Debt Issues Put a Ceiling on Stocks and a Floor Under Gold

By: Joseph Russo | Wed, Aug 3, 2011
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August 3, 2011 | 9:00pm ET

When politicians, monetary authorities, and other talking-heads refer to dire consequences for "the economy" unless XYZ legislation is passed, I can't help but think that what they are really talking about are dire consequences for stock prices.

Although their last dance-on-the-ceiling failed in this regard, bailing out an insolvent financial system, QE1, QE2, and perhaps some stealth form of QE3, are all clear efforts to keep stock prices artificially inflated.

It seems to me as though most of these status-quo cheerleaders truly believe that the stock market IS the economy. In my view, there could be nothing further from the truth. In fact, I believe that this egregiously false paradigm is what gives the financial sphere all of the power it needs to usurp-and-affect rather than to mirror-and-reflect what goes on in the real economy.

Gold Daily Chart

The intractable debt and deficits created over the past 30-years are finally catching up to the band of academic thieves who have collectively robbed the economy from its citizenry and placed it in the hands of the Wall Street/Government cartel.

You bet Egyptians are both stunned and relieved to see their tyrannical dictator Mubarak on trial just as many Americans would be to see Greenspan, Rubin, Summers, Bernanke, along with half of Wall Street and Washington on trial for crimes against the economy.

Having said that, it should come as no surprise that the infamous QE1, and QE2 "stock-market-bailout-rally" has bumped into a rather stubborn ceiling. Meanwhile, a one-thousand-mile-deep concrete floor has already cured under the price of Gold.

S&P500 Daily Chart

Relative to the recent price action in both Gold and the S&P, today's chart-points speak for themselves.

On days like today, it truly pays handsomely to be able to understand the proper context in which markets trade. Oh, what a feeling, - when we're Dancin'-On-The-Ceiling.

There truly is nothing quite as empowering than to acquire a razor sharp focus on what the charts are saying and then profiting from them.

Unlike the majority of what you see and hear in the mass media, the charts somehow always manage to tell the truth.

Until next time,

Trade Better/Invest Smarter

 


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Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/