Armstrong Economics Blog/Understanding Cycles
Re-Posted May 25, 2020 by Martin Armstrong
QUESTION: Mr. Armstrong, you have been targeting 2021 into 2022 as a critical time. Do you think this is unfolding faster than expected, or is this yet another sucker rally to get people all trapped in again on a bounce and then slaughter them? I find it curious how people get so bullish at every high and it smells that way now. What do you see in the near-term? I saw Socrates traded the rally in gold very good, but the ratio just shifted and it did not make a new high. It looks like weakness is coming back. All these people clamoring that they missed the NASDAQ rally look like they will be separated from their money really soon. What do you think?
ANSWER: You have to subscribe to Socrates for each particular market. I do not have the time to comment on every single market and you cannot make a comment of the Dow and apply to another index any more than gold applies to silver or platinum. They are all different. Socrates is there for a reason. It is objective without bias and is not written by any person – it is totally computer generated which is a good thing in times like this. We all have our prejudices that can get in the way of objectivity. That is why people sell the low and buy highs.
We definitely have to be careful here for it is true that only fools rush in where wise men dare not tread. With all the chaos in the world, these people who think they missed everything with the NASDAQ rally merely illustrates how naive they are to even think the market can rally from here with no problems because some states are opening up. They will simply become the fuel for the moves ahead.
Those are the people who inevitably buy the high because they get so caught up always at the top. The pattern which seems to get the emotions flowing the most is always the Knee-Jerk Reaction before the high. This is often the strongest type of move just before the high which sucks them all in at the top thinking this is it and here we go. They want to pretend to be investors, but then they want to really trade every move.
When we look at the German DAX, there we have elected ALL FOUR Monthly Bearish Reversals from the February high but we also elected a Quarterly Bearish Reversal at the end of March. This is a clear warning that we have a very serious shift in the trend moving forward into 2022. We have not elected any Quarterly Bearish Reversal in the Dow, there is obviously a major shift in trend within the US v externally even with the lockdown.
We are NOT ahead of schedule. June remains a Directional Change and July is the next key target. We then have the 2020 elections coming and that will have a major impact upon the confidence behind the dollar into 2022.
Nobody is capable of forecasting this type of market from a gut perspective. This is the entire reason you need to look at Socrates per market and not assume anything. This is something that cannot be judged even fundamentally because there are so many things changing only a fool will assume they can see the future reducing everything to a single cause and effect.
So far, there is nothing that suggests the trend has accelerated. The swings are still within historical movements. The NASDAQ is different for its low was 2002 not 2009. Obviously, you cannot apply the same outlook to the NASDAQ as you see in the S&P500 or the Dow. To each its own, as they say.
We are creating a new index with 30 stocks to reflect the Paradigm Equity Shift. We are working on a special report to cover this event since it is the first time it has taken place since the 1930s.