“Time is more important than price; when time is up price will reverse. (W. Gann)”

click here for: 2009 Dow Reversal

The strongest stock markets are those with the highest amount of Quantitative Easing!   We have Global Markets: The Japanese Nikkei is always a leader but Shanghai index, Swiss SMI, French CAC,  Nikkei, German DAX, Footsie, Dutch AEX), Spanish IBEX, the  Austrian ATX and Brazilian index...all charts show similar patterns: BEAR TRAPS and reversal formations... fiat money only! What they also picture is that they will continue to climb the Wall of worry as a result of communicating financial vessels and the Zimbabwe scenario. Hard to UNDERSTAND as it is unnatural and has no fundamental support.   Charts for December 8- (click to enlarge)           Shanghai index Swiss SMI French CAC Japanese Nikkei German DAX           English FTSE index Dutch AEX Spanish IBEX Austrian ATX Brazil April 2: the German DAX to break out of a huge falling and bullish wedge April 15 : bearish trends broken and to be broken on several indexes. June 16: hard to believe all these double top and ascending triple top breakouts are not trying to tell us something...As long as all Stock market indexes remain under their 200-day Moving Average , they remain in a Bearish mode. Bear market rallies fail either the 50 or the 200 day moving average. But we could well break through these averages. Remember, the markets always climb a wall of worry. June 29: several markets are breaking through their 200 day Moving Averages!!!!!!!! Our bet is that Authorities cannot allow the markets to break lower as this would disintegrate the 401k pension plans and what is left of the Reserves of pension funds and insurance companies. September 29: corrections are NOT over...but the uptrend is still intact. The French CAC has broken out of a bullish/accumulation formation. The SSEC and Nikkei must break through their old uptrend lines to confirm the reversal,  The FTSE index is bumping into the top of its short term trend channel (caution) and the candle chart looks amazingly similar to the SP%)) chart. Remember we have GLOBAL MARKETS. October 16: the German DAX index surely will not be the only stock market index which broke out of a reversal formation and successfully tested it. VERY BULLISH [in nominal terms] November 27: the correction was swift and short and markets are resuming their uptrend (in nominal terms only). December 8: when will the SUPPORT line be tested?

Updated December 8, 2009 : the Dow was able to break above 9,150 and broke the 10,000. A trend reversal we have in NOMINAL TERMS !

Too early to tell, however we could well see Zimbabwe style stock markets! Interesting is that those markets with the largest amount of Quantitative Easing are the strongest....

Expect EU markets to move in the wake of what will happen in Wall Street.

Today the markets are even more overvalued than the were in 1929 before the Great Crash. The fact that each and every bail out we've seen hasn't come together with a market bottom, is the proof we're in a secular bear market. Hence, over the next months and years, we expect to see much lower stock markets. Only the Zimbabwe effect can stop the slide. The question being whether such an effect will be seen in the Western World!? January 2009 we more and more start to believe our Zimbabwe theory is correct.

• March 10-29: reversal and bear market correction. The Dow can bounce all the way to 8,800 - 9,500

• May 13 : SELL - the Dow did not manage to break through the MAL (max. activity line) [THIS WAS A MISTAKE!]

• July 14: what if the Dow Jones is building a REVERSED HEAD and Shoulder!? rather bullish....

• August 4 10: double top breakout.

• September 29: technically, this is A TREND REVERSAL.

• October 16: this chart certainly doesn't look like we should expect a fresh huge crash...remember markets always climb a wall of worry. Possible however is a test of the breakout level or 9,150.

• October 30: AMAZING...we not only have a FULL MOON (we're not superstitious, but each time there is a full Moon it seems to impact the Stock Markets) but the Dow Jones (and other stock markets ran into resistance EXACTLY when reaching the "Line of Resistance" as drawn on the above chart.

• November 11: fresh bull run...and December 8 we still have a BULLISH chart!

Nov. 11

October 27/28 :  the reversal is confirmed - The technical bounce lives. November 28. several Point and Figure charts show double, triple and quadruple break outs. Other charts show bullish 'Falling Wedges' March 10: technical reversal and start of a bear market rally out of a level below the 2008 bottom. April 2 -13 : and legs it has! Several stock market indexes show positive Break Away gaps. June 28: Bullish cross of the 50 and 200 day Moving Averages. The daily indicators have moved back in a BUY mode and the Monthly indicators are bullish . July 14: aborted HS formation and bear trap. Worst case scenario will me more side ward consolidation. Authorities cannot allow another crash. Note the confirmation of a Bullish cross-over on the moving averages and the KEY REVERSAL on the candle chart. July 21: short term double top breakout.  Only the daily indicators over overbought. Medium term still sit in BUY zones. We need a sustained break through the 9,000 -9,150 level for higher markets. November 11: fresh bull run and stair-case pattern but less strength November 27: worst case scenario we can test the 200 day Moving Average.

