Why a Near-Term Market Rollover is Probable
by Charles Hugh Smith, contributing editor
Wednesday, April 11, 2012
Executive Summary
- A plethora of technical indicators show a breakdown is in progress
- The key charts you need to be aware of
- Time to place your bets: higher equity prices or higher interest rates?
- Why a defense strategy in the near term is critical for those holding stocks and bonds
Part I: Are We Heading for Another 2008?
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Why a Near-Term Market Rollover is Probable
In Part I, we summarized the global financial meltdown of 2008 as recognition that the collateral beneath an enormous inverted pyramid of leveraged debt had vanished, while all the monetary and fiscal tricks of central banks and governments failed to sustain the illusion of sufficient collateral.
Once again we find that massive, sustained intervention in global financial markets is being touted as successful – everything has been “fixed,” markets have been “stabilized,” and a global “recovery” is well underway,
If we believe this, we might be exposed to a dramatic downside should 2012 turn out to be another 2008, when markets realized that intervention did not create collateral, but instead a temporary illusion of sufficient collateral.
One of the few ways we have to separate illusion from reality is through charts. Not all of you enjoy poring over charts, so I’ve kept these very simple; only price, volume and two moving averages (20-week and 40-week) are displayed, along with a very few salient technical patterns.
Here is a quick summary: One chart — U.S.
by macro2682