The price of Crude oil over $60/bbl, Gold over $460/oz, the national debt growing geometrically, an historical 11 consecutive interest rate hikes by the FED, terrorism and mother nature wreaking havoc across the globe, a housing boom bubble, and commodity prices at historically low levels (inflation adjusted). It sounds like the doom and gloomers have plenty of ammunition for their deflation – depression scenario. Even most of the EW technicians are aiding their cause, by labeling the 2000 – 2002 decline in the stock market as just leg A of an ABC supercycle crash, with leg B being the current advance from 2002 – 2005. I don’t buy any of it!
Crude has risen in price due to a sudden increase in demand from China, and the lack of refineries to fill that demand. As soon as demand levels off, so will the price of Crude, and it will go dormant for another 20 years, like it did in the 1970s. Gold is not a monetary metal, provides no instrinic value other than for jewelry, and does not even pay interest. It has been caught up in the speculative frenzy of Crude oil.
The national debt is a problem, and we usually have this problem until there is a huge economic expansion and budget surpluses like in the 1990s. The FED is constantly tinkering with short term rates to modify the affects of inflation on the overall economy, nothing new. Mother nature runs in cycles. As for terrorism, it has been around since the 1970s in Isreal (PLO), and Ireland (IRA). Only now, there is another cause for another group of fanatics. There will always be fanatics and there always have been. Commodity prices at historic lows (adjusted for inflation). How about automobile prices, adjusted for inflation or the hourly wages adjusted for inflation. I would think they might be at historic lows too.
Finally, the stock market. In the entire history of the US stock market 1885 – 2005, not once has an 80% decline in value not ended a super cycle. Not once has an 80% decline in value, witness a lengthy rally unfold only to decline to lower levels. Not once, not ever! So why should this time be any different? It shouldn’t! I’ve added a 6 year chart to the photos section on the COMPX. It displays my wave count during the 2000 - 2002 supercycle wave. It is very clear that the supercycle ended in 2002. Quite frankly, I am astonished anyone could see it any other way. Sorry, I’ll come down from the pulpit now
Short term: the correction continues from the August highs. Wave C is progressing gradually, and I’m expecting a major low (buying opportunity) in the next few weeks. Will keep you posted.