We finally got some downside action last week.
Hopefully you have used our advise not to buy this Green Period.
The reason not to buy was probably clear for the users of our LunaticTrader program.
This was the LunaticTrader chart for February:
Around 17 – 19 February there was a rare cluster of lunar and planetary events, which indicated a possible major turning point.
On February 17 we had a planetary extreme for Mercury and Neptune, followed by Full Moon in early morning February 18. The lunar perigee came on Feb 19, and lunar latitude extreme on Feb 20, when the market was closed for weekend.
Being in Green Period the market is now trying to recover lost ground. That could continue this week, and there is a chance we will climb to a double top with the Feb 18 highs.
But I think new selling will come in, as several market participants have probably been shocked by the sudden downturn and may want to reduce their exposure on the next good opportunity.
So I am looking for a second leg down into the middle of March.
***
Some readers asked why we are so pessimistic about the economy in our latest message.
It is not about being pessimistic, but about being realistic. And doing some math can go a long way in that regard.
Here is another way to see why QE2 is not likely to work.
The US central bank creates $600 billion new money and is using it to buy treasury bonds over a period of 8 months.
But the US trade deficit stays at $40 billion per month.
At that rate, the newly created $600 billion will have left the country within 15 months.
That much is certain.
So it is like pumping water out of a leaking ship, it keeps things afloat for a while, but as soon as you stop pumping the ship will start sinking again.
Right now the QE2 pumping is scheduled to stop in June.
You can make your own conclusions.
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This entry was posted on February 28, 2011 at 1:52 pm and is filed under Market Commentary.
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Outlook February 28
Posted by Danny on February 28, 2011
We finally got some downside action last week.
Hopefully you have used our advise not to buy this Green Period.
The reason not to buy was probably clear for the users of our LunaticTrader program.
This was the LunaticTrader chart for February:
Around 17 – 19 February there was a rare cluster of lunar and planetary events, which indicated a possible major turning point.
On February 17 we had a planetary extreme for Mercury and Neptune, followed by Full Moon in early morning February 18. The lunar perigee came on Feb 19, and lunar latitude extreme on Feb 20, when the market was closed for weekend.
Being in Green Period the market is now trying to recover lost ground. That could continue this week, and there is a chance we will climb to a double top with the Feb 18 highs.
But I think new selling will come in, as several market participants have probably been shocked by the sudden downturn and may want to reduce their exposure on the next good opportunity.
So I am looking for a second leg down into the middle of March.
***
Some readers asked why we are so pessimistic about the economy in our latest message.
It is not about being pessimistic, but about being realistic. And doing some math can go a long way in that regard.
Here is another way to see why QE2 is not likely to work.
The US central bank creates $600 billion new money and is using it to buy treasury bonds over a period of 8 months.
But the US trade deficit stays at $40 billion per month.
At that rate, the newly created $600 billion will have left the country within 15 months.
That much is certain.
So it is like pumping water out of a leaking ship, it keeps things afloat for a while, but as soon as you stop pumping the ship will start sinking again.
Right now the QE2 pumping is scheduled to stop in June.
You can make your own conclusions.
Share this:
Like this:
This entry was posted on February 28, 2011 at 1:52 pm and is filed under Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.