Skip to comments.Warning: The Stock Market Panic Button Is About to Be Pushed (reducing deficits means inflation)
Posted on 11/09/2012 11:14:19 AM PST by ExxonPatrolUs
In October, we published two articles suggesting that there might be a stock market panic in October. We were early. Whether the delay in the potential market panic was due to organic reasons, such as the excitement leading up to the November election, or some other factor is beyond the scope of this article.
On Thursday, November 8, the lower trendline of the Orthodox Broadening Top was breached. In addition, The Dow, Wilshire 5000, Nasdaq, Russell 2000, and S&P 500 all closed beneath their respective 200-day moving averages. You might say that the stock market panic button is about to be pushed.
We believe that one of the reasons the Fed continues to be the largest buyer of Treasury paper is to keep bond and note values elevated above their respective long-term trendlines. Not only does the US government have to deal with the fiscal cliff, it also may have to contend with rising interest rates if the trend breaks down. Rising interest rates have the potential to blow up any attempt at balancing the Federal budget.
The Broadening Top Formations have allowed the bull market to extend beyond the point that many had expected due to repeated quantitative easing to reflate stock prices. However, there is a payback for these extensions.
Fundamentally, investors are now dealing with the looming fiscal cliff and the prospect of higher taxes on capital gains and investment income starting next year. The urge to take profits before the year end may turn into a panic as the growing number of sellers simply overwhelms potential buyers.
In summary, trigger points that have been identified in prior articles have now been crossed. If you have not already done so, its time to take appropriate action in your portfolios. Dont be the last person standing when the lights go out after the panic button is pushed.
Yup! Look at this guy’s analysis.
Shouldn’t profitable businesses positioned for the future be a store of value against inflation?
I would think so. The price of the stock and profits will go up with inflation. If you convert to cash and sit on it then I'd be worried about a sure enough erosion in wealth.
This is not about reducing deficits. To the dems this is about increasing spending without increasing deficits even more. The deficits are locked in. The dems problem involves meeting entitlement future promises while adding even more entitlements.
it pays a meager dividend all total about $1200 a year, which I reinvest....
we pay taxes every year on it...
but now, I get to pay more taxes on it...my simple little stock shares...
why bother?..why bother?
No, they're wealth-confiscation targets for the Obamunist state. Were you asleep for the past few days? People who engage in productive activity are now considered Public Enemy #1 by our society.
It may be. There is a lot of union and government employee money tied up in the stock market. Now that they won re-election and Harry Reid can keep everyone from holding the Democrats accountable for spending, they can let the market go down some and pay off their Democrat voters with taxpayer money.
The Democrats figured out that there’s too many House campaigns to buy,so they focused on the Presidency and Senate. Brilliant! They really are playing chess while we’re playing checkers.
“Shouldnt profitable businesses positioned for the future be a store of value against inflation?”
That would be true (in most cases) if stock prices were actually determined by earnings, but that hasn’t been true for many years. Stock prices are now determined by the “bigger fool rule”. If there’s a bigger fool out there that will pay more for the stock than you did then the stock is considered undervalued.
If you’re buying the stock purely for it’s dividend payments then it’s somewhat true.
The Republican House has got to turn off the taxpayer funded Democrat vote buying money spigot. The first bill introduced by them needs to be THE FOODSTAMP, SOCIAL SECURITY DISABILITY, UNEMPLOYMENT INSURANCE AND FDA REVIEW ACT OF 2013. The Democrats used hard-earned taxpayer money to buy votes. Time to shut that down.
When the Little Red Hen is taxed at 100% so that all the other farm animals can afford to buy her bread with EBT cards, Big Bro is going starve unless he prints more money for himself or borrows wealth from someone who has it. The red hen can only loan so much accumulated wealth until it is exhausted. And the hen cannot be paid back the principal or the interest by Big Bro because he doesn’t really have it. Big Bro lends money from the future to the little red hen in hopes that she’ll pay it back with interest. But how can that be possible when it will all be taken from her? The hen is tired and cuts back on production so that she does not have to eat as much. The other farm animals can keep consuming at the same rate because Big Bro will step in and equitably redistribute and provide for all needs. The other farm animals are too stupid and hopeless to create wealth but they don’t have to, because Big Bro promises them hope and change.
“In October, we published two articles suggesting that there might be a stock market panic in October. We were early.”
No Anthony, you were wrong. Just like you’ve been wrong for about a year now.
This fool has been predicting an imminent collapse in the stock market for months, as the market as rallied on and on.
He has to stick with it now, so he can claim he was right whenever the next downturn occurs. At this point, Anthony doesn’t even qualify as a stopped clock.
Like Ruger and Smith&Wesson?
Yeah, like them.
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