not good nor bad, it is human nature. Rather than perpetually cry market manipulation, the only thing one can do is to try and ride the coat tails of the manipulated mega-trends.

Back to the economy, My in depth analysis in the Inflation Mega-Trend ebook concluded towards above trend growth for 2010 as a strong economic recovery manifests itself with a series of surprises coming to the upside.

The secret to successful investing is to arrive at FIRM CERTAIN conclusions and then put your own money on it, if your right keep adding, if your wrong the market will throw you out of your positions. None of this bear market rally nonsense where a trader is perpetually looking to sell on EVERY correction that MUST be the END of the rally, when in fact investors should be focused on only being wrong ONCE! I.e. when the trend ends you want to give up some of your gains as the market throws you out of your positions as stops are hit... more on this in a future ebook, perhaps titled How to Trade Manipulated Markets ?

Stock Market - The Dow closed up on the week at 10,927, the trend over the past month has been characterised by two factors, 1. NO technical sell signals, and 2. A steady as she goes rally that is not pushing the market into a technically overbought state. According to the my last in depth analysis (23 Mar 2010 - Stocks Stealth Bull Market Trend Forecast Into May 2010 ) we have by now entered into the time window for a short-term correction that targets a correction from about Dow 11k to Dow 10,650, ahead of trend continuation higher into Mid May that targets Dow 12k.

Short-term Trading- The short-term trend STILL remains UP, Last Close 10,927, BUY Trigger 10,957 Targets 11k resistance, nearest SELL Signal is at Dow 10830, that targets 10,550. Fridays Positive Jobs report implies that the Buy trigger looks set to be taken out Monday therefore targeting Dow 11k as most probable early week trend.

GOLD - I have received a few emails to update my Gold analysis for 2010 - Ebook / Feb 2010 article (Gold Analysis and Price Trend Forecast For 2010)

1. That the current correction is targeting $1050 to be achieved during February 2010

2. That Gold is targeting an Impulse Wave 5 into late 2010 peak of at least $1333 which remains as per the original forecast of 1st November 2009.

Nothing has changed as the inflation mega-trend continues to manifest itself as commodities such as Gold continue to work their way out of the Feb correction bases, i.e. Gold $1050 floor with subsequent strong support area between $1,075 and $1,100 holding the most recent correction. Gold continues to target $1,333+ this year.

Your bottom line trend investing and trigger trading analyst.

Source: http://www.marketoracle.co.uk/Article18392.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved

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Comments

Jas Singh
06 Apr 10, 11:26
UK House Prices

Ecellent analysis as always.

Do we get a sneak peak at your UK house price forecasts?

What I would like to know is, are UK property prices likely to fall in nominal terms?

Best Regards

JS


Ajay
06 Apr 10, 13:34
GOld price

Hi Nadeem,

If you were to put a probabilty on the gold price meeting your target, what would it be?

Is there any possibility that gold price may go the other way?

Thanks,

Ajay


Nadeem_Walayat
06 Apr 10, 15:32
UK Housing

Hi

I will be posting a lot of articles on UK house prices over the next month, though the conclusion won't come until at least mid May.


Nadeem_Walayat
06 Apr 10, 15:34
Gold probability.

When a forecast made as long as Nov 1st 2009 requires little update, that is usually a good sign for the forecast trend. I would give it a pretty high 80% probability of being achieved.

Given that the future is unwritten, a 80% probability is about as high as I can go!

On the risk side, my eyes are on the support $1075 to $1100 holding and then $1050, with Gold at $1130, it is behaving well in terms of expectations.


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