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Both the VIX (S&P500 Volatility Index) as well
as the Bollinger Bands Indicators gave us buy signals on Friday, August 31st,
which goes along with what I have been talking (speculating) about over the
last few months. As you are all well aware, I am convinced that history
repeats so looking back, there have been five prior VIX buy signals in 2012
and in each case, stocks were sharply higher within
days and weeks of each signal. This goes right along with the Jaws of Death
pattern and the new all-time high that I have been speculating on, and we may
get the whole of that move in 2012. A preponderance of the time, the Jaws of
Death Megaphone pattern sees its final wave reach its upper boundary (not a
requirement). While there is always the possibility that this VIX Buy signal
could fail, the odds suggest it will not.
HISTORY'S BIGGEST BULL TRAPS (BONDS & STOCKS)
Like the Jaws of Death, both the Treasury and Stock
Market Bull Traps seem to be aligning themselves foretelling the biggest
crash in history.
HEADS BURIED IN THE SAND
According to my reading of Bernanke's Jackson Hole
speech last Friday, I believe QE3 is coming and will probably be announced at
the FED'S September 12th/13th meeting. The speech sounded to me like he was
signaling the markets that he plans a strong stimulus program and he does not
need to see further deteriorating economic conditions to do so. He used the
term "gravely concerned" about the jobs situation. Since the
idiotic Humphrey Hawkins Law was passed, the Fed was given a conflicting dual
mandate to maintain both price stability and support employment. They clearly
have failed at both tasks. Since the employment mandate is not being
achieved, Bernanke is convinced that more needs to be done to turn the
employment situation around.
Later in the day John Williams, the President of the
San Francisco Fed, practically announced that the Fed will be doing a QE3 to
stimulate the economy, sooner rather than later, before a negative economic
shock hits the system. He emphasized flexibility, without being specific on
limits or types of programs. Clearly, this coming QE3 is planned, ready, and
about to be announced either during the DNC Convention or soon after.
Bernanke has, as I have previously mentioned, the
added incentive to do his utmost to get Obama re-elected, since if Romney
wins the presidency, HE WILL BE LOOKING FOR A JOB in the very near future.
Listening to Bernanke and Williams on Friday, if both don't believe that the
economy is on a growth path, they can at least hope that by passing QE
programs hundreds of thousands of jobs have been created, which means they
believe another QE program will create jobs. If he wants to continue to be
the Fed Chairman, in his mind, he has to do another QE program now and he has
the votes. Most of the voting members of the Fed's Open Market Operations
Committee are, against all evidence to the contrary, in favor of more
immediate stimulus. Like all Liberals, they cannot see any other alternative
for creating jobs, which is an absolute must for Obama to win.
Most analysts believe that another QE program will
be bullish for stocks (of which I am not so sure), precious metals and
commodities as it will definitely fuel the fires of inflation. It could also
turn out to be a deflationary step for the US Dollar.
In spite of Friday's large rally, which came on
rising volume, stocks tanked after the speech, probably because of those who
were disappointed that QE3 wasn't formally announced, but then stocks rallied
sharply after the speech was dissected and it was clear that stimulus is
surely in the wings. The key now is for TRADERS ONLY to buy the Rhetoric and
sell the News.
The key for
precious metals is to see if Gold can break out above $1,725, which would
convince everyone that the correction pattern is over and that Gold and
Silver are headed for new all-time highs.
GOOD
LUCK AND GOD BLESS
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Please Note:
This article is for education purposes only and is designed to help you make
up your own mind, not for me to make it up for you. Only you know your own
personal circumstances so only you can decide the best places to invest your
money and the degree of risk that you are prepared to take. The Information
and data included here has been gleaned from sources deemed to be reliable,
but is not guaranteed by me. Nothing stated in here should be taken as a
recommendation for you to buy or sell securities.
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