Market Says NO To Rehab

June 23, 2013

Weekly Market Outlook

By Keith Schneider

newsletter062413The nasty global sell-off in stocks and precious metals this week was not surprising after Fed Chairman Bernanke stated that he will be sending the markets to rehab, taking away the fix of easy money. The markets shot a clear message back that it’s not ready to go, and the Dow promptly dropped 600 points. Gold fell about $100 dollar an ounce, and bond yields soared, leaving investors around the world unsettled. However, the bigger the fix usually results in an equally large bubble that has to be ultimately dealt with. A slow backing off the throttle should ease the withdrawal symptoms somewhat but some should be expected. It’s time for the grand experiment to be dealt. Amy Winehouse wrote a song about refusing to go to rehab and sadly overdosed a fitting metaphor for all central banks.

Also interesting to note is the spontaneous social combustion resulting in riots in Brazil, Indonesia, Turkey, and Egypt which all point to the growing power of technology and social media. From an investing standpoint, social media is the sector to watch. More importantly, keeping the masses uninformed, ignorant of corruption and the misuse of power is increasingly difficult. Ultimately, free societies with transparency leads to higher productivity so longer term the prospects for the global economies are very promising.

Shorter term, higher rates have caused the technicals to erode as the US equities markets moved to a warning phase. To find out what market phases are all about click on the link as this week’s video is a timely review of market phases and their importance. The video is part 2 of a special series on swing trading found here:

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