The ongoing revolutions in wave of 5 of 5 of the hyperinflationary Armageddon
In October 2010 the beginning of wave 5 of 5 of the hyperinflationary collapse (‚rocket mode') was officially proclaimed (in the premium area). I had been waiting for this monumental event since 2006, as I expected it would dramatically change the markets & world... Since October 2010 I am probably the biggest bull on the planet. To my knowledge, no other forecaster has been able to anticipate the tremendous upside pressure in the inflation markets, i.e. in the (Western) stock markets & the entire commodity universe since last summer. In this article I'd like to discuss the background & implications of this and present an interesting sentiment indicator, namely the analysis of „Google Trends".
Wave 5 of 5 of the hyperinflationary Armageddon is characterized by monetary expansion & inflation getting out of control, so that the inflation-protecting markets (stocks & commodities) are sky-rocketing. Historically equities (!) are the best inflation-protector & not commodities, as is often falsely assumed. The real-world global inflation rate apart from massaged official numbers has now risen to the highest level in 30 years, which has already triggered massive civil unrest in the poorer countries. War & high inflation are always Siamese twins. The geographical focus of the ongoing revolutions was determined by the 1/4/11 solar eclipse which was visible over North Africa & Middle East (as discussed on January 2nd in the premium area). For many years I have been projecting the year 2011 as the next peak of the global martial activity - and revolutions being the most productive use of this energy. The exact time trigger was the square (angle of 90°) of the revolution planet Uranus to the Galactic Center (GC) in January 2011. The GC is extremely important, yet it is not duly taken into consideration by my financial astrology colleagues. The 4th harmonic (0°, 90°, 180°) of Uranus & GC is the global revolution cycle (duration: 21 years):
- 1947-48: revolutions in many countries (e.g. China), post-war order established
- 1968: A whole generation was named after this year of revolution.
- 1989: biggest political revolution since WW2
- January 2011: biggest political revolution since 1989
In October 2010 I forcefully warned the premium subscribers of Amanita Market Forecasting that we had just started a long period where the bears will be hunted down mercilessly, so that selling short is strictly forbidden (except for daytraders)... Luckily, the Amanita subscribers have benefited a lot from this extreme & extra-ordinary call: between November 2010 & February 2011 the benchmark index S&P 500 did not decline longer than for a single (!) day (allowing a tolerance of some tenths of a percentage point). The US stock indices, the DAX & commodities (as measured by the RICI index) have risen with an annualized rate of a whopping 60-80%. This is historically unprecedented, a silent revolution in the markets.
The beginning of wave 5 of 5 was almost precisely 76.6 years (37 x 108 weeks) after 1/31/1934: on that date the dollar was devalued by 40% against gold. 76.6 years later was 9/1/10 & history does repeat like a clockwork: fiat money started to depreciate dramatically against real assets almost exactly with that date. The spearhead of the revolution against the fiat money fraud was silver which nearly doubled. The 76.6 year has been successfully used for many years with excellent results (Link1, Link2).
Very few financial analysts are aware of the basic premises of technical analysis. One premise not recognized by 99% of the analysts is that the money in the market remains approximately the same. I try to illustrate that claim using the example of mutual fund cash levels. Let's assume that the levels are very low, usually a bearish omen. However, because of the printing press running day & night in wave 5 of 5 more & more money is moving into these funds, which is then flowing into the markets. Therefore the markets may continue to rise even with theoretical cash levels of 0%... against all historical examples.
So in wave 5 of 5 one has to be very careful with all monetary indicators: they may work less, not at all or even 180° different compared than in the past. That's why sentiment indicators are getting more important, especially those which are not widely watched. One of them is "Google Trends", yielding good results. "Google Trends" is an excellent indicator telling us which guru the crowd is currently adoring. Then you simply apply the basic rule of contrary analysis that the crowd is almost always wrong (e.g. following the wrong guru) - and bingo, you arrive at a likely direction for the markets. The spikes in the "Google Trends" charts are decisive because they are indicating a run of the crowd:
- Charles Nenner (Link): He was listed by „Google Trends" the first time in the summer of 2006, after an interview calling for a crash in the fall of 2006. Result: the stock indices sky-rocketed and saw an upside "crash" between July 2006 & February 2007. The year 2007 was good for Nenner, but at this time nobody cared two hoots about him. In late August 2010 („A" in the chart) we see the last spike in the Nenner chart (the first time also in the News Reference Volume) where he dared to predict a Dow Jones of 5,000. Result: on the day of the interview the stock indices bottomed out & staged an even bigger upside crash than in 2006.
Nenner's approach is severely flawed, e.g. "the more indicators (200!), the better". The premise ‘the more complicated, the better' was never correct & is getting even less accurate because of the ongoing Galactic development. The markets always try to disappoint the crowd. It was rather easy to be very successful with market statistics as long as it was still rather unknown (approximately through the 1980s). However, today with thousands of statistically-based trading systems in the markets & powerful market software available for a few thousands of dollars or euros the opposite is now true. Therefore ‘playing dumb', ‘focusing on just a handful of factors' & ‘creative market calls far from empirical patterns' are the dictate of the moment.
- Gerald Celente (Link): He suddenly became very popular in late 2008 (when the crisis was more or less over). Since that time his predictions have been a valley of tears. Probably the global financial & political system is rather safe as long as Celente is so popular.
- Bob Prechter (Link): It's by far the best buy signal of all when this perma-bear gets popular. The first spike ("A" in the chart) is dated 2/27/09, just a few days later the biggest bull market in our lifetime started... Another spike was in the days before the important 2/5/10 low. However, the biggest spike was in early July 2010, right at the annual bottom of the US indices...
- Marc Faber (Link): Mark Faber experienced his popularity all-time high in May 2010 („F" in the chart) after warning that, "China may 'crash' in the next 9-12 months". Needless to say that just the opposite happened: the Hang Seng Index bottomed out in May & exploded by +30% over the next 6 months.
It's the ultimate nightmare for every market forecaster to have a "Google Trends" spike. From that day on it should be easy to make a big buck by betting on the opposite of the trend called. Being prominent according to „Google Trends" means one has become part of crowd madness. Thus the daily prayer of the analyst should be, "Let this Google Trends cup pass from me." ;-) From an ontological point of view it's clear that the purpose of the markets is to separate the trader/ investor from his money.
My sympathy goes to an excellent US cycle analyst (not listed by Google Trends) that was one of my key teachers at the turn of the millennium - I am very grateful for that. Since the summer of 2010 he has delivering permanent top calls, destroying his excellent reputation acquired over many years. Very few analysts realize that neither fundamental nor technical nor astrological nor cyclical factors continue to work as they did in the past. Of the few who realize that permanent character change in the markets (usually by using statistical methods) only a fraction is able to psychologically bear the consequences, e.g. that decades of research may be partly for the birds. More on the galactic acceleration of time in the next free Amanita newsletter...