Posted Jan 9, 2014 by Martin Armstrong
At some point we will experience a Cycle Inversion meaning the targets remain the same, but what we get is the opposite event. Why will this INVERT? At some point the THINKING process must flip whereas the FLIGHT to quality has been traditionally people sell private assets and run to government paper. But what happens when government is the problem? Capital will start to flee from government to the private sector assets. Although the USA did not default or even suspend its debt during the 1930s, the contagion affect from Europe still impacted the trends within the United States. Here we can see that the spread between AAA corporate paper and government paper began to narrow as people realized that government debt might be a problem. The City of Detroit defaulted back then as well,
The timing targets will not change – we just get the opposite event. I have demonstrated how the fixed cycle in gold produced highs going up and then the same cycle produce a low by 1985. We achieved a similar even on the ECM in 1987. The turning point came precisely to the day, but we achieved the LOW rather than the high. That enabled us to forecast that the low was in place and new highs would be seen by 1989.
What is possible currently is that if the share market backs off and moves into a February low, then a rally into late Summer is likely with the Fall correction. That could continue into a low for 2015.75 and this would suggest a possible cycle inversion meaning the flight to quality reverses post-2015.75 and instead of government debt, we see capital move into private assets. However, a high in Feb reverses the outcome.
The question that will need to be answered is what happens post-2015.75? We will go over this at the conferences. The traditional Flight-To-Quality being a rush to government paper may be the opposite so we see a rally as the flight unfolds with government paper. Even gold rallied with the downside of the ECM dramatically. It experiences a tough of the flight to quality.
These events are determined not by OPINION, but by the correlation of how all markets are responding. This produces a movement that is unified on a global scale. This is part of understanding who everything is connected. As long as the Dow does not exceed the December high, we cannot rule out a February low. That low may not be much to write home about. The depth is irrelevant unless we elect Weekly Bearish Reversals.