Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Global Stock and Financial Market Confidence Meltdown

Stock-Markets / Financial Markets 2011 Aug 14, 2011 - 01:29 PM GMT

By: George_Maniere

Stock-Markets

Best Financial Markets Analysis Article           I have never been big advocate of conspiracy theories. Most of these theories are information that is reported in the media circus to incite anger towards one group of people. Meanwhile the real stealth culprits go unnoticed.


           Let’s use the mortgage crisis as an example. There can be no doubt that the mortgage crisis and subsequent collapse of our financial system was an unprecedented nightmare. Upon a closer look, however, the people involved were not part of a conspiracy; they were looking for immediate gratification. The people that were involved have no idea of the collateral damage that they caused nor do they have clue about the international global ramifications that were caused. These people had no idea that the fraud they were perpetrating in the mortgage market would bring down the entire financial system. They were simply looking at the two feet in front of their face and were seduced by the specter of the easy buck. These people see only easy money in front of them and I don’t think most were capable of connecting the dots and seeing the collateral damage that their actions would wreak on future generations.

           What was done in the name of greed was far more insidious than shilling for an easy dollar. The real crime was that they were pulling the bricks out of the foundation of the Global Financial System. Indeed, far more telling was the meltdown of global confidence. The lack of global confidence is the cause of higher volatility in the markets. Confidence in the global markets is collapsing. Herbert Hoover said that “capital is acting like a loose cannon on the deck of a ship in the middle of a storm.”

           For a moment, let’s forget about the stock market. Would you go into a grocery store if you were not confident that the food you were buying was fresh and safe? I don’t think so. The most fundamental issue that supports all markets is confidence, be it your local grocery store, the local butcher or the stock market. In the stock Market you can’t possibly invest unless you understand what you are buying and have confidence in what is happening. A trader must have the belief that his understanding of what is driving the market is correct. Our politicians do not and will never fix the real problems; they only react to them after it is too late.

           If history has taught us anything it is that as institutions and policy makers grow, there will always the temptation to stretch the rubber band. Just as individuals can go bankrupt no matter how rich they are, financial systems can collapse under the pressure of greed, politics and profits no matter how well regulated they seem to be. A careful study of history will reinforce the lesson that governments continually mismanage financial markets, a recipe for the debasement of currencies and the loss of confidence in our financial markets. 

       Summer roller coasters are supposed to be fun but last week's stomach-turning ride on the stock market (which was the first time in the 115-year history of the Dow Jones Industrial Average that it moved more than 400 points for four consecutive days) was more like a terror ride on an out-of-control roller coaster.

Oddly, with the VIX hitting a high of 48, the market ended the week just about where it started. The Dow ended the week off just 1.5%, only 175 points from where it began. The Standard & Poor's 500-stock index and the Nasdaq Composite ended down just 1.7% and 0.96%, respectively. All three of the major indexes are down for the year: 2.7% for the Dow, 6.3% for the S&P 500 and 5.5% for NASDAQ.

This leaves investors torn between worries of another recession and hope that stocks are at bargain-level prices. And that means a further loss of confidence.

Please see a chart of the DOW from last week.

A study of this chart tells me two things. There has been a complete breakdown of confidence in the market. We can see a drop of 400 points followed by a gain of 400 points followed by a drop of 600 points followed by a gain of 400 points and 160 points respectively. In a week we went absolutely nowhere, except that we did manage to further meltdown any confidence there might have been in the markets. I was shocked to see anyone go long into last weekend.  The two signs to look for in the DOW are a close under 11114 as a bearish sign and a close below 10053 as capitulation. On the other hand a close above 12327 (a very unlikely scenario) would be a signal that the market has turned bullish.

            A look at the two charts of our old friend Gold below tells a similar story.

           Both of these charts tell the same the same thing. The long awaited correction in gold has begun. With the parabolic run gold has experienced since August 1st I felt it was prudent to take some profits and did so twice in 15% increments. The question that has everyone completely confused and confounded is this a real correction? If it is and history is our guide we should see a bounce at the 150 day moving average or about $145.00 for GLD or $1485 for the spot price of Gold. However with the complete loss of confidence that our leaders have shown us and the markets it seems that healthy or not gold will continue its run up. I mean where are you going to run for a safe haven? U.S. 10 year treasury’s paying 2%?

Given that discouraging backdrop, I would advise that you maintain a long position in gold and silver. If gold continues to sell off don’t fight it, slowly take profits. I would also advise that it's prudent to keep ample cash on hand, hold investments that could do well if things deteriorate, and focus on companies and investments that can prosper in a weak environment.

           As I write I am long GLD, SGOL, PHYS, SLV, PSLV, AGQ, XOM, ED, VZ, T, JNJ, LMT, KMP, CAT and AAPL.          

By George Maniere

http://investingadvicebygeorge.blogspot.com/

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at maniereg@gmail.com. I will respond.

© 2011 Copyright George Maniere - All Rights Reserved


Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules