Nifty Head & Shoulder pattern formation

Remembering The Summer Of 1929

Submitted by Jesse via The Burning Platform blog,

This is one of the best documentaries on the Crash of 1929 if you wish to get a feel for the times.   You may find it interesting to watch the whole thing below.I have posted the entire documentary twice before:  once, on the 80th anniversary of Black Thursday in 2009, and once before in December of 2007.

I remember the Summer of 1929 being described as unusually hot, with the stock market going up and down like a roller coaster, making investors and pundits almost dizzy.  That is, until the great push up to the very height of the market in early September.

It was the laissez-faire abuses of the 1920’s, the reign of supply side economics,  the institutionalized political corruption of easy money, an oversized,  overly influential and powerful financial/industrial sector that set the stage for the terrible Depression of the 1930’s.

It also gave rise to the many reforms introduced by the FDR administration.

Most of which have been steadily overturned, one by one, by the big money interests who care for nothing but themselves, and would do it again, and again, if allowed to do so.

Most of the scams of the moneyed interests are remarkably simple, and the same over time.  At least they are once you scrape away the jargon, the bells and whistles, and paid for policy theories of pedigreed prostitutes.

The titans of Wall Street are no smarter than many smart people who do much more difficult jobs and lead simple, honest lives. But they are driven, they are insatiable, and they are shameless.

Enough people are easily fooled in each generation by well scripted ideological PR campaigns, clever revisions and misrepresentations of history, and the steady drumbeat of slogans and propaganda to allow the same old scams and abuses to come back again.  And unfortunately even very smart and powerful and greatly advantaged people are always willing to do anything for money.

Here is a link to the transcript of this documentary.

Narrator: At sea and on land, everyone seemed to be making money. It was a stampede of buying. And major speculators like John Jacob Rascob whipped up the frenzy. He told readers of The Ladies’ Home Journal that now everyone could be rich. September 2nd, Labor Day. It was the hottest day of the year. The markets were closed and people were at the beach. A reporter checked in with astrologer Evangeline to ask about the future of stock prices. Her answer: the Dow Jones could climb to heaven. The very next day, September 3rd, the stock market hit its all-time high.

Ben Karol, Former Newspaper Delivery Boy: My father and I had an ongoing discussion about the stock market. And I used to say, “Pop, everybody’s getting rich but you. You know, you work so hard and you’re never going to make a nickel. All you do is you keep delivering these newspapers and that’s about it. The guy who’s shining shoes is in the stock market, the grocery clerk is in the stock market, the school teacher’s in the stock market. The teller at the bank is in the stock market. Everybody’s in the stock market. You’re the only one that’s not in the stock market.” And he used to sit and laugh and say, “You’ll see. You’ll see. You’ll see.”

Narrator: On September 5th, economist Roger Babson gave a speech to a group of businessmen. “Sooner or later, a crash is coming and it may be terrific.” He’d been saying the same thing for two years, but now, for some reason, investors were listening. The market took a severe dip. They called it the “Babson Break.” The next day, prices stabilized, but several days later, they began to drift lower. Though investors had no way of knowing it, the collapse had already begun

Narrator: In the weeks to follow, the market fluctuated wildly up and down. On September 12th, prices dropped ten percent. They dipped sharply again in the 20s. Stock markets around the world were falling, too. Then, on September 25th, the market suddenly rallied.

Reuben L. Cain, Former Stock Salesman: I remember well that I thought, “Why is this doing this?” And then I thought, “Well, I’m new here and these people” — like every day in the paper, Charlie Mitchell would have something to say, the J.P. Morgan people would have something to say about how good things were — and I thought, “Well, they know a lot more about this market than I do. I’m fairly new here and I really can’t see why it’s going up.” But then, when they say it can’t go down or if it does go down today, it’ll go back tomorrow, you think, “Well, they really are like God. They know it all and it must be the way it’s going because they say so.”

Narrator: As the market floundered, financial leaders were as optimistic as ever, more so. Just five days before the crash, Thomas Lamont, acting head of the highly conservative Morgan Bank, wrote a letter to President Hoover. “The future appears brilliant. Our securities are the most desirable in the world.” Charles Mitchell assured nervous investors that things had never been better.

Craig Mitchell, Son of Charles E. Mitchell: Practically every business leader in America, and banker, right around the time of 1929, was saying how wonderful things were and the economy had only one way to go and that was up.

“Running for President under the slogan “Rugged Individualism” made it difficult for Hoover to promote massive government intervention in the economy. In 1930, succumbing to pressure from American industrialists, Hoover signed the Hawley-Smoot Tariff which was designed to protect American industry from overseas competition. Passed against the advice of nearly every prominent economist of the time, it was the largest Tariff in American history. (at that time the US was a large export economy with a trade surplus).

Believing in a balanced budget, Hoover’s 1931 economic plan cut federal spending and increased taxes, both of which inhibited individual efforts to spur the economy.

Finally in 1932 Hoover signed legislation creating the Reconstruction Finance Corporation. This act allocated a half billion dollars for loans to banks, corporations, and state governments. Public works projects such as the Golden Gate Bridge and the Los Angeles Aqueduct were built as a result of this plan.

