Originally published by Chamber of Merchants
Markets are Distracted
I don’t mean to sound alarmist, but there are some signals that make we want to back away from the Dow Jones Industrial Average rally, “real nice and slow like.’
Let’s look at the Dow Jones Jones in the last few hours of trading:
The Dow Jones had such a powerful rally that traders had no choice but to join the party. The idea is that Donald Trump’s administration is going to be great for the Industrial Sector. Look at the negative selling volume in the last 2 hours of trading. If this were a stock I would be calling a Pump and Dump. In fact, heck, I’ll go ahead and do it:
I’m calling the pump and dump on the Dow Jones.
I have also had plenty of feedback from some people who are keen on Copper now, having dumped the idea of Gold:
In fact, copper was being pushed higher since late October. Look at that rally… Sustainable? Not in my opinion, and not without a retracement first.
Will copper be in higher demand? Of course, yes, no doubt.
Right this second? No. Growth is anaemic in the world, China was a large copper buyer and it has severely slowed too in growth.
But Jack, everyone knows that higher copper prices signal oncoming economic growth and good times!
Exactly.
Think about that.
The only reason the Dow Jones is rallying is because of copper signalling growth and the Trump government’s planned fiscal spending on infrastructure. How easy is it to manipulate copper prices on contract. Very easy. It’s done with gold all the time. It’s the perfect signal to get everyone thinking about how great everything is about to become while funds get pulled out from under the market’s feet.
Did you know that the American budget has to be renegotiated in March next year?
Did you know that there is no money to pay for all this infrastructure spending?
This rally to me, is possibly a gigantic fakeout, a pump and dump to get everyone buying copper and Industrial while the stars sneak out the back door.
Look at the Nasdaq 100…
Look at the last volume bar on the Nasdaq. The last time we got near those negative volume numbers was in July and look what happened to the markets back then.
And the bond market?
Bonds are getting dumped. Big league.
The line that is being fed down through the media to you and me is that money is leaving bonds because it’s going into equities.
BUT, why is the NASDAQ down almost an entire percent? It was actually down 1.4% but the public came in to buy the dip.
Why is the S&P 500 hardly holding onto its gains?
Why is the US dollar struggling to hold its high?
But don’t look at that! Focus on the Dow Jones… It’s awesome! It’s rallying! Look!
Meanwhile the Bond Market is getting sold off…
Do you know what that means?
The US Government owes 20 trillion dollars in debt. Do you know how they pay the interest on that debt?
They borrow more money.
How? They borrow money by offering BONDS.
But the market is dumping bonds. So the U.S.A. has a little problem with raising all the money for this spending. They’re going to be forced to offer massive yields.
“What about the tax revenue, can’t the Government use that?“
Oh yes…they’re cutting taxes remember? So whatever tax revenue is coming in, it will not be enough. Guaranteed.
Imagine owing money on a credit card, then when you can’t pay it back, you go to another bank and get a new credit card, maxing it out to pay the first card… and then getting a third credit card to service the first two cards… now multiply that by a billion.
That’s what is happening and the bond market is getting sold off…
What am I getting at here?
Put gold aside for a moment, that’s where I’m positioned and I have no problems with fluctuations…
Rather what I am sharing with you is a concern:
It’s not definite, but it is highly probably that the copper price has been pushed up artificially, to get the Dow Jones to rally, so that big money and smart money can exit their positions while we get left holding the ball.
The NASDAQ, S&P 500 and Dow Jones almost always rally together. But in the last few hours of trading… it changed.
Conclusion
I’m no expert, but everyone is so super bullish on the easy dow and copper trade, banking stock etc while it appears that large volumes of funds are actually leaving the market. I would exercise extreme caution.
How much upside is left in copper? How much upside is left in the Dow Jones?
I’m not making any changes to my positions. Silver is still up, inflation numbers come through tonight from the US and I have no issue with this crazy volatility.
Rather, I am looking at the events unfolding and if I am right ( I might not be) , but if I am right then we are about to hit a major, major market correction.
I mentioned many times that the markets were being held up for Hillary Clinton.
Well she’s out and the rebel is in. Therefore I expect to see that money that worked so hard to keep record highs in the markets to start leaving the market until proper corrections have occurred.
The next few days will demonstrate whether or not I have had way toooo much coffee, or whether there was substance to my concern.
There are two options here:
Either the Dow is right or the Nasdaq is right.
If the Dow is right, then the Nasdaq will bounce and head back up to follow suit.
If the Nasdaq was actually leading the trend, then I believe we’re about to test support levels in a major market correction.
In addition, it would confirm that the Gold price was sold down simply to allow better entry points for the powers that be.
I previously mentioned that I did not see a stock market crash coming and that it would be sector rotation. And that is exactly what might be happening… But the NASDAQ which is tech focused and consumer focused should also be making record highs, but it’s not.
Additionally, the bond market should not be getting sold off…
Bonds selling off demonstrates a lack of confidence in the financial stability of a government’s promise to pay back what they owe. It also demonstrates a concern regarding inflation and interest rates.
If I am wrong, so be it, at least I got it off my chest.
If I am right then you at least have an inkling of what’s going on when the orange hair-piece hits the fan as the market corrects.
Turning off the alarm switch now. That siren was killing my ears.