-- Posted Friday, 30 November 2007 | Digg This Article
| Source: GoldSeek.com
DEEPCASTER LLC
www.deepcaster.com
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DEEPCASTER HIGH POTENTIAL SPECULATOR
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Deepcaster’s recent Forecasts for Gold, Equities, Crude Oil & the U.S. Dollar illustrate well the interplay among Interventionals, Technicals and Fundamentals.
For Technical Analysis devotees, of which Deepcaster is a conditional one, a very significant event occurred on Wednesday, November 21, 2007, the day before Thanksgiving.
The market drop that day precipitated an official Dow Theory Primary Trend Bear Market Signal. It was the first such signal since September, 1999.
The Dow is now “officially” in a Bear Market.
Even if one is not a devotee of Technical Analysis, such signals are important. That is because many investors are indeed Technical Analysis devotees. And that fact, and the perception of that fact, can and does influence market realities.
While only a few technical indicators have a basis in the natural world, some do. Fibonacci retracement levels, for example, tend to reflect wave behavior. And they do also affect the behavior of markets and market participants much of the time.
Many market participants believe in the power of technical analysis, therefore technical analysis is powerful.
Regarding the Wednesday, November 21st bear market signal, technical analysts hastened to add that bullish rallies are not only possible, but also probable, within a primary trend bear market. We agree.
The question, which we address in our current forecast at www.deepcaster.com/Latest Letter is whether and when such a Market Rally will occur within the now prevailing Bear Market for Equities. Also important is the interplay between Technicals and Interventionals.
As Deepcaster has pointed out, there is strong evidence that technical patterns are at times used or created as “lures” or pretexts by The Central Banker Cartel*, to implement their perceived policy agenda via Intervention (see Deepcaster’s November, 2007 Letter entitled “Market Intervention and Data Manipulation - - Consequences & Forecast for Gold, Crude & Equities and The Cartel End Game”). Thus Technicals are an important, but not necessarily determinative, factor in Deepcaster’s Forecasts.
Moreover, Interventionals are important for themselves because they reflect the implementation of the Fed-led Cartel’s* monetary, economic and political policies.
Finally, regarding Fundamentals, in spite of intervention and in spite of the technicals fundamentals eventually assert themselves. (Otherwise they would not be “fundamentals” i.e. fundamentally determinative.) But, of course, the key question is “eventually when?” Whether in a week, in a month, or in years, depends on the market, the circumstances, and The Intervenors.
Consider the “Fundamentals” of the U.S. economy as of the end of October, 2007.**
- Real GDP was decreasing at about a negative 2% annual rate.
- Real Consumer Price Inflation was increasing at over 11% annualized
- Real Producer Price Inflation was increasing at over 6% annualized
- Real M3 Annual Growth (money supply) was increasing at over a 15% rate
- Existing and New Home Sales and Housing Starts were down over 20% each, year over year.
Finally, consider that U.S. Government debt has now exceeded $9 trillion as of October, 2007 and downstream unfunded liabilities are in somewhere in the excess of $45 trillion. The fundamental picture is not at all bright for the U.S. economy.
So is now the time to buy Gold? Gold has recently approached and retreated from its $850/oz. record set on January 21, 1980. But consider that an equivalent Gold price in today’s inflation-adjusted dollars would be over $2280 per ounce based on 10/07 CPI dollars and over $6,000 an ounce in terms of October, 2007 Alternate Inflation-adjusted Dollars.**
Given the aforementioned overview of some Fundamental, Technical and Interventional factors, we now consider examples of their interplay with an eye to making Forecasts which can lead to profit.
EQUITIES
December 2007: Even though we got a Dow Theory Primary Trend Bearish Signal on Thanksgiving eve 2007, in the short-term, bullish rallies can nonetheless occur in what is now a Bear Market. Key indices have approached close to or touched their lower Bollinger Bands, and markets are oversold. That suggests a bounce is coming. One the other hand, the now-dominant Bear Trend and bearish fundamentals could result in a further December Takedown.
The NASDAQ is technically weaker than the Dow, S&P or Russell 2000 and may thus perform less robustly than the other indices.
Moreover, due in part to The Interventionals, Precious Metals and Crude Oil shares may perform differently than other markets.
1st Quarter 2008: But even if there is strong Equities performance in December, 2007, it may well not be reflected in the 1st quarter of 2008.
First, the fundamentals are terrible, the Sub-Prime and Collateralized Debt Obligation and credit market “freeze-up” problems are far from solved - they are massive and their ripple effect is spreading.
Moreover, the aforementioned U.S.’ multi-trillion dollar (and increasing) national debt and unfunded downstream liabilities, trade deficit, and “TIC” figures, tends to put a ceiling on U.S. Equities values, when measured in inflation-adjusted dollars.
Technically, the fact that we have a Dow Theory Primary Trend Sell Signal indicates that over the intermediate to long-term, therefore, the primary trend for Equities should be down.
But the key factor is The Interventionals. Would The Cartel* like to see a gradual takedown of the Equity Markets, or will it work to prop up the Equities markets to counter pervasive negative consumer and economic sentiment and realities. The key to the answer likely lies in the Repo Pool (see Deepcaster’s November, 2007 Letter at www.deepcaster.com/LatestLetter/Archives. Its performance is usually a harbinger of movements in the Dow and other major indices.
