Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Market Investor’s Great Divide; Stocks Crossing the 200 Day Moving Average

Stock-Markets / Stock Markets 2015 Dec 12, 2015 - 10:45 AM GMT

By: Doug_Wakefield

Stock-Markets

“Reuters, the British news agency, moved a story on its wire at 11:39 A.M. Tuesday, May 8, saying that Continental had denied as “totally preposterous” rumors that the bank was considering bankruptcy….

Ordinarily, Continental would have refused to comment on the rumor by Reuters. Instead, it reacted with a quick denial, perhaps in the hope of placating the foreign depositors….


The run took hold domestically when, a little more than twenty-four hours after Continental had said bankruptcy was “totally preposterous,” the Board of Trade Clearing Corporation (BTCC) just down the street from Continental withdrew $50 million. The BTCC, a clearinghouse for trading on the Chicago Commodity Exchange, had been a long-standing customer. Word of its defection moved promptly on the wire services, and the panic was on.” [An account of the 1984 collapse of Continental Bank in Chicago from Bailout: An Insider’s Account of Bank Failures and Rescues (1986) by former FDIC Chairman, Irvine Spraque, pg 152 & 153]

In the summer of 2013, I released the article, The Nirvana Trade, discussing how relentless the 200-day moving average had been throughout 2012 and 2013. This was the line in the sand that “the crowd” refused to cross without almost immediately getting its footing, and moving right back above it.

This past August, on the 21st, I released the article, The Stock Nirvana Has Been Broken. Every investor tracking the S&P 500, watched as this index fell 10% between August 20th and the close on August 25th.

Yet, by the end of October, “the crowd” had managed a rally back above this line, and the talk of yet another “all time high” was everywhere.

So while the S&P 500 is back under its 200 as we close out this week, the larger picture and the American public’s understanding of risk is what is now foremost on my mind as we head into next week’s Fed “will we raise rates or will we stall again” release on December 16th.

Since 2012, the American people, looking at the world through our broad equity markets, have been given the impression by the Federal Reserve that “We have your back.” When they look at statements and look at the S&P 500, especially since the 10% four day drop into August 25th, it really has looked like someone has made sure that US equity investors would not go below this “nirvana line”.

This type of obsession to break above 2100 after last November’s 2100 target  released by Goldman’s equity strategist David Kostin took place multiple times this year. Yet never was there a strong breakout to the upside. 

So as everyone will wait and see if the Federal Reserve will finally raise rates on December 16th, or yet again kick the decisions down the proverbial road, markets around the globe have certainly produced an extremely volatile picture far different from US equities.

Volatility, The New Venue

If there ever was a warning to the American investment community, it is now, and it has already come from watching the largest markets in the world this year.

Can millions of investors watch massive swings in the two most traded currencies in the world over the last 2 years, and not expect something to take place in US equity markets?

How can the price of oil drop this much over the last 18 months without having huge ramifications to the finances of oil producing nations, as well as the oil industry in the US, which has been a major factor in the growth of the American economy since 2008?

Can we watch global investors experience this level of volatility in China, a nation that has quadrupled their debt load since 2008 (another first in history event) and not wonder how this would impact American stocks and economy?

The massive rally (plunge in yields) in German bunds and then sell off (yields rise) with the turning point being the lowest yields in German history, should tell us all that central bank planning has NOT made our financial world more “stable”.

So while we wait to find out what Chairman Yellen will tell us next week about interest rates, the short end of the bond markets have already told us they are certainly expecting her to raise rates for the first time since the Fed Funds rate was lowered on December 16, 2008.

If you are reading this article, you are thinking.  Never has skeptical thinking been more important. Never stop trying to influence the thinking of others who think that information like this is only for those interested in finance.

The dominant central banks of the world and the unending commentary by the financial media and industry have lead the average investor to the conclusion that constant intervention is now the new abnormal. Without them, how could what’s left of the free markets survive?

“These breakdowns come about not in spite of our efforts at improving market design, but because of them….The steps that we have taken to make the markets more attuned to our investment desires – the ability to trade quickly, the integration of the financial markets into a global whole, ubiquitous and timely market information, the array of options and other derivative instruments – have exaggerated the pace of activity and the complexity of financial instruments that makes crises inevitable. Complexity cloaks catastrophe.” [Comments by Richard Bookstaber, who served as managing director of risk at Salomon Brothers during the 1987 crash, and as Morgan Stanley’s first market risk manager during the meltdown of Long Term Capital Management in 1998. Comments are from his book, A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation (2007) pg 5]

Be a Contrarian, Remember Your History

The big shift from longs to shorts and shorts to longs continues pounding global investors and traders. Calm markets are coming to an end. Whether raising rates or using NIRP, volatility will be the word for 2016.

Click here to start the next six months reading the newsletters, reports, and group emails as the bust phase grows stronger, and thinking becomes more critical.

On a Personal Note

Check out Living2024, my personal blog. I wanted to have a place to write stories about how this entire drama is reshaping our thinking on money. Check out my latest post, A 4,000 Year Old Lesson: Joseph & the Costs Of A State Rescue

Doug Wakefield

President
Best Minds Inc. a Registered Investment Advisor
1104 Indian Ridge
Denton, Texas 76205
http://www.bestmindsinc.com/
doug@bestmindsinc.com
Phone - (940) 591 - 3000

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

Doug Wakefield 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