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Unknowingly, with QE Infinity, Bernanke has put in motion a runaway move in the
stock market that will end in some kind of crash this summer. The crash will cause Bernanke to double down on QE which will trigger a spike in commodity prices. Let me explain my rationale. Words: 455
So writes Toby Connor (http://goldscents.blogspot.ca) in edited excerpts from his original article* entitled We Are Now Getting Deep Into The Euphoria Stage.
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Connor goes on to say in further edited excerpts:
Depending on how long and far above the 200 day moving average this thing stretches will determine how violent the stock market crash will be when the forces of regression take over. I think we could see a crash of 15%-20%.
The problem with runaway moves in the stock market is that they stretch way too far above the mean in both price and time. As this process progresses institutional traders become more and more nervous, so the stock market becomes more and more shaky. Kind of like a heavy snowfield just waiting for that last snowflake to turn it into an avalanche – and that’s exactly how these stock market runaway moves end. At some point all of these nervous investors try to get out the door at the same time and you get a crash or semi-crash.
A Runaway Stock Market Crash Is Coming
Until the crash comes…the stock market will probably continue to creep higher with occasional 40-50 point corrections [which is] characteristic of runaway moves. They set a standard correction size early in the move and all corrections thereafter fall in the range. Then at some point one of those corrections spikes through the range and months of gains get wiped out in a matter of days, or even minutes. The flash crash in 2010 is an excellent example of a runaway move crash.
Here’s How it Should Play Out
- The runaway move will end in some kind of crash this summer
- Bernanke will then freak out and crank up the printing presses even faster. $85 billion may become $150 billion.
- Commodity markets will then go crazy just like they did in 2007/2008 as Bernanke tried to print away the real estate implosion and,
- when commodity prices spike, economies collapse – just like they did in 2008.
All the pieces are starting to fall into place:
- QE infinity is driving a runaway move in stocks that will end like all runaway moves, with some kind of stock market crash scenario.
- That will trigger even more printing which will spike commodities next year, and
- That will be the end of the economy and the beginning of the end for this stretched and extended cyclical bull market.
Look for a final top in the stock market late this year or early in 2014 and a much extended topping process as the fundamentals slowly overwhelm Bernanke’s printing press.
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