There has been absolutely ZERO change in my very bearish forecast throughout all of 2008 and, once again, we’re moving into a new POTENTIAL crash zone 9-24 through 10-7ish.
The idea that investors ever thought the enormous mortgage related losses—that must be realized by someone at some point—could simply be swept under the rug was something that astonished me this entire year. The FED gave investors numerous opportunities to lower leverage, hedge, or exit the markets completely…but they just continued to pick bottoms and throw good money after bad. You would think investors would have been much more cautious given the fact that this debacle is much different than previous debacles in that the problem (the catalyst) is not something that can be addresses with a single recapitalization/merger/takeout/ etc. Unlike 1998, when LTCM was a singular problem that could be addressed by a singular solution, this mess involves almost everyone in finance and it, more importantly, involves problems that cannot easily be quantified as far as the total loss or longevity of the bleeding. Bottom-line…weakness into 9-18 followed by a sharp bounce into 9-23 followed by a FULL-BLOWN CRASH 9-26 THROUGH 10-7.
Crude Oil Speculative Bubble to be Followed by a Surprising Price Collapse
As crude oil melted up into the 147 level and the talking heads said we were headed for 200-300 dollar per barrel oil, I sent you all a special report telling you that the BAM Crude Oil Model was expecting a total collapse of prices with a first-stop target of 87.75 into September of this year followed by a return to the 36-47 dollar level over the coming 24 months. To prove that conviction I chose the DUG as my #1 long-side recommendation and told you all that the model expected to see that ETF double in price (from the 38 level) as we trade into the end of 2008/first quarter of 2009. Crude has now traded down to 90.20 coming less than three dollars from that forecasted target price and although I do see a sharp rally into the 9-18/9-21 period, the first decent lift we see will place crude oil in a position to trigger one of the most vicious sell signals on the board which should create a mind-boggling collapse into year-end.
Deflationary Spiral Followed by “Last-Gasp” Hyper-Inflation
As new data has been generated throughout this trading year, I’m now comfortable passing along information about the coming seven years. The outlook for price action remains unchanged i.e. a return to the INDU 6565 level followed by a return to the INDU 3971 level, but what has become more clear in my work is a potential timeline for revisiting those price levels. My work is now suggesting that we will revisit the 6565 level during 2009/2010 (if we don’t crash to 6565 during the Fall of 2008) and that we could revisit the 3971 level as early as 2010!
Full report coming soon