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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 686.96-0.1%4:00 PM EST
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To: GROUND ZERO™ who wrote (34490)7/3/2012 12:57:18 PM
From: Nevada99991 Recommendation  Read Replies (2) of 220889
 
Just don't forget that the Y-axis of most charts is the dollar which is a variable not a constant. As the dollar becomes more volatile it affects chart patterns more. Thus, your conundrum of a terrible economy and charts that say we're going higher. Here are two fiat currency definitions to keep in mind:
Inflation - The Fed has printed too much money
Deflation - The Fed is about to print too much money
One thing that doesn't contract in a deflationary environment is debt. The western nations are massively overindebted. If there economies (and tax bases) shrink insolvency is certain. They will do whatever it takes to avoid that and the game is just beginning. Ben has made that pretty clear. Inflation will not drop below +2%. Just because the Dow goes up doesn't mean it's worth more. I could see the Dow rising while it's P/E multiple contracts along with it's buying power. The only way I can see to expand this economy is too shorten the measuring stick (devalue the dollar). I think your chart read is correct. The markets are probably going higher in nominal terms, though probably not in real terms.
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