“Moving Average Bounces Getting Weaker And Weaker:
Mish Warns ‘Major Carnage Coming'"
Authored by Mike Shedlock via MishTalk
"Those 50-week exponential moving averages will break. When that happens I expect a quick plunge to the 200-week EMA. Will that be the end? If I am right, that's not even close.
I expect all the gains back to 2007 to be wiped out. To visualize, we need to look at monthly EMAs. With the exception of the Nasdaq 100, a decline to what is now the 200-month EMA would take us to where I believe we are headed.
Superbear? Does this make me a superbear? Hardly. John Hussman, who does excellent technical and fundamental work is far more bearish: "I Expect the S&P 500 to Lose 2/3 of Its Value" said Hussman in January. My charts suggest about 50% except for the Nasdaq.
Pension Fund Disaster: The sad part of this story is that despite the biggest bull market in history, pension funds are extremely underfunded. Whether the decline is 33%, 50%, or 66%, pension funds will get crushed. Heck, given 7% per-year assumptions, even flat returns for seven years will destroy many if not most of them. For discussion, please see "Global Pension Gap Expected to Hit $400 Trillion: US Leads the Way."
By the way, asset bubble bursting episodes are anything but inflationary. If you think massive inflation is right around the bend, please think again: "Velocity of Money Picks Up: Inflation Coming? Stagflation? How About Deflation?”
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