Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Flatline Investing and Dead End Debt Schemes

Stock-Markets / Stock Markets 2015 Jun 27, 2015 - 12:37 PM GMT

By: Doug_Wakefield

Stock-Markets

Next Tuesday is the end of the first half of 2015. As of today, the Dow has once again rallied up to break the magical 18,000 line, holding this level after coming within inches of this level for the first time on December 5, 2014....now 139 trading days ago.


Daily Dow Chart

Does this mean that the patient is about to flat line, yet rather than this being a huge negative; we will merely turn off the speed of light algos, close down the "assistance", and watch the Dow 18,000 live on into perpetuity?

Does this mean that with enough central bank planning and political meetings, whether US stocks or Greece finances, that everything will eventually lead to lasting happiness, a world of constant wins, and no risks to worry about?

Or does the NASDAQ Composite's break to "all time high" cause us to pause, remembering what happened the last time we were here in 2000?

Yes it may appear nice to have a market that seems completely removed from fear by any daily headlines, geopolitical crisis, or economic reality any more, but do we also remember that one cost in this drama was the tripling of the US national debt since the last time "the patient" was at "all time high" 2000?

NASDAQ Weekly Chart

So while after weeks of dealing with realities like huge short-term loans from European central banking institutions to cover the rising level of money exiting the banks of Greece, and a slowing economy since this experiment in global/political leaders started in 2010, we will go into the weekend with the possibility of learning once more at the final of the final until there is a final deal to kick this can down the road some more....the global/political establishment has once again come to "the rescue".

GDP Assumptions
[Source - Zero Hedge, June 21 '15]

Greek Deposits versus ECB Claims
[Source - Zero Hedge, June 25 '15]

Greece Crisis - Merkel Says Eurogroup Talks Will Be Decisive on Saturday, The Guardian, June 26, '15

Troika Offers Greece Third Bailout Program, Prepares Emergency Plan If No Deal, Zero Hedge, June 26 '15

Yet, as we get past the latest crisis that only a group of global/political central planners can save - you know, telling nations to cut expenses, sell asset, and raise taxes so we will give you more debt - the debt markets themselves, twice the size of the equity markets, don't look too pleased with what has been unfolding.

The crowds in the bond markets seem to be saying, there are REAL consequences from playing with the idea of unlimited bailouts, based on unlimited debt.

Treasuries - Long Dated Yields Hit Nearly 9 Month High on Hopes of Greece Deal, CNBC, June 26 '15

US 10-Year Treasury Yield Daily Chart

German 10-Year Treasury Yield Daily Chart

So while someone continues to "assist" the "random" crowd in American equities, supporting the illusion that flatline is better than hard decline, there are those that continue to show serious doubts about this scheme, and have been increasing their speed toward the exit of this madness.

Smart Money Just Sold The Most Stocks in History, Zero Hedge, June 23, 2015

YTD ***** Flows by Client Type

Domestic Equity Net New Cash Flows

And across the ocean in China, the crowd of new investors pouring into the casino for the new ride up, are once again learning the lessons from '06/'07, that until recently, had been old history, and not worth considering during the party of "unlimited riches".

Newly Added China A-Share Trading Accounts
[Source - Zero Hedge, April 28 '15]

Shanghai Stock Exchange Weekly Chart

China's Market Selloff Accelerates, WSJ, June 26 '15

"China's stock markets plunged Friday, a sharp turnaround after a year of strong gains, as investors start to question the sustainability of that breathless rally.

China's smaller Shenzhen market has fallen 20% from its recent peak, entering bear territory, while the Shanghai market has dropped nearly as much from its high earlier this month."

SPX Daily Chart

So while a "rescue" from the Troika to Greece might continue the media narrative of "global political/banking elites save stock investors" a little longer, the period of investment heaven by constant zapping of the global markets by central banking bailouts, could soon turn into a period of investment hell.

There are ways to make money in the period ahead, but it will not be smooth and backed by constant intervention. We have trusted in a centrally planned rally too long. Soon, buy and never sell, will be turned over to watch, trade, and expect high volatility.

"A crash is a collapse of the prices of assets, or perhaps the failure of an important firm of bank....The system is one of positive feedback. A fall in prices reduces the value of collateral and induces banks to call loans or refuse new ones causing mercantile houses to sell commodities, households to sell securities, industry to postpone borrowing, and prices to fall still further. Further decline in collateral leads to more liquidation." - [Manias, Panics, and Crashes: A History of Financial Crises, Fourth Edition (2000), Professor of Economics at MIT, Charles P. Kindleberger,]

Charts from Zero Hedge in this article:

Greek GDP: The Shocking Reality Vs IMF Forecasts; And Who Is To Blame For The Greek Implosion, ZH, 6/12/15
Bundesbank Slams ECB's "Bridge Financing" to Greece, ZH, 6/25/15
Smart Money Just Sold The Most Stocks In History, ZH, 6/23/15
Chart of the Day: Over 4 Million New Chinese Trading Accounts Opened Last Week, ZH, 4/28/15

Being a Contrarian, Remembering 2000

The big shift from longs to shorts and shorts to longs continues to rumble, a warning that continues to grow louder with each passing week now.

Click here to start the next six months reading the newsletters and trading reports as we come through this incredible year.

With the NASDAQ Composite finally breaking its March 10, 2000 high on Thursday, April 23, 2015, I really cannot think of a better time to benefit from independent, contrarian research.

On a Personal Note

I have recently started a blog called, Living2024. It is a personal blog, not business. I wanted to have a place to write some deeper stories about where this entire drama seems to be taking us all. Check out my latest post, A Centrally Planned Sex and Financial Life.

Doug Wakefield
President
Best Minds Inc., a Registered Investment Advisor
2548 Lillian Miller Parkway
Suite 110
Denton, Texas 76210
www.bestmindsinc.com
doug@bestmindsinc.com
Phone - (940) 591 - 3000
Alt - (800) 488 - 2084
Fax - (940) 591 –3006

Copyright © 2005-2011 Best Minds Inc.

Best Minds, Inc is a registered investment advisor that looks to the best minds in the world of finance and economics to seek a direction for our clients. To be a true advocate to our clients, we have found it necessary to go well beyond the norms in financial planning today. We are avid readers. In our study of the markets, we research general history, financial and economic history, fundamental and technical analysis, and mass and individual psychology.

Disclaimer:  Nothing in this communiqué should be construed as advice to buy, sell, hold, or sell short. The safest action is to constantly increase one's knowledge of the money game. To accept the conventional wisdom about the world of money, without a thorough examination of how that "wisdom" has stood over time, is to take unnecessary risk. Best Minds, Inc. seeks advice from a wide variety of individuals, and at any time may or may not agree with those individual's advice. Challenging one's thinking is the only way to come to firm conclusions.

Doug Wakefield Archive

© 2005-2016 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

Catching a Falling Financial Knife