Hopefully, you’ve been following my weekly articles in the Trends Journal. If so, you now have an “insider’s” perspective on how the markets work. I congratulate you!
Moving forward, I intend to outline current market trends while also maintaining a perspective on future trends. This way, you will be able to assess not only how the markets look today and how you can capitalize on them, but also how they likely will play out in the future.
In my last article, “FINANCIAL FRANKENSTEIN 2020,” I explained how FOMO (Fear of Missing Out) and “irrational exuberance” in the markets push it to new highs. Just this past week, we witnessed the NASDAQ and the S&P 500 hit new record highs. Looking at the overall market indices, both the Dow (the mega cap corporations) and the Russell 2000 (the small caps) have been laggards. I believe that is about to change. I expect the stock market, now caught in a positive feedback loop, will continue to hit new highs… until it does not.
Main Street/Wall Street Disconnect
The current stock market is 100 percent disconnected from the U.S. economy, which is now in a free-fall collapse.
In the U.S., on average, we are losing six million jobs a month. We are in an engineered economic deep freeze, with not even a shred of recovery in sight. Granted, you will hear from certain politicians that we are in a V-shaped recovery of some kind, but this clam is nothing more than misinformation and blatant propaganda. There is no recovery in the economy.
There is, however, an epic recovery in the stock market, which is currently “melting up.”
Keeping politics aside, from a market standpoint, today’s stock market is pricing in a Biden win. A Biden win would be extremely stock market positive and also massively bullish for gold, silver, and cryptocurrencies.
Why? The answer is simple: a New Debt Paradigm.
In my 7 July article, “THE MARKET IS FLOATING ON OCEANS OF DEBT,” I explained how the market is defying gravity in an unprecedented way. Under a Biden Presidency, I believe we will witness a debt expansion cycle like no other.
Being that the market is pricing in a Biden win, and all the big-money players know this, as I had mentioned, stocks are “melting up.” If Biden were to win, the most likely scenario for the market would be a “sell the news” moment, which would result in stocks falling immediately after the election. I would also expect the same fall in the market if Trump were to win.
Following the election and the “sell the news,” if Biden wins, I would expect a powerful rebound in stocks. On the other hand, if Trump wins, I also would expect a rebound, although not quite as strong. In either case, I would expect the stock market to trend higher, as much more debt is borrowed into existence.
An inevitable and truly epic crash is coming for the stock market, but when?
No one is astute enough to know when that will be, as it is impossible to pin down exactly. But by understanding the mechanism behind it, we know where clues to a “crash-down” are… and that is the debt market.
Observing the 10-year yield remains the biggest key to unlocking the mystery of when a stock market crash will occur. For over a decade, rates have been suppressed, allowing a massive stock market bubble to manifest.
Therefore, knowing the debt market is a TIME BOMB makes it simple to understand that a debt market melt-down will precede a stock market crash.
It’s coming… are you ready?
Stay tuned for further market updates both here and in my blog, TradersChoice.net
by Gregory Mannarino
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