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Preparing For The Next Bear
Gary Savage: So with the advent of global QE, and zero interest rates, have central banks unlocked the key to perpetual bull markets? Let’s just say, I doubt it.
They have managed to stretch some of the multi-year cycles, and hold off the bear much longer than most have anticipated, but I don’t think they have discovered the secret to infinite prosperity.
As I said, the implementation of global QE has stretched some of the longer term cycles, and that is the first thing I’m going to explore in this article. Prior to 2000 there was a very clear four year cycle in the stock market. Roughly every four years stocks would move down into an exceptionally vicious decline, usually associated with either a recession, or some kind of financial debacle.
After 2002 central banks, in their hubris, decided that they could abort the normal business cycle by adjusting interest rates to zero and printing an infinite amount of currency units. At that point the four year cycle in the stock market morphed and evolved into a 7 year cycle.
As you can see in the next chart, it’s getting very late in this seven year cycle, so we can probably expect the top sometime this year.
From this point on I’m going to convert to the chart of the NASDAQ as technology is driving this bull market, and the chart of the NASDAQ will tell us when to expect the top.
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Source: http://marketdailynews.com/2015/03/16/preparing-for-the-next-bear/
