In 2005 I began to notice chart patterns which were previously useful were turning into traps, For example, when a head and shoulders top pattern was completed, a short squeeze would ensue. Every now and then this is normal. But on every single trading, it is not.
In spring of 2006, Henry Paulson became the first activist Treasury Secretary in history. From spring of that year on, the market had an invisible floor under it.
The lower volume was, the stronger the market would be. The volume chart began making a perfect parabola pattern with few exceptions. Then there was the emergence of the snake pattern, on minute by minute charts patterns, never seen in history before. All action occurred in the first and last hours. Could there be a conspiracy, devoted to elevating asset prices? Would it even be possible? Could it be done? The 100 or so richest folks in the world certainly have enough money and power to do it. Would they? A better question to ask is Why wouldn’t they? But, Woo, James, that is conspiracy theory, therefore it couldn’t be true. Right?
Adam Smith, is well thought of, but his observations are routinely treated as platitudes..Some of us take his wisdom to heart. If Adam Smith is to be believed, it is nearly impossible that stock prices are not thoroughly manipulated. So. who should we trust here?
Lets look at a chart of the Dow along with the percent of stocks over their 200 day moving averages. Around 26 percent are above their 200 day moving averages. This is the level that would be expected at the bottom of a bear market. Is this the bottom? I am betting that the bottom is about to fall out instead.
This is based on the whole bull market being phony from the beginning. The ingredients .necessary to move it higher are missing. There is one caveat, That doesn’t mean nothing will be done to try and save it. I made a similar point in the article below. In 1987, the market did suddenly crumble but there was a recovery. If we experience that kind of event this year, it will keep on dropping. Any recovery won’t start for at least two years. Our system is so corrupt, any recovery at all should not be taken for granted.