 

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December 8: S&P 500 Large Cap Index - reversal !

May 13 : the index is reversing as it reaches the top of its short term down trend channel. June 15: the market finally gives in. July 14: key reversal. July 21: will the index manage to break through the downtrend line? August 24: double top breakout.? September 1: will the trend be reversed? September 29: breakout it is. October 16: worst case scenario we will probably test the breakout level. October 30 - November 11: we have 2 potential scenario's. November 27: a lot of static but still a BULL market. December 8: next step is to break through the Red Trend line and hereby reverse the secular bear trend into a secular Bull trend.

	June: the Golden cross is a BULLISH signal. July: but the markets are overbought and need to correct. This is exactly what they are doing. June 29: more and more bullish indicators August 4 : multiple top breakout. September 29: market stays very strong and we have so far little or no important corrections. October 16: Global Markets and this index is nothing more but a confirmation. November 11: the amplitude of the bull run is getting weaker.
Nov 11

December 8: Dow Jones Transportation index: Car sales and the Dow Jones Transportation average are unfortunately confirming the bad shape the world economy is in. [we refuse to take into account the cash for clunkers we see in the EU and the USA]

January 20: The Transportation index has fallen out of a bearish flag. Not a positive forerunner. Once the double bottom gets broken, we expect an objective of 1,950. Is this index trying to tell us we have seen the lowest Crude Oil prices? March 5 : short term bearish objective almost reached. March 27 : testing the support level which as become a resistance level. August 4: triple top breakout! September 29- Oct. 16: testing the breakout level and previous top November 11: once the 4,100 level is broken and confirmed, technically the Transportation Index will sit in a bullish mode. Fundamentally this doesn't make sense...but the market rules. December 8: triple top breakout ???

Imagine.....and remember one has to be blind not to see this! Imagine you are a fund manager. Cash, saving accounts and Bonds are yielding zero to negative. Where would you invest your money? Imagine you are a regular investor and you realizes we are about to have Hyperinflation. The odds are either to keep Cash and/or Bonds and loose because of the Hyperinflation or keep your cash in tangible assets (Equities). Imagine what Zimbabwe is like and answer the 2009 Question: "Will the Crash break into down leg 2 or will markets start to behave in a Zimbabwe style?" According to our theory of communicating financial vessels, the latter is to happen: we have no destruction of Money; Bonds have a negative yield; Commercial and Private Real Estate continues to deflate. An inflationary depression Zimbabwe style only sees nominal prices going up…The authorities will in one way or another halt the present debacle by flushing the market with fresh money (like the 2009 stimulus plan a 1010 stimulus plan is now in the make) and keeping short term rates low. Expect the bail out will be devastating for Bond investors…We expect the Treasury Bonds to crash together with the Dollar and this will in sequence lead us to a modern Zimbabwe adventure. June 2009 this is exactly what is happening. 30 Year Treasuries are down 20% since the beginning of this year.  Imagine Quantitative Easing goes on. Due to communicating monetary vessels we will see HIGHER NOMINAL World Stock Markets. If this is to confirm, forecasting a Dow Jones of 30,000 would be ridiculous for we can see levels of 300,000 and over. The Trillions of freshly created money (and money to be created) will sooner or later end up in the Stock markets (tangible assets) as Gresham's law comes into effect. Only then, the rise will be in Nominal and NOT in Real Terms. One doesn't have to imagine this: a triple top breakout on the Dow Jones Industrial confirms our theory of communicating financial vessels. Golden crosses of the 50 and 200 day moving average must still confirm the move. Bear in mind that if the rise comes it will be one in nominal terms only and in the Zimbabwe style. The Dow needs to break through the 9,150 and test this level first. When it does, it will show a long term triple top breakout, a Golden Cross on the moving averages (50 and 200 day) and a break through its down trend line. A golden cross of the 50 and 200 day Moving Averages of the Nasdaq Composite is already reality. June 2009 we have similar patterns for European Stock markets. The Shanghai composite index has already done it. Imagine you're in charge of the FED, the ECB. Would you let more banks go under? Would you risk to see the financial system collapse because of the Derivatives? If you would, your buddies would not be the only ones to loose their jobs. You would loose yours too! Imagine you're president of the United States, of France, of any Western country. Would you stop printing money and risk Deflation or would you engage in more and more Quantitative Easing (money printing) in order to bail yourself out?

A different story: Stock market expressed in real money (Gold) since 1861

Click here for the Point and Figure charts of the major stock markets expressed in real money or Gold

December 8, 2009: Retail index expressed in Real Money  - a solid down trend it is! - as long as this chart shows no trend reversal, we remain bearish on World Stock markets!

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