Double Dip is Imminent

I have been purposely reluctant to be calling for a double dip for the past few months because I was afraid that people would tend to just 'tune me out' and call me a crazy person in the face of a rallying stock market.  I have officially changed my stance as of today, the first day since July 2008 that the market has closed below the S&P 500's 200 day moving average.

The bulls' main argument against another deep correction is that earnings are very good.  This is of course a short-sited argument, but very typical nonetheless. Fundamentals always look good at the peak in a market. That's WHY it's the peak in the market.  With the entire global economy in debt-ridden turmoil, future U.S. company earnings are bound to be seriously impacted, and the stock market is now anticipating this.     But the United States debt is one of the worst in the world... do we really expect to come out of this unscathed?  Furthermore, the fear that this correction brings on will snowball to the downside.  As is typical in every market cycle, the markets will overcorrect and stocks will get extremely cheap.  A deflationary period is imminent which will cause a double dip recession. I expect 5000 on the DOW.

Prepare yourselves for a wild ride. It gets ugly from here on out.

Beginning of the US Currency Crisis

If you want to know what is happening with the upcoming currency crisis, how our market has rallied recently, and why the dollar is doomed to fail eventually with hyperflation, this is your video.

However, this video covers inflation, not deflation.  What we are facing today and at least over the next year is another deflationary period not unlike the one that took hold in 2008 and early 2009.  We will see massive stock sell-offs in the medium term.  The inflationary period described in this video will not come until later.

Warning:  This is a hugely informative video, but it is long.  At 55 minutes long, you will need a good chunk of time to watch it.

http://www.youtube.com/watch?v=eb1n1X0Oqdw&feature=player_embedded#!

A new Bear Market

I have been publicly Bearish for months, but now it has finally become clear that we have entered a new Bear market.  But after a steep sell-off last week, we had one of the biggest 1 day rallies I can remember in recent times after a EU bailout was announced.  This was enough for me to predict a short-term rally would continue for at least a few days, but alas it looks like I may have been premature in that call.  As I write this, the futures market is down about 0.5% just hours after a 3.5% rally.  A scan of the blogs and sites I follow indicate that the smart money is not fooled by this bailout and the subsequent rally. Europe’s problems are far from solved and in fact they are just beginning.  Although we did not yet break the 200 day moving average, I believe it will happen in the next few weeks.  Once that happens, all bets are off on how low we can go.

We have just entered the beginning stages of a Sovereign Debt Crisis, which started with Greece, but will ultimately end in the United States (through a collapse of the U.S. dollar).

Brace yourself. It’s going to be a wild ride.