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
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy Government PANICs! Sterling Collapses! - 19th Mar 20
Coronavirus Market Crisis - Nowhere to Hide! - 19th Mar 20
Coronavirus Most Likely GDP Economic Outcome for Q1 and Q2 2020 - 19th Mar 20
How COVID-19 Leads to 2008-Style Bank Crisis - 19th Mar 20
Coronavirus Impact on Global Economic GDP Numbers - 19th Mar 20
Bticoin Crash Big Channel Review - 19th Mar 20
Gold is Doing Its Job…Silver Will Come Back as a Safe-Haven Asset - 19th Mar 20
The Chartology of Coronavirus Deflationary Event - 18th Mar 20
Fed Slashes Rates to Zero and Introduces QE in Response to COVID-19. Will Gold Rally Now? - 18th Mar 20
Coronavirus - Nothing to Fear but Fear Itself - 18th Mar 20
The Stocks Bear Market Is Upon Us... Or Not - 18th Mar 20
US and UK Coronavirus Containment Incompetence Resulting Catastrophic Trend Trajectories - 17th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

The Broad Stock Market, Helicopters and Gold

Stock-Markets / Stock Markets 2016 Jul 15, 2016 - 08:16 AM GMT

By: The_Gold_Report

Stock-Markets

There has been a stunning post Brexit turnaround in the markets, says technical analyst Clive Maund. Far from leading to chaos, the markets have taken it in their stride, and are now rising in anticipation of "helicopter money."


Dow Jones Industrials 5-year chart

Helicopter money is basically unlimited global liquidity intended to head off a liquidity crunch and keep the game going as long as possible—this is the next and ultimate stage in the fiat endgame. The starting point for this is Japan, but it will quickly become global, and legal constraints can simply be brushed aside—if laws prohibit it, they can be changed.

With the current global debt structure any serious liquidity problems could quickly lead to a catastrophic deflationary implosion, and that must be avoided at all costs. Helicopter money serves the best interests of the elites in various ways—they remain in power and in control for as long as possible, and can continue to use low interest rates and the carry trade, etc. to grow their fortunes even further, whilst the man in the street gets stuck with the bill as his standard of living and quality of life continue to deteriorate as inflation mounts and wages fail to keep up. There will be no prospect of interest rates being normalized, of course—there will be a hyperinflationary firestorm before that happens.

From an investment standpoint, helicopter money creates a "rising tide lifts all boats" situation, where most investments continue to rise in price, particularly those that provide a good yield. The prospect of this massive bonanza of newly printed money on a global scale is what has caused the reversal in stock markets of the past couple of weeks, that has seen both the Dow Jones industrials and the S&P 500 indexes break out to new highs. It has also been due to capital flight out of Europe, which is beset by severe problems, which why European markets have in contrast only rallied feebly.

The key point is that this rally looks like the start of a major up leg that will be fueled by a tsunami of money creation, but for it to continue the problems in the European banking sector in particular must be contained because if European banks collapse and there is contagion, we could quickly find ourselves back in a 2008 situation. The solution is to furnish European banks with whatever liquidity they require to head off crisis, but they might not succeed in achieving that.

Turning now to the charts, we see the dramatic post Brexit turnaround and breakout to new highs by both the Dow Jones Industrials and the S&P 500 index on their respective 5-year charts. Here we should note that new highs don't necessarily mean that the markets are "in the clear," as there were new highs after the Bear Stearns debacle in 2007–2008, which ended up being followed by a crash.

Dow Jones Industrials 5-year chart

S&P 500 Large Cap Index

Basically, the markets want to correct, want to have a bear market, but those in power are pulling out all the stops to prevent this happening with their reckless and ultimately suicidal money printing orgy—if markets quadruple over the next three years, what does it mean if money only buys 20% of what it does now?

We can see how, from a purely cyclical standpoint, the stock market is ready for a severe bear market now on the following long-term chart. It could yet happen if the problems in the European banking sector are not contained, but the intention of the elites is keep the game going to the bitter end with their resorting to helicopter money.

S&P 500 Index Long Term

The charts for the Value Line, which is more representative of the U.S. market as it is composed of 1,700 unweighted stocks, at first sight look weak, in comparison to the Dow and the S&P 500, but on closer inspection we can see that it may be completing a Head-and-Shoulders bottom, which is easier to see on its 2-year chart. If so, a big market rally is in prospect.

Value Line Geometric Index 5-year

Value Line Geometric Index 2-year

We have been caught flat footed by this rally, and the best course of action is thought to be to unload any broad market short positions.

Here is perhaps the most important point of all. It has already been pointed out in the latest Gold and Silver Market updates that the latest gold and silver COT charts are at frightening extremes. If the helicopters take off and shower the world with cash, as is looking more and more likely, then the investment world will quickly switch back to "risk on" and gold and silver will become a sideshow again for a while, until the inflation really kicks in—this will be the time that the $10,000 an ounce gold crowd really have their day, and it won't be as far off as many think.

Here is a good article I found this morning in Zerohedge on the helicopters now warming their engines, entitled Soon and really really crazy. The latest Gold Market update highlighting the extreme danger signaled by the COTs was greeted with scorn, an example being this mail from the "This time it's different school"…

"COTS are not bearish they are desperate...what worked before is not working any longer....why would they continue to add to shorts when they must be so deep under water...you can't hold your breath forever....they cannot control the Chinese Gold exchange that is the point...when we break 1400 if they are still short....it's game over....and they deserve it making all that easy money at the expense of the tax payer..."

We will have to see, but my contention is that if we go back to "risk on" again in a big way, thanks to the work of the helicopter fleet, then gold could get smashed back down again, at least until the inflation starts to build in preparation for the now inevitable hyperinflation.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Disclosures:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the content preparation or editing so the author could speak independently about the sector. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

All charts provided by Clive Maund


© 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