And selling out to “dumber” hands

More and more, those who have made long, successful careers in money management are realizing that the system has morphed into a strange beast they no longer recognize, nor trust. Fear of epic, perhaps historic, dislocations in price when the current market reverses is causing more and more of the “smart money” to sell out now and seek safe harbor: 

….continue reading HERE

In the weekend edition of The Wall Street Journal, the paper carried a piece by David Shambaugh, professor at George Washington University, whereby he explained why he believed we may be close to a breakdown in the Chinese communist party.

Needless to say, the implications here could be immense.  I believe it is well worth the read. 

Please click on the link below to view the story:
 

The Coming Chinese Crackup

The endgame of communist rule in China has begun, and Xi Jinping’s ruthless measures are only bringing the country closer to a breaking point

Regards, 
 
Jack 

Regards,

Jack Crooks
Black Swan Capital 

Update: The market’s push to new recrod highs last month failed to prevent a significant divergence from forming with the relative strength index. This is one of the three signs I highlighted for a possible peak in stocks. See updated chart and commentary below…

It is said that an image is worth a thousand words. This chart conveys a very important message when it comes to the future direction of the stock market and whether investors should be concerned about a coming bear market. We explain the chart in more detail below.

Larger Chart

In the very top panel of the chart you’ll notice that the stock market as measured by the S&P 500 is overbought on a

long-term basis. This is no surprise and shows that we are now trading at levels seen during the two prior market tops. That said, the stock market can remain in overbought territory for an extended period of time, which is why we need to focus on more timely signals (red flags) for when this condition may reverse. Of the three I present, one has now been raised.

Red Flag Number One (√)

The first technical warning sign that we should heed is marked by a significant divergence between the relative strength index (RSI) and the market itself. This is noted by a declining pattern of lower highs in the RSI as stocks continue to make higher highs, a sign that the market is “topping out”. In the late ‘90s this divergence persisted for many years as the tech bubble reached epic valuation levels. In 2007 this divergence lasted over a much shorter period (6 months) before the market finally peaked and succumbed to massive selling. With last month’s strong rally to new records, we now have a confirmed divergence between the long-term relative strength index and the market’s price action (as shown in the chart above).

Since this divergence can persist for months or years, we also look to two other technical red flags for possible signs of a market peak and impending bear market.

Red Flag Number Two

The second technical sign to look for is a major crossover in the MACD (moving average convergence-divergence) indicator shown in the bottom panel. This is often used by technical analysts as a buy and sell signal. As shown by the dotted lines, a MACD crossover occurred in May of 2000 and December of 2007. Currently, we see the market has steadily lost momentum since the beginning of 2014 but has yet to issue a sell signal. A sustained break below the 12-month moving average may trigger such an event. That brings us to the third technical signal we need to watch.

Red Flag Number Three

When a major line of support becomes resistance, you now have confirmation of a trend change in the market. This occurred around January-February of 2001 and May-June of 2008 (see red circled regions on the chart) when the S&P 500 failed to break back above its 12-month moving average. After that point in time, the market persisted in a bearish downtrend until a confirmed change of direction with a new bull market. Currently, the market is trading above this major line of support and only briefly broke below in October of last year.

Summary

One of the three red flags we should watch for gauging a possible market peak has been raised. Since this first technical warning sign can persist for a period of months to years (remember, market tops are a process and not an event), we will now want to see if a major sell signal is triggered by a crossover in the MACD, as occurred at both prior tops in 2000 and 2007, and then lastly with a major trend change when the 12-month moving average no longer acts as support but as a line of major resistance.

Again, we should not presuppose this pattern will play out on an immediate timeframe. The market may make new highs in overbought territory with a continuous divergence on the RSI. As always, opinions are quite divided on whether stocks are already in a bubble or, conversely, in the beginning stages of a much larger advance (see Martin Armstrong’s interview below). There are too many moving parts to predict such outcomes with any certainty. Instead, we must monitor market action, incoming data, and make adjustments as the situation requires. The chart presented is one of many tools for doing just that.

