The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, December 31st, 2013.
Have you seen the movie Gravity yet? If not do so because it's great - especially because of what it can teach you about the weightlessness of space. It can teach you about the false sense of security (euphoria) weightlessness can give one, and that making bad decisions in this state can have startling and undesirable ramifications. What's more, if there is one lesson stock market investors should keep in mind from what can be learned in Gravity, it's events can spin out of control without gravity very quickly, events that have lasting consequences. So, the appearance of the movie Gravity right now is quite timely in several ways, perhaps capturing a glimpse of what we are increasingly experiencing here on earth in the artificially created atmosphere central planning attempts to create for the unwary, to the eventual ramifications of a return to the laws of Mother Nature.
And according to Dr. Paul Craig Roberts, former Assistant Secretary of the Treasury, and co-founder of Reaganomics, we should expect the degree of Fed interventionism (central planning) in the markets to increase in coming days, further distancing price discovery from reality, and setting us up for an even bigger fall later on when fiction finally meets up with reality once again. In the meantime however, what we should expect is increasing currency, fixed income, commodity (precious metals), and stock market manipulations designed to maintain the status quo so that guys like Warren Buffet can keep raking it in apparently. So please, don't be fooled by the tapering at the Fed's last meeting. This was just more Kabuki Theater designed to fool the unwary using market psychology and misdirection.
Misdirection - what do you mean? Well, for those who supposedly watch the markets closely (have not heard a peep about this anywhere else, so please don't take my work again without giving me credit), this should be obvious. The question then becomes, why did the stock market rally violently when the taper finally arrived? Was it because it was small, expected, and at an opportune time like some would have you believe? Answer: Definitely not - it was because the minute the Fed made the announcement they had their traders hit the yen hard and relentlessly, giving the impression everything must be 'hunky dory' if the crazies that trade this stuff think things are 'OK'. And that was all it took for the algos to kick in, taking US stocks into record territory the same day.
Of course Mother Nature is at work here too, where gravity will be felt once again as well. The only question in this regard is when. As you will see directly below, we are expected to believe that since the yen is in the process of completing what appears to be a major 5-wave decline, which has been the supposed major propellant of the stock market(s) around the world, once a corrective sequence is complete (lasting 3 to 6 months), we should expect more of the same. (See charts below.) And given the degree of intervention in this market one would have been foolish to fight the tape (never fight determined central planners hell bent on debasing a currency), however in looking a bit closer at an alternative count that better fits present circumstances, where Western stock markets, which have been big beneficiaries of yen carry trade liquidity, appear to be topping out in a mania of epic proportions. (See Figure 1)
What's more, it should be kept in mind that the global (Westernized) fiat currency economy completely dependent on increasing largesse, despite what central planners would have you believe, so perhaps a correction in yen carry trade related liquidity is all it takes to send equity markets reeling. Heaven knows there are a plethora of potential landmines out there to trigger a big fall in stocks, not to mention simple probabilities. And if it's not triggered in the West, then perhaps it's the East. While not talked about in Western mainstream media in 'blackout fashion' like news concerning Fukushima, it should be noted yen carry trade related liquidity is not helping Chinese stocks much, still close to multi-year lows, and lower than in 2009. And although doubled off last year's lows, it should also be pointed out this isn't so good for Japanese stocks either considering all the money printing it has taken to manufacture relatively meager gains. (See Figure 2)
But Western supremacy is not about the Nikki, or Japan for that matter, but how the subordinate periphery can be exploited and harnessed (when the timing is appropriate) to serve the masters of the New World Order (NWO) - the Anglo (including old European money) American banking cartel. Unfortunately for the West however, and everybody who lives there, a mature empire built on debt and bubbles that are 'maxed out' is not a recipe for longevity, especially with a kleptocratic bureaucracy so large and embedded in 'the system' the economy will simply topple over at some point from the shear weight of it's vulgar mass. This is what is so important about the Dow / Gold Ratio (DGR), because it provides the most profound measure of the health of the system - faith in the system. (i.e. because make no mistake about it, despite what you don't hear about it and the denial, the economy is already collapsing.) What's more, this is why it's important to realize the importance of the shift in gold from West to East as the 'powers that be' attempt to postpone the inevitable collapse of the American Empire. (i.e. as well as enriching themselves.) (See Figure 3)
People who pay attention to such things should take note at this time that it's likely no coincidence US stocks are reaching a point of singularity in concert with the DGR testing the break below the all-important and secular trend defining 233-month exponential moving average (EMA) right now (see above), set to reach respective targets by around mid-January. (i.e. perhaps later considering this top is high degree.) All it would take is a continued surge in stocks and declining gold prices into the New Year to reach 14.5 on the DGR by then. Again, people who pay attention to such things will also be interested to know that if history is a good guide in predicting these occurrences, although scale is variable, pattern has in fact proven accurate in forecasting possible repeat performances, making this analog comparison particularly interesting. Naturally if a large number of speculators rush out and short stocks / buy puts to leverage off a possible 50% decline in the Dow running into April this will likely not happen, but on the other hand, if bearish speculators are finally sick of getting their heads squeezed off - maybe it will. (i.e. or a decline of a lesser degree, but still substantial.)
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