Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Economic Unraveling Has Started, Dow Theory Stock Market Sell Signal

Stock-Markets / Stock Markets 2010 May 21, 2010 - 01:22 AM GMT

By: Brian_Bloom


Best Financial Markets Analysis ArticleI’m not sure where this will all end, but today we saw a Dow Theory sell signal.

If you look closely at the chart below (courtesy you will see that volumes have been creeping up since the 1000 point fall the week before last. When prices fall on rising volume that is evidence of selling pressure

“Theory” says we should see a technical bounce and if we do see that then it’s probably sensible to sell out of everything except special situations.

A “special situation” is a business that you expect will do well (make strong profits) regardless of what’s happening on the stock market. Those businesses will be satisfying “real” needs.

Of course, I can’t prove it, but my view is that we are heading for an era of deflation. The governments of the world tried stimulating their respective economies and this unraveling of the stock markets is evidencing that their attempts have failed. In any event, their behaviour did not pass the common sense test. There’s no point in going into the theory of it. The subject has been discussed ad nauseam. What we need to focus on is that if the experiment in stimulation failed, there’s not much purpose to be served in trying to stimulate a second time. Further, if the governments of the world all try to do this then the entire planet will experience hyperinflation. No one can hide from that. Not even if you own gold. The gold price will need to rise to tens of thousands of dollars an ounce to compensate and it will be impractical to do business by exchanging a fraction of a gram of gold for a loaf of bread, for example.

Why won’t the price of bread and the price of gold rise in tandem? i.e. Why won’t the current “exchange rate” of gold and bread stay the same?

The short answer is that this is a theoretical outcome. The reality is that the average person will have difficulty in responding to the fact that their governments don’t have canned solutions to the problems we are facing. The pace of economic activity will slow. Demand will fall. When demand falls, the inflation adjusted price of “things” falls relative to currencies. If gold is the ultimate currency then the price of “things” will fall relative to gold. The amount of gold required to purchase a loaf of bread will fall. Of course, if you own gold under this scenario you will be better off than if you don’t, but your standard of living will not rise unless you reduce the capital stock of your gold.

To my way of thinking, if we are going to survive what’s coming down the turnpike, we need to swallow hard and face up to the realities of life. We need to grit our teeth, band together to share the burdens and stop listening to political bullshit. Our political leaders need to stop talking in a manner which is calculated to win votes.

Step 1 for the average person will be to downsize; to sell assets to pay down debts and to get your monthly living expenses under control. Contrary to the belief of many financially successful people, the average person is not stupid. What is happening in the USA, for example, is that an increasing proportion of people who have mortgages are finding that their mortgages exceed the value of their homes. In this light, they see no purpose to be served in continuing to pay the monthly mortgage. An increasing proportion of these people are now reneging on their monthly mortgages. This is deflationary. It is also destabilizing of organized society as a whole. The entire banking system will come under threat.

What can we do about this? The short answer is that we cannot solve a unique problem with a “canned” solution. There are no canned solutions. There are no silver bullets. If society is to survive what’s coming down the turnpike, then society has to reinvent itself. This “attitude” of selfishness has got to be jettisoned. Having said this, it does not follow that the answer is “communism” or “socialism” or any other “ism”. The answer does not lie in any “system” of government. Democracy and capitalism are logically sound systems which have spiraled out of control. Yes, we need to bring these latter systems back under control. But the answer, in my view, lies in a generalized attitude of people caring for one another as opposed to leeching off one another.

That last statement would have been judged to be impractical, naïve and hopelessly romantic in an era where greed was deemed to be good and where, in an environment of dog eat dog, the best way to survive was to become top dog. The fact is that the statement does not flow from a romantic disposition. It flows from recognition of “truth”.

Another insight will flow from people doing what they are good at doing because they can, not because they aspire to maximize their rewards. This is known in the psychology textbooks as “self actualization”. For example, Warren Buffet will be the first to acknowledge (I actually saw him do this in an interview) that he does what he does because he enjoys it. He still lives in his same old house and drives an ordinary motor car. He does not do what he does because it will make him rich. He is not being driven by his ego. He does what he does because it gives him a sense of satisfaction.

