The Thai baht was first targeted by George Soros (GS) because Thailand had high non-performing loans in the banking and financial industries and the Thai baht was pegged to the USD back then. Nearing an inflection point: Watch the USD! We may be nearing an important inflection point in the markets. Last week I wrote that I was seeing the classic signs of a late market cycle rotation into deep cyclical boutiques near me s, which would likely coincide with a stock market rally for several weeks (see A classic late-cycle rotation), but recent developments suggest that the cyclical rally may be on its last legs. This can produce what Didier Sornette has called “log-periodic” oscillations (see Increasingly Immediate Impulses to Buy the Dip). It seems that with the market trading at such lofty multiples, we only need to see a negative catalyst to send stock prices tumbling. During secular bear markets characterized by flat returns, investors need to use dynamic asset allocation techniques such as the Asset Inflation-Deflation Timer model to capture the swings of a flat market. The next point you need to do is to research all the share that you are interested in. 65 again. Research in Motion has support at $55 now.
Here is a longer term chart of the 10-year Treasury yield, which shows that the 10-year yield is now testing both an important downtrend line and a Fibonacci resistance level. Here is the chart of the 30-year Treasury yield in the same time frame. This chart presents a Rorschach inkblot test for both bulls and bears alike. He overlaid a chart of the SPX against the gold/copper ratio. The fact that the ratio has been falling over the last two years suggests more optimism on the economy and stock market. The challenge at present is that last week’s Fed’s decision does make an already precarious situation more precarious. While this may be a breakout-pullback-retest pattern, other market indicators are flashing more cautious signs that this was a false relative breakout. In order to preserve a log-periodic pattern, further oscillations needed to exhibit an even faster alternation between steeply-sloped advances and shallow declines.
Based on numerous past speculative episodes in the financial markets, we know that financial bubbles have often proceeded in an oscillating pattern featuring increasingly frequent cycles of advance, punctuated by gradually shallower declines reflecting an accelerating eagerness to buy dips. Tesla (TSLA) is a strong buy below $200 going forward. Las Vegas Sands stock is a buy on dips below $40 for a trade. The stock continues to go up or down for weeks or months post such big news. Netflix, Inc. (NFLX) – Shares of Netflix, Inc. went down a second day in a row and broke down through $158 support. DryShips Inc. ( DRYS ) – After two big downgrades Friday & Monday, DRYS finally turned around and went green. Shares of InfoLogix, Inc. popped on Wednesday but failed at $7 again. Molcorp (MCP) – Molcorp (MCP) failed at $50 again on Monday, this is the 3rd time in two weeks. U.S. construction spending increased by 0.9% in November over October, the Commerce Department said Monday, following an upwardly revised rise of 1.6% in October. At the same time, examining market cycles over a century of market history, present conditions cluster among the most negative 2-3% of data points in terms of average return and downside risk.