So, transition to expanding chaos might be about to commence, bringing unprecedented volatility to financial markets. If so, then hyperinflationary madness is likely to move into overdrive, only further quickening the pace of the physical economy's shutdown. Confusion sown as a result in all probability will be off the charts.
Bailout fail leading to debt write down no doubt would entail a mad scramble for capital, while central banks do what they must to continue propping up the banking system and faking its solvency. Ensuing chaos further crushing credit market confidence could put core debt securities on course to experiencing an historic jolt reversing the decades-running bond bull market. As counter-intuitive as it might seem in an increasingly chaotic environment, gold could be in for a beating. Technically speaking, this likelihood quite appears in the realm of possibility. Yet whether subsequent to spot gold's prospective swoon new record highs still might be in the offing is a question better pondered with more certain sense of circumstance following a credit market convulsion whose likelihood is increasing as Europe's ever-widening insolvency appears on the verge of spiraling out of control.
Per the impact on the stock market resulting from an imminent scramble for capital, the alternate wave count put forward Friday might find wave c of the second "three" of wave (b) of B promptly unfolding and bringing the S&P 500 to retest its rising trend line off 1974 bottom. Then again, upcoming might still find wave c of a of the second "three" of wave (b) of B unfolding (much as was my preferred view Friday), while likewise bringing retest of the S&P 500's rising trend line off 1974 bottom and setting up over the period following a full display of the Elliott Wave Principle's "alternation guideline" as waves b and c of the second "three" of wave (b) of B subsequently develop.
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