GOLD
December 2007: The fundamentals and long-term technicals for Gold are roaringly bullish for December and beyond, so much so that we need not even recite them.
The danger is in the Interventionals. We believe The Cartel has much to lose to allow Gold to exceed by very much the January 1980 $850 high (although it might throw in a spike over $850 to lure more longs into a trap).
Were Gold to rally much above $850 it would likely cause many more investors and speculators to pile in on the long side, a development which we believe The Cartel would not see to be in its interest.
Therefore, though the price of Gold has already been taken down from “850” the key question is whether The Cartel desires to, and will be able to, take it lower. We expect that the Gold moves will be associated in the Big Media with one or more of the following pretexts: the ostensible signs of health in the economy, and/or an announcement of the sale of up to 400 tons of IMF Gold into the market for developing country debt relief, and/or an announced major step toward settlement of Middle East tensions as a result of the late November 2007 conference in Annapolis, MD.
1st Quarter 2008: While the fundamentals and long-term technicals for Gold will remain roaringly bullish, the Interventional intentions and capabilities once again are critical. If the air continues to bleed out of the Equities markets, will The Cartel be able to afford to allow investors a “go to” avenue of escape (from Equities) in Precious Metals bullion and share prices. Can it stop such a move?
CRUDE OIL
December 2007: Crude Oil has been extremely bullish for some time now, approaching $100/barrel mark. Deepcaster has for some time thought that this bullishness is overdone in the short-term because worldwide aboveground supplies of crude are actually quite ample. This above-ground surplus has finally been reflected in the recent drop below $90/bbl.
For the long run, of course, consumption exceeds discoveries by a wide margin.
Moreover, Crude Oil Technicals indicate a “double top” has been made and a downtrend breakout has occurred.
This is consistent with a pattern of a declining Equities trend. The Cartel likely does not want Crude Oil or the other strategic commodities to be a “go to” asset either, as Equities decline. A Crude takedown would likely be accomplished through the some $6 trillion in derivatives reported by The Bank For International Settlements - The Central Bankers’ Bank (www.bis.org>statistics>derivatives>Table19) as being devoted to commodities. But will the recent drop to just under $90/bbl be the extent of the pullback or will the price of Crude continue to erode, notwithstanding? See Deepcaster’s Forecast in its December, 2007 Letter at www.deepcaster.com.
If the Takedown of Oil is to continue we expect it would be accompanied by some pretext, quite possibly the “successful” Middle East conference begun the last week of November in Annapolis, MD.
On the other hand, there are many demand and geopolitical factors which could drive the price higher.
1st Quarter 2008: If the Equities Market are to be taken down in the 1st quarter of 2008, then it is reasonable to expect Crude Oil too would continue to be taken down into the 1st quarter of next year as well so there would be no retreat (except Treasury Securities) via Crude Oil for those escaping the Equities markets?
THE U.S. DOLLAR
December 2007: It is clear that the fundamentals of the U.S. Dollar are terrible and worsening. The U.S. economy is slowing with worse to come. The U.S. trade deficit, downstream unfunded liabilities, foreign ownership of U.S. Treasury and U.S. Assets, and National Debt are all increasing.
Moreover, interest rates, which could be used to prop up the U.S. Dollar, are declining in the U.S and The Fed does not seem inclined to support the Dollar, in spite of what they say. This spells bad news long-term for the U.S. Dollar.
However, in December 2007, the U.S. Dollar is technically due for a bounce, but will it bounce? Would such a bound be accompanied by the announcement of substantial progress in the Middle East Peace Conference or by The Fed refusing to lower rates at its December 11th FOMC meeting?
Will a move either way be “facilitated” and “enforced” by the over $40 trillion in derivatives reported by the BIS as devoted to the Foreign Exchange Markets? (see www.bis.org>statistics>derivatives>Table19).
1st Quarter 2008: If there is a U.S. Dollar bounce in December will it continue into 2008? And if it bounces in December, will we see the U.S. Dollar perhaps beginning to weaken again as we approach the end of this first quarter consistent with its horrible fundamentals and technicals and its planned (we believe, ultimate) demise?
Indeed, the evidence indicates The Cartel is implementing an End Game which involves the ultimate destruction of the U.S. Dollar and its replacement by the Amero.
The End Game apparently would also involve a new status for what is now the USA. See Deepcaster’s June, 2007 Letter entitled “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” providing substantial evidence for an apparent “Cartel rationale” for implementing their revolutionary policy goals.
Only by considering The Interventionals and The Cartel’s policy goals which spawn them, as well as the Fundamentals and Technicals, can one make adequately-informed Forecasts regarding market performance.
Deepcaster’s goal is to help you preserve and enhance wealth along the way.
Deepcaster
November 30, 2007
* We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster’s November, 2007 Letter containing a summary overview of Intervention entitled “Market Intervention and Data Manipulation - - Consequences & Forecast for Gold, Crude & Equities and The Cartel End Game” at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”
** www.shadowstats.com
DEEPCASTER LLC
www.deepcaster.com
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
-- Posted Friday, 30 November 2007 | Digg This Article | Source: GoldSeek.com
