It’s quite uncanny that the direction of the financial markets and particularly the US economy is contained, atleast in part, in the three letters that define the most watched barometer of confidence. Is it any wonder that this benchmark average is named one letter short of the impending direction of the stock markets…….. DOWn.
Mirth aside, the chart pattern on a multi year framework beginning with the Great Depression paints a scary Double Top formation - a pattern that is seen by chartists as the most reliable sign that a deep downside attack is in store. By this pattern the Dow should have no hindrances in testing anywhere between 3500 and 4000 which coincides with the long term trendline.
Sadly, this only underscores the fact that the United States may be about to encounter one of the worst scourges of Asset price deflation.
I’m writing at a time when a haunting and seemingly never-ending dollar strength is playing out in the most vehement and convincing manner across the board except gold. The break of 7182 in the DOW Jones, only means that there will be further bank collapses, more bail outs and more dollars being pumped in. And this in itself could be the prelude for a precipitous fall in the dollar value, simply because the US would have printed so many dollars like there is no tomorrow only to find a deluge of dollars and its value evaporating in no time.
No comments:
Post a Comment