Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Are Stocks the Next Oil (or Uranium, Copper, Silver)?

Stock-Markets / Stock Markets 2015 Aug 12, 2015 - 12:46 PM GMT

By: Gary_Tanashian

Stock-Markets

See: Oil collapse couldn't come at a worse time for industrySee: 2007, when everyone was convinced of 'Peak Oil' and there were websites named 'Peak Oil', 'Oil Drum', etc. constantly reinforcing the mania.

I remember being away on business one day in 2007, with nothing better to do in my hotel room than watch the congressional debates about 'peak oil' and what to do about the evil speculators that were driving prices up. I enjoy watching a good mania as much as the next guy. I realized that what we were seeing was 'Peak Hysteria' with respect to this phenomenon. I thought, 'Yup, Prechter's right'.


See: This hilarious video someone made about those who promoted the pitch to the public. Some of these people have re-tooled their scripts for a deflationary world today and others keep fighting the good fight I guess, or are living in a hole somewhere. Joe Kernan actually did a great job with the mania's star promoter. "I'm the expert you guys, not you..." -T Boone Pickens (ha ha ha).

Video: Peak Oil Hits $44 in 2015 The 'Experts' Peter Schiff, T. Boone Pickens, Chris Martenson Explain.

Moving on, what do the charts below say about the stock market? The oil mania was a manifestation of inflation. Inflation is willfully deployed against what is a structural global deflation that is always in play and trying to exert pressure. The charts below show where the inflation went on this cycle.

Oh, it's Biiwii... he's a perma bear! Well maybe, I sure do not think the stock market is sustainable and I sure do think it is getting the same treatment as Oil circa 2007, Uranium 2007, Copper 2010, Silver 2011, etc. But I am more than willing to call it ready to bounce or even not yet ready to end its bull market, if only an interim correction ends up being the most probable view. But tuning out all that casino patron stuff, what does this big picture monthly chart say to you?

What does this chart say to you?

I keep hammering this chart in particular not because the Fed should do something or should not do something with respect to ending ZIRP. I hammer it because whether it was the Fed's intention or not, a large and conspicuous distortion has manifested. Period. Here is what NFTRH 355 had to say about it...

"Pardon me if I hit you over the head too often with the following chart. But we have just wrapped up a couple of weeks that saw the Fed receive congratulations again for doing nothing (FOMC) and speak out of both sides of its mouth (Lockhart and Powell). We also saw another okay Payrolls report come and go.

Of course, with commodities crashed and inflation expectations well contained, must the Fed actually do anything? One might imagine that they also look at some representation of this chart and think 'golly, that's one hell of a distortion built into this market'.

I can't think of many other reasons why a rate hike would even be on the table. They've seemingly got it all; a booming stock market, no inflation and no need for stern monetary policy. I believe that the Fed is as aware as we are that there is an imbalance of epic proportion out there somewhere. Will they try to repair the imbalance now, after 6 years?

The chart is the chart and while I cannot speak in details (since I don't know them), I can see what historical imbalance looks like. Either the market's laws have been repealed or something is going to seek equilibrium one day. If the former, well, how does it feel operating in a remotely guided market? Risky, if you ask me. If the latter, the risk in finding equilibrium is almost unfathomable. This is not meant as hyperbole, it is a chart."

Back to real time. We have noted (as the chart above shows) that in normal times the stock market goes up as the Fed Funds rate is increased, until one day it breaks and the Fed steps on the gas (drops the Funds rate) in response. The market could follow the rate up again on this cycle, but the distortion has severed ties with the historical comp of the last 2 cycles and that is the concern. Oh and the Fed has not even tapped the break yet. The stock market is in uncharted waters.

[edit] So we noted the Hammer (bullish reversal) candles on Friday, and as if by magic in flies Stanley Fischer for a little micro management and a bullish reversal (bounce). It is sort of a low grade Bullard per the chart above. We also note that these jawbone parties are not real and that the S&P 500 is going to break one way or the other soon... Hammer Time Foretells Bounce Time; Now What?

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2015 Copyright  Gary Tanashian - 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.

Gary Tanashian Archive

© 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