By Thomas Henning
Many bright people have been analyzing the present financial/economic situation in terms of what the central bank thieves and their Marxist government stooges will do. The problem with all of this analysis, while honest and well-meaning, is based on an imploding epoch, on the false supposition that the central bank/government complex will continue to exist as a viable entity. However, this complex is presently evaporating and will soon cease to exist.
These analysts cannot conceive of a world without the thieving banker Bilderbeast. This is understandable because it's beyond their life experience. They cannot make the leap from the old epoch, which is imploding from internal debt rot, into the new epoch, which is selecting out the fools who are wallowing in the debt rot of the old imploding epoch.
The mechanical process is quite simple: The debt defaults, profits smash, tax receipts swan dive, the parasitic governments voted into office by the free lunch slopping helots go into a final thieving orgy, but still starve and become impotent and then irrelevant.
This all may seem a bit cold-blooded, but markets are a cold-blooded expression of the economic natural selection process. When you're right, you profit. When you're wrong, you lose. So watch the action of the markets and ignore the noise of the old epoch.
The bond market has been in a terminal upleg that complements the cyclic bull market that started in August, 1982.
The upside action has been putrid simply because nobody wants the garbage being peddled to pay for the imploding Ponzi scheme, and the Fed has been reportedly buying about half of this worthless junk, thus diluting the Rasbucknic even further. In addition, the Fed has been buying worthless mortgage paper.
The firmness in bonds must be respected simply because it is there, but a bust below the 114 and 111 lows would confirm a run from bonds and a rise in interest rates. This will trigger fun and games.
For the last couple of articles, I've been looking from a bottom by the Rasbucknic as the Weekly Internal studies have either moved into bullish divergences or flashed early warning internal buy signals.
The Daily studies (not shown), have turned bullish as the hard momentum has started upward.
The question remains as to whether these buy signals will result in a sustained upmove or just an upside correction. A close at 77 or higher would turn the Weekly Hard Momentum bullish and this would suggest the former choice.
Inversely harmonizing with the Bucknic are recent breakdowns by the Euro and Swiss Franc.
The gold complex is in a cyclic bull market. This perspective must be kept in mind.
The complex bottomed in 2000, legged up in a I-wave, corrected downward in a II-wave, and the favored count suggests that the III-wave has started.
My favored near-term count suggesting another downleg in gold was aborted. Chalk one up for "The trend is your friend." That's the good news. The bad news is that, while the cyclic bull market is in gear and the III-wave has started, it has become a bit overbought and we're starting to get some internal divergences which suggest that a correction is due.
Meanwhile, the gold stocks have turned blah relative to the metal and have not scored a new high confirming the gold new high. This is a small warning and harmonizes with the concept that a gold correction is due.
The question remains as to the inverse relationship between the Rasbucknic and the gold. Frankly, I don't know how this will play out, but when the coming implosion accelerates, no doubt a major causal development will be an abandonment of all fiat currencies into gold.
At any rate, don't get cute but stay with the cyclic bull market in gold. We don't know when a gold squeeze will occur, and what result the gold repatriation to the East will have as Asian gold trading centers have been started.
The stock market is in the terminal phase of the bull cycle that started in August, 1982.
After bottoming in November/March, the market has legged up and has developed a Dow's Theory bearish divergence as marked on the comparative Weekly Industrial/Transport chart. For the record, the Transports did confirm by a hair, and then failed to hold the confirmation. This goes down as a "no cigar." Prior to that Transport upside non-confirmation, internal distribution occurred starting in August, as the 30-Day Negative Volume started a well-defined uptrend as the 30-Day Positive Volume started a well-defined downtrend. This distribution is intermediate in scope and was followed by a Daily Hard Momentum breakdown with the Weekly studies also turning bearish. A close below the October 2 low of 9487 by the Industrials, confirmed by the Transports below 3595, would confirm the breakdown. At that point the Weekly studies will turn very bearish.
I can't rule out another upleg, depending on how one reads the near-term wave tea leaves, but if it evolves, the condition of the internal studies, while not ruling out another upleg, pretty much rules out a sustained upleg.
Ultra-near-term, as of this writing, if the Dow scores a new high above 10,092.19 without a confirmation by the Transports above 4045.11, then the breakdown levels will be raised to closes below Dow 9712.73, Transports 3599.84.
In sum, stock market intermediate internal studies have broken down after a bearish Dow's Theory divergence evolved and the Hard Momentum has cracked to the downside. The wave tea leaves hold out the possibility of another upleg, but indicators virtually rule out a sustained upleg. A close below specified key lows would confirm the breakdown.
The central bank, one-world-order hustle exists for the purpose of plundering assets on a national and international basis. The hustle has worked. The problem is that the debt creation, which was necessary for the hustle, has become inevitably impossible to sustain and is imploding, thus killing the central banking system that fostered the debt.
Keep perspective. The stock market is in the terminal phase of a bull cycle that started in August, 1982. The market is in the transitional phase setting up a bear cycle with a probable life expectancy of a decade. That bear cycle will evolve as the old epoch implodes into the new epoch and selects out the fools who overstayed the old epoch.
When that bear cycle starts, an asset implosion will result and those assets will no longer exist to be plundered by the Bilderbeast. The Ponzi scheme requires inflation and increasing tax receipts. Deflation and imploding tax receipts kill the beast. This is the new epoch. The old epoch is evaporating.
It's a waste of time to bother with it except to understand it and take action to survive the transition into the new epoch.
Editor's Note: Thomas Henning's column, "Musings of a Stock Market Curmudgeon," appears regularly in The Bull & Bear Financial Report, in both print and online editions.
