INTRODUCTION "Silver Bottom And Dow Top"(Mar. 8) identified the higher low forecasted in the Mar. 1 article, "Silver, Equity And Currency Turning Points: Silver Has Seen Its Lows." These followed the 4th-quarter forecast of silver's November bottom under $15.00, basis iShares Silver (ARCA:SLV).
The above is rehashed for context to illustrate why what follows in global markets will be an absolute CATACLYSM {see Cycle of Market Emotions (COME) section}!
The technical analyses below, including COME section, represent the theme of this report, namely, that all trends have been skewed by political manipulation, defying free markets, thereby setting them up for historic shocking swingsin psychology and volatility this year.
The three reports in the first paragraph above explain the technical reasons for the forecasts, without again indulging in all of the Uber-bullish silver fundamentals, simply focusing on newly developing time cycles that I had forecast 12 months ago, momentum indicators, and volatility premium analysis as corresponds to the underlying.
After the November 2014 flush-out, I believed that the next (and in all likelihood higher) low would be in May, with the ideal date falling in the very last week, precisely when everyone would be fretting about the coming period which is known for its seasonal weakness. And so it was.
Somehow, in the face of all steaming hot and one-sidedly bullish fundamentals, which includes JPMorgan (NYSE:JPM) cornering the silver market, old voices of fear did recently emerge, just as one expects at higher lows, since, by theory, such lows revisit or even eclipse the bearish psychology see at the very bottom.
Heavens. How much brain does it take to understand that JPM will NEVER low new lows?! And what can't make new lows, must erupt sooner than later, especially a manic schizoid like silver.
(As an aside, there is a shocking opportunity for sophisticated investors, stemming from the fact that deliverable silver products do not trade at ANY premium.)
Note the ready-to-explode 1-year SLV chart immediately below.
Every report that I have written since a long while now has discussed the Dow's waning momentum, as the new highs are made with ever small margins versus the preceding all-time peak. In fact, the reports have harped on the nauseating recurrence of expanding triangles (full discussion in CATACLYSM, see link above), which are rare patterns.
The recurring theme: Point-7, which concludes the expanding triangle, is a nasty spike as such triangles reflects increasing volatility. The first and largest triangle dates back 12 years (in same link above), and has subdivided enough times to make me look foolish last year. For good measure - and quite understandably - the momentum indicators have consistently put in lower and lower levels (creating ever-worsening divergences).
Note the pathetic rolling over in the 1-year Dow chart immediately below. Major Dow support area ~15,700. (Dow and SLV charts include 200-day moving average and slow stochastic.)
COME
The most important point that any investor should absolutely understand is the italicized claim made in the 3rd paragraph above.THIS HAS NEVER HAPPENED BEFORE IN THE HISTORY OF MARKETS.
Page-2 of the linked report (see CATACLYSM par. 2 above) includes the well-known chart of the "Cycle of Market Emotions" (COME).
I will now explain how to understand it in conjunction with the preceding sections to appreciate that what follows must NECESSARILY be a CATACLYSM. Simply, the market is not at its peak. It is much lower and must "catch-down." Excerpts follow:
"When a market is at its peak, it stands to reason that it is also at the summit of the COME.
"Such was the case in January 2000, when the Dow was even able to celebrate Bill Gates's multi-billion-dollar Y2K gag..."
"That March, the internet bubble had hit its crescendo and everything subsequently crumbled 50%, as forecast in SKDF (Sid Klein's Daily Fax).
"Considering the major economic indicators, and the Dow in inflation-adjusted terms, the market's secular peak was in 2000.So, that means that the euphoria phase was achieved then (see COME).
"From new nominal highs in the Dow, the next 50% debacle came during the 2008 period. To put it mildly, the 2008-09 period marked high anxiety,which is the phase that follows euphoria.
"Since then, the gargantuan printing program in the U.S. and elsewhere has led to utter complacency mixed with the underlying remnants of high anxiety, which has taken the form of the public trusting neither governmental efforts nor the markets, while, ironically, being fully invested in them due to a perceived and mindless sense of lack of choice. In other words, the 2009-2014 period has led to the peak of the denial phase, so to speak.
"I am as certain as I can be of this interpretation of where to place the market in the context of the COME. Why? Because there is NO precedent in historyfor such monetary manipulation that would create such artificial index prices or market psychology.
"The preceding interpretation has profound consequences, including the possibility of utter cataclysm. Why?
"The latter is due to the fact that the anxiety phase would ordinarily be associated with the initial phase of a bear market(Wave-1, in Elliott Wave terminology). The denial phasewould ordinarily be associated with the countertrend Wave-2 rally. Fear is associated with the accelerating Wave-3 crash.
"THEREFORE,if the next phase in the COME is the fear-phase, the world may be looking at a cataclysmic event directly ahead to rationalize the markets finding themselves right smack in that phase which is ordinarily the 3rd chapter (Wave-3 down) in the COME {in other words, jumping right into the 3rd point in the down cycle (see COME), right from the nominal price peak}!"
"Remember, the purpose of this report is to show that, despite ever-new nominal highs, the latter have merely been camouflaging the fact that the COME has actually been advancing within the bear cycle!
"One must understand this crucial point, if one wishes to survive this, especially in light of bail-ins (click here); once the market "catches up" to where it actually is, so to speak, it will be DRAMATICALLY lower.
"Imagine a person taking a potion that keeps him/her looking like a 30-year-old until the age of 90, once the body assumes its age all at once."
"Technical analysis does work. If one identifies where the market would otherwise be if not for the manipulation (by analyzing where it would have been without the betrayal of free markets), one can see where we "really are."
"Yes, the Fed's trading desk will have cost believers and investors in free markets a lot of money in the intermediate term by causing sidestepped profits.
"However, such wise investors will have been rewarded, by having been positioned to profit from the shocking spikes in premiums, asthose premiums will have eclipsed what was seen in 2008."
"Therein, one will have found the recipe for the dramatic spikes in premiums - the stuff of which fortunes are made, reflecting that phase in the COME known as, FEAR!"
Just as free-market-defying money-printing denies the market the opportunity to trade at the level at which it naturally would otherwise, the events that most easily cause fear include war, which is consistent with...
CONCLUSION
Due to a first-ever event in the COME, the marketplace will have gone from "Euphoria" to "Fear" in one single bound, step-3 into the bear cycle.
An at-the-money silver option could trade for $6.00 and the VIX could soar to 90, for example. With that, traders will fear their utterly massive profits to be on paper only, since such swings in volatility are consistent with fear that the system is failing altogether. (See bail-ins above.)
As is a matter of public record, when I have been early, subsequent accuracy proved to more than make up for it. If past were prologue, then, what follows will have presented the most glorious opportunity of all times. My confidence is unsurpassed.
Unfortunately.
Besides, JPMorgan and HSBC have told us that it is going to happen. Over 33 years, I have learned that the banks issue such warnings when they need to be able to later say, "Well, we were honest with you and said so, right?"