Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek Radio: Harry S. Dent Jr. and Bob Hoye, and Chris Waltzek
By: radio.GoldSeek.com

Your Comprehensive Crash Survival Guide
By: Clive Maund

European Threats
By: John Mauldin

Yet Another Trillion-Dollar Unfunded Liability: WHY California Is Burning
By: John Rubino

Gold And Silver Prices Rise As The Markets And Oil Decline
By: Steve St. Angelo

BIS gold swaps fall in November but bank continues secret trading
By: Robert Lambourne

Listen to what gold is telling you
By: Gary Savage

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 3% on the Week While Stocks Drop Nearly 5%
By: Chris Mullen, Gold Seeker Report

Gold Stocks Acting as They Should During Market Stress
By: Gary Tanashian

Craig Hemke Warns of Fraud in Fractional Reserve Precious Metals Markets…
By: Mike Gleason

 
Search

GoldSeek Web

 
The warning shots of 2007


By: Steve Saville, The Speculative Investor

 -- Published: Monday, 26 February 2018 | Print  | Disqus 

For a market analyst there is an irresistible temptation to seek out one or more historical parallels to the current situation. The idea is that clues about what’s going to happen in the future can be found by looking at what happened following similar price action in the past. Sometimes this method works, sometimes it doesn’t.

Assuming that the decline from the January-2018 peak is a short-term correction that will run its course before the end March (my assumption since the correction’s beginning in late-January), the recent price action probably is akin to what happened in February-March of 2007. In late-February of 2007 the SPX had been grinding its way upward in relentless fashion for many months. The VIX was near an all-time low and there was no sign in the price action that anything untoward was about to happen, even though some cracks had begun to appear in the mortgage-financing and real-estate bubbles. Then, out of the blue, there was a 5% plunge in the SPX. On the following daily chart this plunge is labeled “Warning shot 1″.

After the February-March ‘hiccup’ the SPX resumed its bull market. Both the stock market and the economy were believed to be in good shape, with the problems that had emerged in the realm of sub-prime mortgage lending generally considered to be contained to that relatively-unimportant part of the economy. No less of an authority than Ben Bernanke assured us that these problems were, indeed, contained.

The upward trend continued until mid-July, at which point another ‘out of the blue’ plunge began. This time the decline lasted 5 weeks and wiped 11% off the SPX. On the following daily chart it is labeled “Warning shot 2″.

The July-August decline was taken more seriously by almost everyone, including the Fed’s senior management. It was taken seriously enough, in fact, to prompt a reversal in the Fed’s monetary policy. The Fed entered rate-cutting mode.

During the weeks following the August-2007 low there was still widespread optimism. The overall economy was supposedly still strong, the Fed was being supportive and, as everyone knows, you should never fight the Fed.

The SPX went on to make a marginal new high in October-2007 and then commenced a bear market that over the ensuing 17 months would result in a loss of almost 60%.

The SPX was more stretched to the upside in January of 2018 than it was in February of 2007 and the more recent plunge was twice as big, but we could be dealing with Warning Shot 1. Also, this time around there may not be a second warning shot.

 


| Digg This Article
 -- Published: Monday, 26 February 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus


Regular financial market forecasts and analyses are provided at our web site. We aren’t offering a free trial subscription at this time, but free samples of our work (excerpts from our regular commentaries) can be viewed here.

E-mail: Steve Saville



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.