Home > Uncategorized > Brief Update: 2010/01/22: Equities Fail on ‘Politico’-Economic Shots: 1970’s Politics are Back With a Vengeance

Brief Update: 2010/01/22: Equities Fail on ‘Politico’-Economic Shots: 1970’s Politics are Back With a Vengeance

▪  And that is not really so very surprising, as the ‘politics of envy’ always surfaces as the economy and markets slide into a trough after the latest mania lapses. And the March NASDAQ 100 future stalling out at no better than Tuesday’s vigorous retest of its 1,890-93 key topping action from last week significantly informed our view that all of the equities could be in trouble in spite of some recent nominal UP Breaks in weaker sisters. DJIA also couldn’t hold to its 10,600 area UP Break, and has now capitulated below its Tolerance at the 10,423 selloff low hit on the last trading day of last year. While they may rally in the near term, the tops are now likely in for a much more major correction than anything seen since July.

▪  And as equities are a key driver of trends in other asset classes, that was going to be a very important influence on whether government bonds and the US dollar maintained their current resurgence, as well as whether February Gold held onto its key 1,125-17 support for a push higher; and the latter has now failed and is also nearing its December sharp pullback lows much as the equities are also headed for significant lower supports. Whatever transpires, as long as US Dollar Index holds no worse than its .7700-.6650 UP Break and Tolerance, it is still likely headed for more substantial .7950-.8000 interim resistance, just as ‘govvies’ are headed higher if equities sag, even if long term rates end up much higher later.

▪  In addition to all that, the return to 1970’s-style politico-economic environment is something we predicted five years ago in “1970’s Redux: Son of Stagflation” (http://bit.ly/VRJby) (published by affiliate ITI)…

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