Categories: Base Metals / Energy / General Market Commentary / Precious Metals
Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

Benchmarks to False Moves - The Constant Cycle of Change by Martin Armstrong

QUESTION: Mr. Armstrong; You said China will become the financial capital of the world after 2032. That means the US must decline. At the same time, you have been consistent in forecasting a bull market in the U.S. share market when everyone else keeps calling for a crash. Are the two connected in some way?
Thank you
HS

ANSWER: Yes, these two events are interlocked. All markets function very distinctly. They move like a pendulum. The famous one in the United Nations building with the classic physics experiment, Foucault’s pendulum, is propelled by the rotation of the earth itself. While it had long been known that the Earth rotates, the introduction of the Foucault pendulum back in 1851 was the first visual proof of the rotation of the Earth in an extraordinary easy-to-see experiment.

The pendulum remains in a constant oscillation relative to the universe. As the earth rotates, we can see that it does so around the constant path of the pendulum swing.

Bulls-BearsThis applies to market behavior as well. There is a constant oscillation to everything we call our Benchmarks. They remain constant within the universe and everything else rotates around them. The energy that maintains the cycle is the constant oscillation between two extremes. The further it swings in one direction, the greater the energy moves in the opposite direction.

This is the very essence of how everything moves. This is the creation of energy to keep things going from the instant of creation also known as big bang. Personally, I do not believe in just a simple big bang. I believe after big bang; the expansion will stop and then reverse and move back toward the point of origin. Then it will explode outward once again. I do not believe it was a one-time event since energy can neither be created nor destroyed – only transformed between states.

Now apply this to markets. The real energy within a market is always to trap the majority, for then they lose money and it forces them to cover their position. If 90% of the people are long, then any news can set off the collapse. If you scare the majority, there will be no bid when you try to sell, which results in a flash crash. Likewise, this current rally in the Dow from 2009 has been the most bearish in history. The majority of analysts still keep calling for an inevitable crash. Retail participation still remains near historic lows.

You cannot get a crash of major consequence as long as the bulk of the people are not invested in the market. Here you see how the market ALWAYS makes a false move just before it makes the real move in the direction of the underlying trend. At each correction, the emotions run high and people ALWAYS expect whatever trend is in motion will remain in motion. Hence, shorts build up and then they are compelled to cover and that gets the rally moving.

To continue reading please click link https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/benchmarks-to-false-moves-the-constant-cycle-of-change/