My power was out yesterday due to strong thunderstorms in the area. Here’s yesterday’s post and a quick update.
Quick update: The NTSM analysis is still hold. We had low volume on Monday and that may mean the downtrend is close to ending...assuming we don’t have a rash of bad news.
Yesterday’s post:
HERE’S AN IMPORTANT REVIEW OF QE2:
Excerpts on QE2 from an article in Marketwatch by Brett Arends (senior columnist for MarketWatch and a personal-finance columnist for the Wall Street) Journal at.... http://www.marketwatch.com/story/qe2-was-a-bust-2011-05-21
“QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy....
(JOBS) ...The percentage of the population in work is actually lower today — 58.4%, compared to 58.5% last August....
(HOUSING) ...the average price of an “existing” (i.e. used) home was $177,300 in August, just before QE2. Today? It’s $163,700 — or 8% less...
(GROWTH) ...Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now....
(RETAIL) ...Retailer Gap on Friday became the latest economic bellwether to warn on weak sales and rising costs....
Meanwhile QE2 has created an entirely artificial bubble in all dollar-based assets.
Look at the stock market. Since Aug. 27, when Bernanke unveiled his plan for QE2 in Jackson Hole, Wyo., the S&P 500 has risen by 26%.
So far, so good, right? But it’s an illusion. What’s really happened is a decline in the value of the dollars that the shares are measured in.
Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars it’s even less. Measured in gold, the S&P 500 is up just 4.5%.
Meanwhile the illusion of a boom is causing all sorts of investors to take crazy risks. Witness LinkedIn’s IPO. Economists from the so-called “Austrian” school say this is a reason to go back to a gold standard. It certainly makes you wonder what’s next.”
HERE IS WHAT I THINK IS NEXT...
A significant drop in the price of stocks (>25%) is coming within a year...we just don’t know exactly when.