The lesson? Find what you enjoy doing and do that, and adjust your lifestyle to the income that that activity will generate. Stop worrying about that “contrived” argument of the wealthy: “If he’s so smart, why ain’t he rich?” How many rich people do you personally know who are content and happy inside themselves? Stop worrying about what others think about you. Start living the life you were born to live but in the context of caring about others. You will be amazed at how little you actually need and how comfortable inside your own skin you will become. You will be amazed to discover that “material possessions” are a poor substitute for inner comfort; that you don’t actually need that third pair of sneakers.

Step 2. When you are comfortable inside your own skin and you are no longer driven by ego, the words “I’m sorry” come easily. And when you utter these words, the person hearing them feels better and has a warmer predisposition towards you. Conflicts are much easier to resolve when ego is not the driving force behind behaviour.

So, you still think this is impractical waffle?

Okay, then let’s agree on a reality check:

The chart below, of the Shanghai Stock Market Index, is up to date to May 20th, 2010. (courtesy )

If your way is correct and a selfish, materialistic approach is in fact the most effective way for humans to inter-react with one another, then the chart above will bounce up from the rising dashed trend line. It will do this because you were correct all along – and that the centre of gravity of the world economy has in fact shifted to China and China will grow to drive the world economy in the same manner that the USA did and the UK did before that.

On the other hand, if the index falls below the rising dashed trend line, this will signal that the Chinese economy is also about to contract and it will later be revealed that the so-called “economic miracle” was not a miracle after all. Like Western Society, which is showing signs of decay, the Chinese economy was built on a foundation of self centered greed and there is just as much corruption (if not more) in that country as we have been witnessing elsewhere.

It is true that “greed” was probably the driving force behind the Industrial Revolution. In this light, greed was indeed good. But greed has served its purpose. It has now become counterproductive. It has passed its “use-by” date. It has become a cancer in society. And, by way of analogy, as any builder will tell you, one cannot fix concrete cancer by plastering over the cracks and then adding a coat of paint. The re-bar has to be replaced or the building will eventually collapse.

Our problems are structural and the structure is decaying. To address that we need to change the way we conduct our lives. If you read Beyond Neanderthal, you might get an insight as to how this might be possible. (Look past the detail and focus on the principles.) If you have already read it, then read it a second time. You will find that what you previously thought was impractical suddenly seems a whole lot more practical. I did not write Beyond Neanderthal because of what I could get out of it. I wrote it because I could.

Go well,

By Brian Bloom

Once in a while a book comes along that ‘nails’ the issues of our times. Brian Bloom has demonstrated an uncanny ability to predict world events, sometimes even before they are on the media radar. First he predicted the world financial crisis and its timing, then the increasing controversies regarding the causes of climate change. Next will be a dawning understanding that humanity must embrace radically new thought paradigms with regard to energy, or face extinction.

Via the medium of its lighthearted and entertaining storyline, Beyond Neanderthal highlights the common links between Christianity, Judaism, Islam, Hinduism and Taoism and draws attention to an alternative energy source known to the Ancients. How was this common knowledge lost? Have ego and testosterone befuddled our thought processes? The Muslim population is now approaching 1.6 billion across the planet. The clash of civilizations between Judeo-Christians and Muslims is heightening. Is there a peaceful way to diffuse this situation or will ego and testosterone get in the way of that too? Beyond Neanderthal makes the case for a possible way forward on both the energy and the clash of civilizations fronts.

Copies of Beyond Neanderthal may be ordered via or from Amazon

Copyright © 2010 Brian Bloom - 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.

Brian Bloom Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Liam Slater
21 May 10, 11:07
bearish again ?


problem is that you have been saying the same near every month for the past year (your archive)

so is it time to buy ?

22 May 10, 13:21

Democracy and capitalism are "out of control"? That's like saying 'freedom' is out of control. Democracy and capitalism are NOT out of control, but the politicians and crooks who OWN them are. It's time to throw the gangsters in jail along with those who allow them to get away with their crimes. A good example is Gietner and the other tax cheats, the leftists in charge of fannie & freddie, and their boss Obama. Hold these bastards accoutable for their crimes, and get aout of the way of free market capitalism.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules