U.S. Stock Market – I’ve shown since the first of the year a technical chart of the DJIA in what is known as a “megaphone” position. I noted that it suggested we could see 15,000 – 15, 500 before topping out.

We’re now in a danger zone. Many signs of a major top are now taking hold. TOUT-TV has gone back to beating their puny chests (as they have done at other major tops) and a sense that so long as the FED continues QE the market can’t miss. When you combined this with the fact that the “Don’t Worry, Be Happy” crowd have convince the investing public (and themselves) one must always be in stock or bonds or both (Remember, you can toss one of the Talking Heads off the top of the Empire State Building and all the way down they will say the same thing – so far so good!), you’re setting up for a major fall.

U.S. Bonds – Here too an air of invincible has gripped the bulls and a sense interest rates are never, ever going to rise substantially so keep partying-on dude. Bonds are clearing the worse of two evils versus stocks.

U.S. Dollar Index – Quietly and without much discussion, the technical picture of the Index gets worse. All sorts of failed momentum and relative strength indicators are screaming this

Gold – The next $50 move in gold could very well signal where the next $500 goes. A close above $1,500 and the gold “take-down” a few weeks ago blows up in the bears faces big-time. However, if we for some reason go back under $1,400, the bears could collapse the market. The good thing this time around my heart and brain both believe its to the upside. Remember, physical buyers around the world continue to say only one thing on any decline.

Mining and Exploration Shares – I’ve received numerous inquiries about my alternative to traditional financial planning process and many who have contacted me all share a common position with me – we got killed in junior resource stocks. That’s why I think on any real rally we’re  going to see more than usual resistance as like me, these folks don’t want the financial and mental anguish anymore of being in such a position. A close above $1,500 and more importantly $1,700 in gold, is what needed to get the juniors moving up again in a big way.

Stocks are now beyond overbought. The market ramped on Tuesday (the 17^th straight Tuesday rally by the way) because traders are now playing for Tuesday rallies.

The financial media is looking for any and all reasons to justify the move, but the fact is that the market had rallied for 16 straight Tuesdays before… so why not a 17^th time?

Behind this backdrop things only worsen. The divergence between stocks and the economy is growing rapidly. Stocks are now over 4% above their 50-DMAs. Anytime stocks have been this far above their 50-DMAs in the last four years we’ve seen a correction:

The overbought nature of the market is even more obvious when you compare the S&P 500 to its 200-DMA:

It is clear now we are in something of a blow off top. How long it will last is anyone’s guess, but investors are far too bullish given the fundamentals. The long, “risk on” trade is so lopsided it’s not even funny.

Maybe this time is different… maybe stocks will only go straight up forever. Maybe this bubble, unlike the last two, will not burst.

Or maybe it’s time to start prepping for the next stock collapse.

Investors take note, the market may be hitting new highs thanks to traders’ games, but the real economy is contracting sharply. This is precisely what happened during the market peaks before the Tech Crash and the 2008 Collapse.

We are getting precisely the same warnings this time around.

If you are not already preparing for a potential market collapse, now is the time to be doing so.

I’ve been warning subscribers of my Private Wealth Advisory that we were heading for a dark period in the markets. I’ve outlined precisely how this will play out as well as which investments will profit from another bout of Deflation.

As I write this, all of them are SOARING.

Are you ready for another Collapse in the markets? Could your portfolio stomach another Crash? If not, take out a trial subscription to Private Wealth Advisory and start protecting your hard earned wealth today!

We produced 72 straight winning trades (and not a SINGLE LOSER) during the first round of the EU Crisis. We’re now preparing for more carnage in the markets… having just seen another SIX trade winning streak…

To join us…

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Best Regards,

Graham Summers

»» Equity markets in North America and Europe rallied on the U.S. employment report, although investors looked past the soft spots. Statements by the ECB also boosted stocks during the week.