Related:

• Martin Armstrong: Major Turning Point Coming in October
• Stock Trader Almanac’s Jeffrey Hirsch: One More Final Correction and Then a Super Boom
• Bill Fleckenstein: Still Not Time to Short the Market – Wait for QE4

With currencies being rapidly devalued by their respective governments, the global economy in a slow-down, and tensions over resources heating up around the world, it’s time to start considering the endgame.

According to billionaire resource investor Carlo Civelli there is likely no way out for central banks which have spent the last several years printing money hand over fist. Over his decades’ long career Civelli has either managed or financed over 20 companies, many of which now have market capitalizations in the billions of dollars, so he knows a thing or two about investing during boom times, as well as busts.

In his most recent interview with Future Money Trends he warns of  an endgame scenario that is nothing short of a total collapse. And here’s the scary part: Civelli says that even gold may not be a safe haven should the worst case scenario play out….continue reading HERE

This transcript has been automatically generated and may not be 100% accurate. I … January is marked with for consumers and the financial markets … get lots of optimistic views of white there to kill investments are gonna go up … sometimes we like to divert from that point of view … and Jack Otter Editor Barron’s the common for the opposite point of view I’ve gotten Mark Palmer who is editor of the boom boom and doom report … I got the drawn to … the gloom doom and gloom reports … on mark to give us your outlook for the global economy in twenty fifty … well I think it would OPEC different parts of the world to America as we selected American Norse America Canada Mexico … and in Europe and binned the emerging market calm breaks was known to be Asia … and Africa and Central Asia the Middle East … then have to say that Europe is unlikely to grow … maybe grows by one percent to eighty contracts by one percent to be … statistical other nations … I don’t think that the U S economy speaking uprising slowing down … and in emerging economies we have no gross at the present I … in some countries they may be growing a one two percent than in others they Harry’s of contraction the new dos new production … the Chinese economy which is … the dominant emerging economy in the world … he said that the slowing down … being the only other hand has probably at the present time around five six percent growth … rate in general … you tobacco aches for staff cannot … even go back to the global reserve accumulation that they’re not … so I think that who face a disappointing two thousand and fifteen in terms of … economic growth … India sounds like you’re only bright spot there … whoa in terms of gross yes but don’t forget last year in dollar terms the stock market was up thirty five percent … and the chairman of the new capital from the Fed to from the was up close to fifty percent last year … twenty outperformed the in the seas … I don’t think that these will be repeated maybe will go up another fifteen percent or so … but in general I think a lot of my kids … are that not terribly explains the Renault … bargains any good news sounds like a soaring price twelve × topped the Barron’s full conference I think it was in October … I think the Chinese economy slowing down but the stock of the two will go up to the markets … and the economy can move in different directions … and said that there is a lot of central bank interventions that … expectations buying basis while … the central bank will do what makes … and so in basis ironing the stops in the expectation that the … Bank of China was thinking he’s … so into this sign environment where do you invest where were one of their money … well I mean I think they are there for the first time in a long time since two thousand and seven teams thousand and eight … actually some shorting opportunities … some coconut shorting some … sectors I thing is quite dangerous to short EU stops … this um it may come and take him over … the country line with the exit so … that I would say that BdB you know some CDC’s like the biotechnology index the Psalm and the very Heidi and … social media … ETA these are relatively high tea in my opinion … Bibi other people at the frontier was … or that the stops in that same icon Doctor … I stopped eating dates is on the high side … reading these are shorting opportunities I think … you say in the least probably stayed a short … although it’s a very oversold and send them is a negative second rebound like the euro … the police concerns about the U S dollar is enormous … so we may have a setback in the rebound the euro’s … I think it at my bake … he’s the I cord short … central banks I would short central banks into was out on and defeat in that is I think … investors … will suddenly realize … what the scam central banking fees … and then Daewoo was competence … and based only one way to short central banks idea and I went to to buy gold … ah so … are you long gold are you three as on long gold up in great Moallem gold things that … need nineteen nineties … and dare I polls recently became more … and I think if someone really wanted to make a lot of money in gold … he’s the higher your risk proposition Venetian by … the small mining stocks like the TT exchange their junior year I guess that the ice data that tends to do with … better than the old one it does well and were so a lesson that absolutely … last year when gold went up by fifteen percent … in the first few months … of two was thousand and fourteen … the GDX stayed with the forty percent so … it’s more much more what 

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.