Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
The Death of the US Real Estate Dream - 22nd Jul 18
China is Now Officially at War With the US and Japan - 22nd Jul 18
You Buy the Fear in Gold - 22nd Jul 18
Trumponomics Stock Market 2018 - The Manchurian President (1/2) - 21st Jul 18
The Death of Japan's Real Estate Dream - 21st Jul 18
SMIGGLE Amazing Mega Shopping Haul, Pencil Cases, Smigglets and Giant Back Packs! - 21st Jul 18
Cayton Bay Beach Caravan Park Holiday - What's it Like? - 21st Jul 18
Gold Stocks Investment Wanes - 20th Jul 18
Diversifying Your Stock Investing Strategies is Smart Investing - 20th Jul 18
Custom Global Stock Market Indexes May Be Sounding Alarms - 20th Jul 18
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Stock Market (Bernanke) Demand Cannot be Sustained As Is

Stock-Markets / Stock Markets 2013 Jul 07, 2013 - 10:47 AM GMT

By: Michael_Noonan

Stock-Markets

If central planners were put in charge of managing the Mohave Desert, out West, it would eventually run out of sand. When central planners manage anything, they distort natural market forces, and that ultimately creates an exaggerated effect in the opposite direction. At some point, and now sooner rather than later, the Fed's [Bernanke] interference with the stock market is going to make the 2008 crash seem like a minor correction.

There is one thing, and one thing only, driving the stock market, and that is debt. It is not new capital. It is not new investment in plants and machinery, the "old fashion" way of creating a sustained bull market. It is borrowed money, and the cost of cheap money is going to become dear. When that happens, the [overly] leverage factor is going to destroy everyone who is leveraged. This "party" to the upside will end, and when it does, those who chose to believe in the lies will suffer dire financial consequences.


Friday's "positive" jobs "growth" is a lie, plain and simple. More and more Americans are leaving the work force, [not by choice], joining those who have already left, but are considered "invisible" by the Bureau of Lies and Statistics. More and more Americans receive some form of welfare from the Federal teat...Food stamps, an example of the government's latest "growth industry." Full-time jobs are disappearing; part-time jobs ascending, mostly all minimum wage, offering no health care. "Thank you, Obamacare."

The government, on every level, is financial dead weight. Every cent spent by government comes from the public, and now, more so than ever, from deficit spending. Guess who is responsible for all deficit spending? Read the 14th Amendment. With almost zero rates of interest, Congress has zero reason to exercise fiscal "responsibility." They do not care.

Why mention all this? The charts are distorted, based on lies, just like those of gold and silver, where the COMEX has been used as a sledge-hammer against rising precious metal prices, the antithesis of fiat creation. The government hates anything that exposes its lies. Federal Reserve Notes are not dollars, not by law, and even according to their issuer, the Federal Reserve itself. Federal Reserve Notes, [FRN], are debt instruments.

Here is a shocker for everyone: Debt cannot be money, yet almost everyone treats it as though it were money, believing in the lie. When presented with the truth, it is not believed because it goes against the lie, which is believed as true. Do not take our word for it. DYODD. [Do your own due diligence]. Cognitive dissonance reigns.

We see the lies in the charts, and that is why the above lesson in reality was provided.

Mention has been previously made that volume has been greater on declines, an indication of increasing seller activity. The addition of the dark channel lines show the weekly chart to be stronger than expected. The last swing high reached the upper supply channel, and the swing low of two weeks ago stayed well above the lower demand channel line, and also above recent lows from March and April, all appearances of underlying strength.

The amount of time and price for the last swing lows are labeled. The current decline was similar in point value to the middle swing correction, but the decline accelerated in just half the time, an indication that sellers moved the market down with greater ease.

Price has rallied to the upper supply line of the down channel, seen in more detail on the daily chart. We get to see the how of price approaching a potential resistance area on both time frames when the market opens on Monday, [Sunday evening].

The LL and first LH are used to create the down channel. A line connects the high and the LH, extended lower into the future, the dashed portion, and a parallel line is drawn from the LL, extended into the future, also represented by the dash spaced portion. A new LL was formed at an oversold condition, and now price is retesting the upper channel.

The dashed horizontal line off the wide-range bar down, in mid-June, usually offers some resistance, just not in this case. The ease of upward movement from the correction low of Thursday and continuing in Friday's rally would suggest a higher price on Monday.

An intra day inspection of the wide-range bar from 19 June, on this 90 minute chart, tells us price accelerated lower starting at 1638, and it can act as resistance on a retest, if price does go higher on Monday. The high of the entire bar is labeled at 1646, just below the 1650 area swing high, and it, too, can be a potential resistance.

The volume on the left hand side of the chart, as price was declining, is about twice the volume on the right hand side, as price rallied. There has been ample evidence of this out of line supply v demand activity in the past. This happens to show the disparity quite clearly. It is why this commentary began with the editorial caveat. No market can ignore the basic laws of nature without eventually succumbing to natural order.

The lesser volume "demand" side comes from the Fed, injecting unlimited fiat into the market, overwhelming the natural inclination to sell. The forces of supply and demand remain distorted. Central planners can keep it that way longer than rational opposing forces can remain solvent, so sellers simply stay out of the way. They will have their day.

Monday's activity can be telling for the immediate term as price goes into the obvious resistance areas, as shown on all three time frames. The daily and intra day time frames have been down, and a few attempts were made from the short side, resulting in small losses.

If price weakens against support, expect a reversal to the downside. If price stays around the resistance area, its ability to hold is the market's way of telling us buys are absorbing the sellers, and price will continue higher. Plan accordingly.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - 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.

Michael Noonan Archive

© 2005-2018 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