»» Why are equity markets up? We discuss catalysts that have kept a bid under stock prices, and should help contain any pullback that could be on the horizon. (page 2)

»» Global Roundup: Overview of Canada earnings, GDP, and corporate credit. Analysis of U.K. and Asia economic data (pages 3-4)

For the complete report as well as Daily Updates CLICK HERE.

Tech Talk clearly did not anticipate the surge in equity markets on Friday. Breakouts by key equity indices to all-time highs (and the appropriate media attention) likely will lead to further short term gains. However, a lack of favourable seasonal influences, mixed responses to quarterly reports, economic data suggesting a slow-down in growth, increasing concerns about a slowdown in U.S. monetary stimulus and virtually no progress on U.S. fiscal policy suggest that short term strength will provide an opportunity to take additional seasonal profits.

The VIX Index dropped 0.76 (5.58%) last week. The Index also fell below its 20 and 50 day moving averages.

The frequency of first quarter reports by S&P 500 companies has started to wind down. Responses have been consistent. When earnings and revenues significantly exceeded consensus, stock prices rose sharply. When earnings and revenues were in line or less than consensus, stock prices moved lower. First quarter reports by top Canadian companies peak this week.

Economic data this week is not expected to have a significant impact on equity markets.

Equity markets responded surprisingly strong on Friday to the U.S. employment report. The data for the most part was better than expected, but was significantly less than robust. Impact on the bond market was greater than impact on equity markets. Bond prices dropped sharply in anticipation of a possible earlier-than-expected withdrawal of monetary stimulus.

Short term technical indicators turned sharply positive on Friday on a wide variety of equity markets and sectors. Strength related to breakouts to all-time highs by the S&P 500 Index and Dow Jones Industrial Average on Friday are likely to extend into trading early this week.

Medium term technical indicators remain significantly overbought implying that early strength in equity markets and sectors this week is unlikely to be sustained.

International news could influence equity markets. Focuses are on the Bank of England’s rate decision on Thursday, the Eurozone’s Purchasing Manager’s Index today and escalating developments in Syria following Israel’s incursion late on Friday.

Large cash positions held by major U.S. and Canadian corporations increasingly are being employed in dividend hikes and share buy backs instead of building additional capacity.

Favourable seasonal influences in most equity markets around the world and in economically sensitive of sectors have a history of peaking around this time of year.

Equity Trends

The S&P 500 Index gained32.18 points (2.03%) last week. Intermediate uptrend was confirmed on a move above 1,597.35. to an all-time high. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought.

The TSX Composite Index gained 217.83 points (1.78%) last week. Trend remains down. The Index moved above is 20 and 50 day moving averages last week. Strength relative to the S&P 500 Index remains negative, but showing early signs of change. Technical score based on the above indicators improved from 0.0 to 1.0. Short term momentum indicators are trending up.

The NASDAQ Composite Index gained 99.37 points (3.03%) last week. Intermediate uptrend was confirmed on a move above 3,306.95 to a 12 year high. The Index remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index improved from neutral to positive. Technical score based on the above indicators improved from 2.5 to 3.0. Short term momentum indicators remain overbought.

The Russell 2000 Index added 19.17 points (2.05%) last week. Trend changed from down to up on a move above 954.00 on Friday. The Index remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains neutral. Technical score based on the above indicators increased from 1.5 to 2.5. Short term momentum indicators are overbought.

The Nikkei Average fell 190.09 points (1.37%) last week. Intermediate trend remains up. The Average remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains positive. Technical score based on the above indicators remains at 3.0. Short term momentum indicators are overbought and showing early signs of rolling over.

…..view 47 other charts & analysis HERE

“Whether you care or not, there are massive changes going on in Government finances that are really devastating some people as we speak. that is already curtailing our freedom, confiscating our wealth” – Michael Campbell May 4th Money Talks Commentary

 Stocks bursting to Record Highs when the economy is so weak? Listen to Michael’s Important Commentary Below:

(Michael starts his commentary, using the left hand timer, at 1:10 and his commentary ends at 10:41. Just move the slider to the right to the 1:10 start)

{mp3}mtmay4thmccom3{/mp3}