In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:
- What The Heck Happened This Week?
- The volatility trade blew up
- How Much Farther Might The Market Fall?
- It was so overbought, that there's a looong way to fall
- Where Can Money Find Safety Right Now?
- Only in a very few places, as nearly everything is still at an overvaluation extreme
- What Should We Be Watching For Next?
- Look for the key longstanding correlations begin to break down. That's when the big crash will happen.
This week's Off The Cuff is a must-listen podcast.
In it, Chris and Charles deconstruct the price action of the markets this week — both agree that it (finally!) marks an end to the 7+ year "extend and pretend" unbroken rally in both stocks and bonds.
More importantly, they warn of the paucity of "safe" places for investment capital right now; as almost every asset class remains dangerously overvalued, and bank risk is on the rise. But they do identify the few areas where money is likely to flee — it will be very important to be positioned in these *before* everyone else tries to enter.
As for how much farther the markets may drop — whether or not there's another short-term rescue happens, both see prices ultimately falling much, much lower. As Charles observes:
I'm looking at a weekly chart of the Dow Industrial Average and I'm seeing we've hardly started a decline.
I mean, the MACD has just barely touched the first part of a negative cross. The Stochastic is only down from 100 to 86 — oversold' on Stochastic would be 20. The RSI (the Relative Strength Index)has fallen 60 — and again, oversold would be something like 30.
So the people who are thinking they're going to buy the dip and it's going to run up another couple thousand points… maybe. But the technical chart says this is ugly, and it's going to take a long time—at least a matter of weeks, if not a couple of months—to actually bottom out.
It's looking to be a really treacherous year for investors, because the trend has been broken.