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Courtesy of Gary

Big Al
January 5, 2014

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DID WE JUST SEE THE HIGHS FOR THE YEAR IN THE STOCK MARKET?

I believe we have now come to an inflection point, and I think the next 2 weeks have the potential to determine the economic direction in 2014.
I believe that if stocks had been allowed to trade freely they would have moved down after the last FOMC meeting and continued the failed daily cycle that was already in progress. However, it’s my opinion that the Fed rescued the market immediately after the meeting as they saw it was beginning to plunge. Let’s face it if the market had sold off hard right after the FOMC announcement of tapering then their only choice would have been to immediately reverse their decision. So I think the Fed was prepared to rescue the market if it showed any signs of weakness after the announcement. That explains the large reversal candle on December 18.
I think it was their intent to create a momentum move to try and prevent the market from correcting very similar to what they did in June 2011 as QE 2 was coming to an end. The bullish seasonality and typical Santa Claus rally helped the Fed keep this market propped up into year end.
But now it looks like the momentum is running out of gas, just like the momentum in June 2011 ran out of gas.
I think the next two weeks are very important, and if the Fed loses control of the stock market it’s going to put into motion unintended consequences that have the potential to push the economy back into recession.
To begin with the Fed has created a parabolic advance in stocks. Parabolas always collapse. If this parabolic move is about to overwhelm the Fed and collapse then we can expect in the not-too-distant future that this silly notion of tapering will quickly go away and instead the Fed will frantically increase quantitative easing to try to rescue the stock market.
This may be what the rally in the dollar is signaling. That a hard selloff in the stock market is imminent.
This is the consequences of not allowing the stock market to correct naturally in 2013. You take away all fear for market participants and create an unsustainable parabolic advance. When that parabola collapses you have a major catastrophe on your hands. This is no different than 2005 when the Fed allowed real estate prices to climb into the stratosphere. We should know within the next two weeks whether or not this parabolic move is coming to an end.
More in the weekend report.
Discussion
55 Comments
    Jan 05, 2014 05:04 AM

    […] […]

    Jan 05, 2014 05:55 AM

    NO MARKET CRASH ! Al markets are manipulated UP AND DOWN ! YOUR LIVING IN A FASCIST WORLD ! STOP DREAMING !

      Jan 05, 2014 05:09 AM

      We will have more middle east problems and african problems ! In the new Fascist new world ! Cool is the way ! And BUY same GOLD !

      Jan 06, 2014 06:10 AM

      On this one Franky, I have to disagree with you.

    Jan 05, 2014 05:12 AM
        Jan 05, 2014 05:39 AM

        YES don’t luk good tanks !

        Jan 05, 2014 05:36 PM

        Hang on guys, Gary is talking about the stock markets here. Anyway, 2013 did not really feel like a parabolic S&P500 move at the time. There were three decent corrections mid-year that were scary to some. Most of the gains were in the first quarter and in the last quarter. However, the stockcharts.com weekly chart covering the last 3 years looks a bit like a gigantic rising wedge.
        Gary is spot on, the change in upslope in the S&P 500 was after the big 2011 correction when the new (and current) rally began. Jim Sinclair would call it a power uprtrend I think.
        I had an idea that the SPX in 2013 was starting to behave like silver in 2010-2011. At one point mid-2013 I thought that the analogy was not working out but now I am starting to wonder again if there is still a parallel. And we all know what happened to silver after it topped in May 2011 – still down 60%!

          Jan 06, 2014 06:12 AM

          The S&P went to record highs almost weekly during 2013 Silverbug Dave!

        Jan 06, 2014 06:11 AM

        Gonna try to get him on our Show sooner rather than later, Bobby. He is a friend of Glen Downs.

    Jan 05, 2014 05:34 AM

    Franky, what about smart meters? what do you think about them?

      Jan 05, 2014 05:47 AM

      Part of the Control Grette we will have to live in !

        Jan 05, 2014 05:16 AM

        Grette=grid

        Jan 05, 2014 05:02 PM

        YES SORRY ((( GRID )))) NO GRETTE !

    Jan 05, 2014 05:00 AM

    Gary, I m just wondering how The Fed would support The Market when they saw it collapsing, do they actually phone various brokers and brokerage houses and give them carte blanche to purchase millions of shares of leading stocks at market prices for instance facebook and twitter until it stabilizes. It would seem to me that they would be blowing their cover if this wasn’t done covertly. DT

      Jan 05, 2014 05:09 AM

      Obviously this would be enabled through The Banks, but the money would come from them. But if you saw large orders come up on the buy side for all the stock leaders it would not look good but It might be enough to spook other traders into thinking all is well. DT

      Jan 06, 2014 06:58 AM

      DT,
      I think the general consensus is that the PPT buys S&P futures.

    Jan 05, 2014 05:11 AM

    Sorry I disagree with you cats. Gold went up on low volume . If the stock market does crash gold will follow. As they say, the stock market is the only game in town. For now

      Jan 05, 2014 05:14 AM

      Being the only game in town, that’s what makes it so dangerous and why you need insurance. DT

      Jan 06, 2014 06:14 AM

      For now it is no a bad game at all Raymondo. I just don’t see how it can last!

    b
    Jan 05, 2014 05:23 AM

    I kinda agree with Ray, if we got a sizable crash in the market I think gold stocks would go down too. Except, they would go down as people would sell their profitable positions to cover loseing ones. As there really arnt to many profitable positions in gold stocks, Im not to sure how much they would go down.
    But, I think they would tend to go down with the market.
    After that, if people saw value in them, they should skyrocket up, being as low as they are.

    b
    Jan 05, 2014 05:27 AM

    Here is another option, if the fed wanted the markets not to crash, whats preventing them from “displaying” whatever numbers they wanted to show? No matter how many shares were bought and sold, isnt it all just digital? pixels on a screen?
    Wont therir control include control of the market “digits/pixels” eventualy?
    How would anyone know that they dont already?

