First off thanks to everyone for the many B-day wishes. I turned the big 5 Ohh today. I’m not happy about this, not happy at all. I’m debating whether or not I want to start soloing (climbing without a rope) and just get it over with. Luckily I’m not seriously considering it J
I wasn’t planning on a weekend report this week because I didn’t really think much was going to happen today. Boy was I wrong on that one.
Stocks:
Well I think we all know what the catalyst is going to be to initiate the intermediate decline. Apparently Dubai can’t pay its bills. I suspect we are also going to see Greece get in trouble in the next week or so and possibly the Ukraine.
Now let me say right up front that even though this probably sounds bad, it is not going to end the cyclical bull. I suspect many bears are foaming at the mouth right about now envisioning another crash. It ain’t going to happen. Folks we’ve already gone down that road. The central banks of the world have already shown they can halt a credit implosion with their printing presses. We’re just deluding ourselves if we think this is the straw that’s going to break the bulls back.
It is the catalyst that’s going to spell the eventual doom for this bull though but not because of any financial problems. Anyone who thinks the central banks of the world are just going to stand by as countries start to fall like dominoes doesn’t understand how these bankers think. I guarantee they are going to crank up the presses again. 1 trillion, two, four, more? Whatever it takes they are going to churn it out. That my friends is going to create inflation. Probably runaway inflation next year. Events are starting to fall into place to set in motion what will probably be one of the most spectacular rallies in the commodity markets in history. And of course the one commodity that we are most interested in, gold, is the only one not only trading above the pre crash highs but also at all time highs. There is simply no overhead resistance in the gold market. Can you imagine how high gold is going to rise in the inflationary storm that is now brewing?
Several significant events happened today. First the market completed the swing high that should start the decline into the half cycle low. It also completed the short term 1-2-3 reversal. More importantly it formed a weekly swing high. As you might recall one of the prerequisites for an intermediate decline is the formation of a weekly swing high. Now a weekly swing high doesn’t always lead to an intermediate decline but seeing as how this rally is on week 20 the odds are very high that this swing is going to lead to an intermediate decline. Dollar: I certainly didn’t expect the dollar to recover that huge move down on Wed. in one day. I thought we would probably get a slightly lower low today and shrink the intraday range allowing for a much easier swing. You can imagine my surprise when the dollar exploded higher. This is how intermediate cycles end though. They tend to rocket out of the bottom as shorts start to cover. Usually it isn’t long before we get panic short covering. I expect we may see this next week, especially if the dollar recovers the 76 pivot level. Gold: Like everything else gold formed the swing high that should mark the daily and probably the intermediate cycle top. The miners are now sporting a topping candle on the weekly charts. The odds are high that everything is going to be heading lower for the next 3-5 weeks. Short term indicators are still neutral. Gary www.garyscommonsense.blogspot.com
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