Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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

© 2005-2017 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