The market is up 100 on Monday and down 100 on Tuesday. This is our current state. The NASDAQ composite posted a "death cross" last week. This is the 50-day moving average falling below the 200-day moving average. However, this is on the daily chart. If you look at a weekly or monthly, the index is moving sideways or a consolidation pattern. You can find harmony in this aspect. The "Dow" is also in the same pattern on a longer chart. The transports appear to be bearish on a daily, but bullish on longer patterns. To sum up: the market is in a state of flux.
Of course, the new major element by Russia (Ukraine) will affect the next trend. As we stated weeks ago, Russia would not do anything while the Olympics were in progress. We felt that if they were to do anything, the date would coincide with the closing of the world event. Again, we were right. Now, we see two terrible options. Russia gains complete control, or they use the excuse of the separatist to cause civil war. Either way, they neutralize the nation. They got what they desired, a buffer zone. We don't need the stupidity of military intelligence (big euphemism) to relate the news. The first big fear will be China with Taiwan. The second, will be our military asking for even more money. They are our biggest danger and the world's. Also, an idiot in NATO could trigger a disaster?
Gold...
on the other hand, broke above resistance at $1882. It is on a bullish run. The next stop should be $1946. We have to look at the volume at that time to determine whether a pullback, consolidation or continuation pattern evolves. Our recommendation, Barrick Gold has finally awakened from a deep sleep. The company has the best mines. It raised its dividend, and it is doing a buyback to support the stock. Now, if only our other two recommendations would join the party?
Good Act...
was signed into law. It did not get much fanfare, but we like it. It says that medical institutions cannot spring unrequested tests and surprise medical billing to patents.
King Dollar...
has formed a triangle pattern. This means a big move is coming. Maybe we will get an idea when the Fed meets in two weeks. We will find what strength of conviction to all their machinations and BS about inflation?
Evergrande
We have not heard anything about the Chinese real estate firm lately. We already know that they are overvalued and basically bankrupt. I think some cooking of the books is going on behind closed doors. An announcement will probably come forth that a reorganization took place. All is well. It is nice to know that all these central bankers attended the same "acting" school. In a related aspect, the "Economist" magazine has a picture of a roller coaster on its cover. The riders are about to drop after the big rise. It is a message about the market. What happens if there is a crash?
Whenever a big crash happens, deflation appears. However, our weak economy could suffer a repeat of stagflation. This is the worst. You get rising prices (inflation), and a stagnated economy with little or no growth. With two more big consumer firms announcing that they are raising prices, the trouble with Russia and China after the Olympics ends, we see higher inflation with oil prices as a leading cause. This will push inflation higher. Not good. Sadly, stagflation could appear.
Not much good news as we are in the middle of the dark days of winter. Dear Reader, take care. Spring is just one month away. Let's hope the feeling of rebirth fills the souls of the discontented as well as the rest of us. Hey, Russia! Give peace a chance. Peace.
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