Stock Index Timing

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MARKET VIEWS .TV INTERVIEW CHART PAGE

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Click on the following links for the chart reference to other interviews by Ike Iossif of Market Views .TV.
Aug, 2007
July, 2007
June, 2007

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The following charts are for reference to the interview of George Slezak by Ike Iossif of Market Views .TV on July 14, 2007.

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Last month in our interview, I pointed out the similarity of the comparison of the last four years CRB Continous Commodity Index to the four years going into the 1929 stock market top. I suggested we could have a few more months of commodity market rally, but I offered caution that we could have a severe commodity market correction before the end of the year.

From Commodity Index Timing .com

The following is a comparison of the current CRB Continuous Commodity Index compared to the Dow Jones Industrial Average in 1929. The chart centers the current high in the CRB Continuous Commodity Index index to the high in the Dow in 1929.

My conclusion from reviewing this chart comparison is that the CRB Continuous Commodity Index could experience a violent correction in the next few months.

In this interview I would like to ask your subscribers to consider the following comparisons of the Hang Seng market to the bubble top pattern of 1929.

From Stock Index Timing .com

The following is a comparison of the current Hang Seng stock index compared to the Dow Jones Industrial Average in 1929. The chart centers the current high in the Hang Seng to the high in the Dow in 1929.

My conclusion from reviewing this chart comparison is that the Hang Seng Index could experience a violent correction in the next few months.

My conclusion from reviewing these chart comparisons is that the Commodity and world wide Stock Indexes could experience a violent correction in the next few months as the result of an "Asian Contasian".

As of Friday's close, July 13, I have recommended, for most aggressive traders, to move to 100% SHORT the stock market in my Stock Index Timing .com web site and in my Commodity Index Timing .com web site I have recommended exiting commodity index funds and moving those funds to cash.

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The critical longer term issue of deflation versus inflation will unfold over the coming year, and as the chart comparison below suggests, a period of inflation, like 1978 to 1983, is actually long term bullish for the stock market compared to the period of deflation like 1937 to 1943, and the Japanese deflation of 1996 to 2002, which is likely long term bearish for the stock market.

From Stock Index Timing .com

The top chart in black is the NASDAQ placed so the low in 1974 overlays with the 2002 low in the NASDAQ chart in red. The lower chart in blue is the Dow Jones Industrial Average and the low in 1932 is placed to match to the low in NASDAQ chart low 1974 and 2002. The bottom chart in green is the Japanese NIKKIE with the low in 1992 centered to match the NASDAQ low of 2002 and the Dow low in 1932.

By matching the 2002 low with the 1974 low and the 1932 low (and NIKKIE 1992 low), the result is the current NASDAQ matches to the time period of the inflation surge of 1979 to 1983, which would imply a rising stock market as the inflation is finally brought under control. And, it matches the period of DEFLATION in 1937 to 1943, (and Japanese deflation of 1996 to 2002) and implies a period of falling stock market prices along with the period of general price deflation.

I am NOT trying to make a forecast which way the issues of inflation or deflation - stock market bull market correction or extended bear market get resolved. I see the coming first phase to be the same under both alternatives - a commodity bubble bust tied to a China bust and a stock market decline into the end of the year.

I believe the extended market scenario will be a function of how the Fed responds, and unfortunately, so far the current Fed leadership doesn't seem to have a clear view of the recent past and current condition, and so I am unsure they will be prepared to respond to the market mess I see on the horizon. But, maybe, their inability to act may end up being the best course of action.

I believe if you take action to conserve capital now you will be in the best position when we get to the crossroads I expect at the end of the year.

Good luck and good trading!

George

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