November 22, 2007

• Is America in trouble?

  

  Ok, I found some troubling information regarding our great country.  I created this chart based on some indicators that I saw, and it’s not necessarily a good thing. This may sound boring, but this will affect EVERYONE.  If this chart is true, we will have a long recession. People may start getting laid off and new college graduates won’t be able to get a job.  Daddy won’t be able to get her little princess a Lexus anymore boohoo.

  Read below, very important.

   

  This is a 12 year chart of the Stock Market S&P. This is a better indicator than the Dow Jones and Nasdaq of the overall health of the stock market. We had a really nice run from 1982 (not shown) to 2000. Notice during the 1990s, the stock market closed above the Green line (although it touched but never closed below it at point A).

  Here’s 2 simple indicators that may portend the future.
  1. When the blue line crosses the red line at the bottom of the chart, that is a sign the trend may change.
  2. A confirmation when the stock market closes below the Green line on the chart.

  How reliable is this?  Look at point A. In October 1998 (the Asian Contagion crisis), the Blue line crossed below the red signal, but the market touched but never closed below the Green line, so no confirmation.  However look at point 1.

  1. The Blue line I use as a leading indicator (it tries to show what happens before it happens).  In October 2000, the blue line fell below the red line, and bamm one month later in November 2000 after 6 YEARS of going straight up, it closed below the green at point 1, falling for 3 years. Anyone who remembers holding stocks during this time lost money, there was a recession, people were getting laid off, etc. etc.

  2. Finally, in April 2003, the blue line broke above the red . And guess what? 3 months later the market closed above the green line for the first time. Look what happens afterwards. market goes up for 4 straight years, never breaking the green line until…..

  3. November 2007 (that means NOW guys), is the first time the blue line really broke the red line in 4.5 YEARS. Notice also, that point 3, is roughly at the same levels as point 1. This is called a double top, or a point that markets has trouble going above. That’s right folks, save your underwear, you may need to reuse them.  However, notice that the market is still above the green line, so there’s no confirmation, BUT if the indicator is correct, and the market goes below the GREEN, within a few months, we can be at the beginning of a Major Recession.

  What does this mean? Well, first of all, this is just an observation, I could be totally wrong, but if history is a guide, something bad cometh.  Remember, the stock market is a leading indicator of the economy. This means, the market will tell you what will happen before lagging indicators such as unemployment reports, earnings, real estate etc. etc.

  Look towards the future, I may have to move away from the land of the weak currency, Oil is at $100 (which not only means it cost you more to travel, it cost more for stores to have things shipped to them, and forced to sell things higher). I don’t know about you guys, but the piggy bank may be safer. And be nice to your boss. You may need him soon.

  Moral of story? give me eprops.

  • 7:37 am
  • 14 Comments