Hoover and the RFC stopped short of meeting one demand of the American masses — federal aid to individuals. Hoover believed that government aid would stifle initiative and create dependency where individual effort was needed. Past governments never resorted to such schemes and the economy managed to rebound. Clearly Hoover and his advisors failed to grasp the scope of the Great Depression.”

What side effects will U.S. rate hike trigger? Emerging markets, Europe will suffer - Analysts

Today central bankers, analysts and economists are gathering in Jackson Hole for their annual meeting. Two questions are on the top of the agenda: Will the Fed hike interest rates in September, and will the global economy sink if it does?
For months, traders, economists and various market players have been wondering whether Fed Chairwoman Janet Yellen will raise rates in September or wait until 2016. Ms. Yellen has decided not to appear at the Jackson Hole meeting this year, possibly because she's already sick of this endless question.
But she's partly to blame for that. For weeks, she went back and forth on the rate liftoff question. Sometimes she said the time was approaching, while after that she highlighted further economic recovery was needed.
Recently, the unemployment rate in the U.S. has been approaching low levels - at which workers' bargaining position could get strong enough to induce economy-wide wage increases - which are usually a crucial factor in driving inflation.
Since the beginning of the global financial crisis 2008, the Fed kept its "federal funds rate" (the rate at which the Fed lends to banks) at the lowest levels in history - between 0.0 and 0.25%. With interest rates offered to savers by commercial banks set lower than the inflation rate, wealthy people have complained about having their savings devalued, or even robbed of, as a side effect.
On the other hand, financial markets participants with the ability to borrow on margin have become cheap-money addicts. Besides, the central bank's policy of large-scale bond-buying (QE) between 2009 and October 2014, under previous Fed Chairman Ben Bernanke poured $3.5 trillion into the accounts of institutional investors. This avalanche of money had to be invested somewhere, and so QE's net result was a sustained equities boom, Deutsche Welle comments.

Risks for emerging markets

Two years ago, when Bernanke hinted at a nearing end of QE, emerging-market currencies got under a heavy pressure. Among the hardest-hit countries were Brazil, South Africa, Turkey, Indonesia and India, which since have been called the "fragile five."
Commerzbank analyst Lutz Karpowitz said in a report: "What made them especially vulnerable was their high trade deficits, which became more expensive to finance in 2013 because of slightly higher US interest rates and a stronger US dollar."
Since then, India's trade deficit has substantially decreased. Indonesia's one has shrunk somewhat too, while others have remained vulnerable.
For many analysts, Brazil is a concern. Over there, production and consumption are both in decline, and inflation is hitting double-digit levels. Russia has been extremely weakened with the rouble plunging due to the lower prices of oil. In Turkey, political uncertainty is putting the Turkish lira under pressure. The circle of unstable emerging economies is growing.
China deserves a special mention. The economic uncertainty connected to internal debt crisis in the second largest economy is threatening to infect its trading partners. The global economy is expanding less than expected, Chinese exports are declining, and Shanghai equity prices are have just started recovering after a grinding 23% drop.
The Chinese slowdown is affecting its partners: Dutch wealth management company NN Investment estimated that almost a trillion dollars has left emerging markets over the past 15 months.
Undoubtedly, Chinese or Brazilian problems have nothing to do with the Fed rate hike, but it would nevertheless intensify negative trends in EMs - because it could cause a great deal more money to be pulled out. This could trigger "something like the Asian crisis at the end of the 1990s, when countries would have to impose capital controls and protectionist measures" to prevent the collapse of their economies, chief economist at Assenagon Group Martin Hüfner said in an interview with DW.

Developed and emerging markets

Risks for Europe

Europe will not be hurt too much. Quite the opposite: the strong greenback has helped euro-denominated exports more competitive globally. However, Europe could feel the side effect from EMs.

Today the world has hardly any tools left in hand with which to face a crisis: interest rates are already at near-zero levels; stimulus packages like the ones launched in 2008 aren't likely either, since many national governments are already groaning under high debt loads.
The Fed is now considering the global environment which could soon include the EM rout and thinks on postponing the hike.
Yesterday, William Dudley, president of the New York Federal Reserve Bank, added fuel to the speculation that rates won’t lift off in September. At a news conference in New York Dudley said, “From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”
However, the strong data released earlier is quite convincing that the Fed may shrug off the turmoil overseas.
Data released yesterday showed that U.S. core capital goods orders showed the biggest increase since June last year.
Investors will now await the U.S. second quarter GDP later in the day, as well as a weekly report on initial jobless claims and data on pending home sales for July.
But above all, there is Jackson Hole in focus, with its questions and awaited answers.

