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Monday, 29 September 2014

The Few against the Many

My Sunday newspaper (Sunday Independent, attrib. Reuters) tells me "Stock markets set to keep rising well into 2015." After a sluggish end of week, "Nearly all the almost 250 analysts and investors polled in the past week predicted markets would rally, with several indexes reaching new highs."

I dare to take the opposite view.

They say: "Share prices are rising so they will keep rising." We have heard that before.
I say: "Share prices are inflated. Interest rates are deflated. Interest rates must rise. Share prices must fall."

Click to enlarge image.

This morning's downturn (with subsequent rebound) confirms the emergence of a new Resistance Line (R), as the Parobola-top, signalling the end of the present uptrend, takes shape. Junk bonds have already fallen significantly in price, indicating that the market is gearing up for higher interest rates and lower equity prices. The Sterling interest rate is to go up in 2015, which is not too far away now, and the USA will follow soon after.

Markets don't wait. They anticipate. We could even have another Black Monday next week, sez I.

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