    Hey, just because your paranoid doesnt mean their not out to get you.

      Jan 06, 2014 06:16 AM

      I think that is taking it one step too far b!

      But, in this day and age you never really know do you?

    Bob
    Jan 05, 2014 05:30 PM

    But what has Buffett done since that article in Aug 2012? For one he’s taken a huge stake in Exxon. Doubt he’d do that if he thought a 90% stock market crash was ahead.

      Jan 06, 2014 06:17 AM

      You have to put cash somewhere and he seems to simply believe that the energy sector is the place to be for safety!

    Jan 05, 2014 05:20 PM

    The link to the Fukoshima video is atrocious.

    All good people, nothing here to see.

    Nothing is going to threaten economic confidence in the world, not a nation ending disaster.

    When it becomes IMPOSSIBLE to suppress then you will know about, but it will be too late. Lots of people are going to die of cancer related issues here, in Japan and elsewhere.

    That’s the lesson here, MSM will cover nothing negative if they can help it.

    SEe this, Pravda would be proud:

    http://www.youtube.com/watch?v=TM8L7bdwVaA

      Jan 05, 2014 05:36 PM

      The media is controlled ! And the Sheeple enjoy ! NICE ! ALL MADIA !

    b
    Jan 05, 2014 05:40 PM

    Conan finds it frightning, I dont blame him. Ive seen him do the same thing a time or two. I wonder why he feels the need for canned laughter.

      Feb 01, 2014 01:51 AM

      Wow, also ich bin echt fcdferwe4ltigt wie vielen er von euch der gefe4llt. :-obaumwollsocke – Sollte ich mich eendcheistn, ihn nicht zu behalten, dann kannst du ihn gerne haben… ich bin mir wie gesagt noch nicht ganz sicher… *grfcbel*

    Jan 05, 2014 05:40 PM

    I am using SH to short the S&P.
    Best to all.

    Jan 05, 2014 05:44 PM

    So many people in the media (and on chat boards, for that matter), seem to buy in to the notion that the Fed is able to control things. If they were able to control things, do you think we would have had two crashes in the past 13 years?

    Do you think there would have been a depression in the housing market or a global financial melt down? People give these guys too much credit.

    I’ve been watching them since the late 70s and I don’t remember them being ahead of the curve one time. Their history demonstrates that they are reactive, not proactive in their policies.

    This era of QE, which so many feel ‘rescued’ the financial system and economy… twenty years from now it will be looked upon as a ‘bet the ranch’ experiment which ended up destroying the dollar.

    On a side note: I am Catholic and went to mass this afternoon. The sermon concerned the feast of the epiphany — the visit of the Magi to the Baby Jesus. And we are reminded that they brought him three gifts and one of these gifts was GOLD.

    They didn’t bring him Federal Reserve Notes… they didn’t bring him Euros… they didn’t bring him one of the zillion currencies which has been debased over the past several thousand years.

    For thousands of years before the Christian Era and for two-thousand+ years since, gold has been the ultimate form of the money and the ultimate store of value. And it’s going to be that way long after the world waves good bye to the dollar.

      Jan 06, 2014 06:20 AM

      HI Eric,

      I kind of had the same thought at Mass yesterday.

      Feb 01, 2014 01:51 PM

      Bobo, I always loved your grin. You were even grateer then you were huge. We’ll miss you. Thanks for being with us. Ride With Pride in Heaven ISnelle Eddy

    b
    Jan 05, 2014 05:16 PM

    I believe the first time gold was coined was 680 bc in Lydia. It was used in Athens.
    According to Malonys research anyway.

    Jan 05, 2014 05:47 PM

    Hi, ‘B’ — yes, Mike put together a great series of videos. Of course, before gold was available in the form of a coin, it was used in a raw form, requiring weights and measures (but still used for exchange).

      b
      Jan 06, 2014 06:31 AM

      yup, think Maloney called it “electrum”.

    Jan 06, 2014 06:50 AM

    Ditto Eric, I agree The Fed is given way too much credit for being able to control the economy, considering the fact they control the purse strings they have done a lousy job. DT

      Jan 06, 2014 06:57 AM

      In fact if I had a wife that spent our money like The Fed handles the purse strings, I would soon be sitting in divorce court. DT

        DT….if you had a wife like the Fed,,,you could not afford to go to court……..

          Jan 06, 2014 06:27 AM

          Good point Jerry, but it assumes that you actually acknowledged debt!

          Feb 02, 2014 02:25 AM

          I was really confused, and this answered all my qunotises.

      Jan 06, 2014 06:22 AM

      I think that the Fed is simply doing all that it can do to keep this train on the tracks. I just don’t think that it will work long term. You know what though? I really hope that a miracle is somehow pulled off!

        Feb 02, 2014 02:32 PM

        Thanks for writing such an eanerto-usdy-stand article on this topic.

    cfs
    Jan 06, 2014 06:49 AM

    Every man and his dog have been predicting a collapse in the Dow.

    The reason why such a prediction may be still too early is the value of the Dow stocks….. They are currently not overvalued significantly.
    E.G. check the P/E ratios and dividends for EOM (exxon)13 and 2.5%, WMT (walmart) 15 and 2.4%.
    Maybe a bit high, but not so outrageously so that a 50% drop would be at all reasonable.

    Where else would you put money? In bonds!