by Steve St. Angelo, SRSRocco Report:
Today we are getting another whiff of what’s wrong in the markets. Currently, the Dow Jones Index is down over 500 points, and the NASDAQ is off by more than 100 points. Who knows where the markets will finally end up at the close of trading, but it really doesn’t matter. Markets aren’t valued in days or weeks; rather it takes months and years. So, be patient, and you will be rewarded with at least a 50% decline in the Dow Jones Index.
Unfortunately, a lot of traders, even some frustrated precious metals investors, forget about the STAGES OF A FINANCIAL BUBBLE. It seems like after about ten years, all memory of the 2008 Financial Meltdown has been all but forgotten. While I can understand the “This time is different” by the Mainstream Media, I have to get a kick reading comments by disenchanted precious metals investors who have been swayed by the rampant insanity in the markets.
So, let me publish the stages of a financial bubble to remind those who have either been brainwashed by the Mainstream Media or who have just forgotten the fundamentals:
If I had to make a reasonable guesstimate, I would imagine we are somewhere going down the Peak slope or close to the Denial Stage. However, once the Dow Jones Index falls below 20,000, we will know that the markets have entered into the Fear Stage. During the Fear Stage is when I see the price and demand for precious metals to increase. As we enter the Capitulation Stage, then we could experience precious metals demand like we have never seen before.
Let’s take a look at the current Dow Jones Index chart. As I mentioned in several articles and videos, nothing goes down in a straight line, and it will likely take 1-2 years before the Index reaches its lows. However, this will not be the Dow’s ultimate low. That will probably take another 10-15+ years.
The Dow Jones Index hasn’t experienced this sort of volatility since 2007. Even though we had some corrections in 2011 and 2016, this current volatility is even worse because the FINRA margin debt is also near a record high. But first, before I show the FINRA margin debt table, let’s look at the MACD technical level on the Dow Jones Index going back until 1982:
If we look at the MACD technical reading on the bottom of the chart, we can see a very ominous setup. The Dow Jones Index high trend-line (upper black dotted line) is about 1,000 on the MACD. As of trading today, the MACD is at 1,761. However, when the markets crashed in 2009, the MACD fell to a negative 1,000+ points. So, as you can see, the Dow Jones Index has a long way to fall before it first gets to the “O” base-line.
Again, if you believe this time is different and you can’t see how over-valued the Dow Index is based upon the MACD technical, then maybe it might be prudent to allow a Doctor to take a Cat-Scan or MRI of the space above you neck.
That being said, I do believe the TOP in the Dow Jones Index was likely 26,600. While we could see a higher high on the Dow, it’s probably a slim chance. Regardless, the folks at the NYSE stopped providing investor margin debt information at the end of 2017 because it just wasn’t necessary anymore. I gather the NYSE assumes that when the markets implode, and along with it, the margin debt, then THE END IS NEAR: