Sound the Alarm

Tuesday, August 25, 2015
By Paul Martin

By Bob Loukas
GoldSeek.com
Tuesday, 25 August 2015

We saw an amazing capitulation event in equities these past three sessions. It’s clear that market internals were weak, but no one could have foreseen the degree and rapidity of the selloff. The major US indices have already entered into official corrections (-10%), while many world markets are approaching bear market (-20%) territory. And it’s unlikely the declines are over. Friday’s drop was a massive distribution day, with 93% of volume trading lower. With a 1,433 point decline, that was the largest three day DOW decline on record.

The VIX spiked sharply, showing the sort of extreme panic/fear in the market that is typically reserved for the end of Investor and Yearly Cycle declines. If we use the the four-year rally in equities as our guide, this type of sell-off corresponds with markets completing a Cycle Low, after which they should turn higher and rally for 10-20 weeks in a new Cycle.

That’s the script if we believe the bull market is intact, but I don’t think that’s what’s going to happen, not this time. I believe this time is different, primarily because the Investor Cycle count is so early (week 6 of 22-24 weeks). With so many weeks left to complete the Investor Cycle, the current waterfall decline is extremely concerning, and could be an omen of significantly lower prices in the near future.

The Rest…HERE

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