Chinese government intervened to prop up stocks - sources

According to Bloomberg, China’s government intervened to boost the stock market today.
The authorities want the market to stabilize ahead of a September 3 military parade celebrating the World War II victory over Japan, said the people who asked to stay unnamed because the move was not public.
Beijing bought blue-chip stocks, according to one of the people.
This would explain that late rally in Shanghai, in which the index closed at 5.34%. It also suggests the government will keep propping up the market, if needed, until the WWII commemoration is over.
Elsewhere, Germany's DAX rallied 3%, while France’s CAC 40 and London's FTSE 100 were both up around 2.5%.
U.S. stock futures are expected to open higher on Thursday.
During early morning hours in New York, the blue-chip DJIA futures surged 195 points, or 1.2%, the S&P 500 futures added 21 points, or 1.1%, while the Nasdaq 100 futures rose 60 points, or 1.42%.
A day earlier, the Dow jumped more than 600 points, the S&P 500 soared 3.9% to bounce off the correction territory, while the Nasdaq added 4.2%, boosted by positive economic data and dovish comments from a key Federal Reserve official who said a rate hike in September now looks "less compelling".

Peak gold ahead, but it will hardly change anything for a bullion - analysts reflect

26 August 2015, 21:02

Less supply usually means higher prices and more profit. The story is different for gold.
With bullion near a five-year trough and investors getting rid of the metal they hoarded for about a decade, some mining companies are losing money and output is set to drop for the first time since 2008.
However, history shows that the cutbacks will hardly have any impact on the market.
When mines last reduced operations, bullion still dropped as much as 29 percent into a bear market. Even surpluses in 2010 and 2011 didn’t stop prices from touching records.
Global mine output jumped 24 percent in a decade to a record 3,114 metric tons in 2014, as firms dug more to exploit a 12-year bull market in prices, according to data from industry researcher GFMS.
Almost 65 percent of bullion that’s mined or recycled is applied in jewelry and industry, and the rest is sold to investors.
In September 2011 gold has dropped 40 percent from a record $1,921.17 an ounce as investors lost faith in the metal as a safe haven. Expectations of higher U.S. rates and a robust dollar pushed the yellow metal to $1,077.40 on July 24, the lowest since February 2010.
Even with today's rally, prices aren’t high enough for some producers, says Bloomberg. About 10 percent of the world’s mines have lost money, according to London-based researcher Metals Focus Ltd.

Associated Gold Mine, Kalgoorlie, Australia, 1951

Many analysts consider that output will start dipping as soon as next year.
Polymetal International Plc. Gold Fields Ltd.’s CEO expects a big fall from about 2018, while HSBC Holdings Plc forecast the drop will be 25 tons this year.
With prices at about $1,100, production probably will drop 18 percent by the end of the decade, Metals Focus estimates.
This will happen probably because the industry, on average, requires about $1,200 to break even when all costs are considered, says James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2 billion Natural Resources Fund.
Barrick Gold Corp., the world’s largest producer, will trim output in the next few years, Moody’s Investors Service said earlier, after lowering the company’s credit rating to one level above junk status.
Trimming output by 5 percent would help balance the market and support prices, according to Mark Bristow, CEO of Jersey, Channel Islands-based Randgold.
Meanwhile, HSBC predicts that the yellow metal will recover 19 percent by 2017, partly as supply tightens.
Barclays considers that the implied gold surplus, which estimates mine output and recycling vs demand from jewelers, manufacturers and investors, will fall to 999 tons in 2016, the lowest since 2012, after reaching 1,476 tons in 2013.
Cutting production may take a while to influence prices because demand can be faced by recycling jewelry and using metal held in vaults, according to Georgette Boele, an analyst at ABN Amro Bank NV in Amsterdam. She predicts the yellow metal to touch $800 by December 2016.

From January 2008 till now, over 300 companies have shed 90% value

Mumbai: Shares of DLF Ltd, Financial Technologies (India) Ltd (FTIL), Suzlon Energy Ltd, Jaiprakash Associates Ltd, RelianceCommunications Ltd, Moser Baer India Ltd and Karuturi Global Ltd have seen an over 90% erosion in value since 2008, making them major wealth destroyers in recent times.

BSE’s benchmark 30-share Sensex is up 32.85% since 8 January 2008—when it touched a then-closing high of 20,873.33 points—to 27,730.21 points on Monday.

That 2008 high was the peak of a bull market that started in mid-2003, although investors didn’t know it then. It was too good to last.

By 21 January, the mood changed dramatically and the BSE Sensex plummeted 7.4%—its biggest single-day decline ever—as concerns over a possible US recession overwhelmed the market.

There are 303 such wealth destroyer stocks, which have shed more than 90% of their value since then, and 219 of them are mere penny stocks now with the current price at Rs.10 or less, after a much-hyped past.

Then again, it isn’t all bad news. There are 469 stocks that have returned more than 100% in the same period.

The erosion in value was flagged on Twitter by stock trader Prashanth (@Prashanth_Krish), among others, on 16 June: “On the day Nifty hit its high for 2008, Koutons traded at Rs.1,000. Today, it trades at Rs.2.45.”

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Market experts said most of the companies that have lost value are those that rode the wave but lacked sound fundamentals. While some had too much debt on their books, others lacked liquidity or a crisis engulfed them.

Investors said it was difficult to spot these stocks initially. But, over a period of time, piling debt and huge volumes without corresponding change in fundamentals were key to identifying such wealth destroyers.

Bank nifty Head N Shoulder pattern Formation