Stock Market Is Now In A Correction - Mike Swanson (05/16/12)


I came up with the idea a few months ago of a "Stock Market Crash Index" from 1-10 and Green, Yellow, to Red. In my view the market has been yellow the past few months because it is has run up so much and it is best to buy after corrections. Now though I think it's in a condition red, not because I think it is about to crash, but because it is in a correction fueled once again by the Greek debt crisis, which is rapidly deteriorating.

The way things are evolving if nothing changes Greece will default in July. The markets are correcting into that and I expect once Greece finally does default we'll get another bottom. In fact at some point after the bottom I still expect gold and commodity stocks to lead the market.

To me this isn't 2008, but something more akin to 1998 or 1997 when bad debt news broke out in Russia and Asia and caused big and scary corrections in the US stock market and markets all over the world. Once these scary events played out though the Fed lowered rates and pumped money into the system.

Right now the European union is not going to print more money. They want Greece to collapse in punishment for its disobedience. They are sentencing the Greeks to economic death.

This is the way international bankers play.

Once Greece blows up though they will print money like mad to bailout Spain and Italy - nations that are simply too big to fail. They will use the punishment they inflict on Greece as a warning to the other European nations to stay with the program. It's pure power politics.

But the key is after the Greek crisis plays out the next few years will be dominated by more money printing. And that will help gold and stocks in general. But in this moment of time it is fear and that fear will build. But people get so scared and worked up that they can't see the future.

I got stopped out of my positions awhile ago and plan on buying big once this correction ends. Will be watching things closely over the next few weeks.

for more:

Podcast: David Frazier Who Gave a Market Sell Recommendation on April 1st Sees Opportunities in This Market - Mike Swanson (05/16/12)

Podcast: Victor Riesco Talks About the Current Stock Market Action and His New Signals System - Mike Swanson (05/09/12)

Podcast: Investment Author Michael Panzner Gives His Updated Views on the Financial World - Mike Swanson (04/23/12)

Podcast: Reggie Middleton On How AAPL Now Has a Market Cap Bigger than All Other Retails Stocks Combined - Mike Swanson (04/20/12)


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