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It is readily apparent that present day markets have built across-market dynamic hedging machinery with a hair trigger. ?This trigger is designed to launch unimaginable trading volumes in less than 250 microseconds, across global exchanges, operating under different & still uncoordinated rules. The activation could be any number of events but my sense is it will stem from the dramatic contraction in money supply. Despite massive central bank actions, money supply as measured by MZM, M1, M2 is still de-accelerating and in the case of the difficult to obtain M3, is contracting. All of which is presently going unheralded by the mainline media


We are nearing a ‘phase shift’ in what I will refer to as the energy level of the markets. Elliott Wave practitioners would refer to it as a ‘higher degree pivot’. W D Gann practitioners would call it a Gann Cardinal. Economists call it a “Tipping Point”. I call it a ‘Critical Point’ or ‘Chaotic Transient’.
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5 Responses to “Flash Crash Omen”

  1. Bobby Says:

    Hello I just found your blog and it is interesting.

    I wanted to ask – are you of the opinion that the contraction of the money supply will lead to some hard times for us in America – and even globally?

    Is it possible we will see a significant downturn in the stock market and the economy as a result? What are your thoughts on a crash occurring in 2010?

  2. mike Says:

    This is a very good blog. In my opinion a crash is imminent based on world news and fundamentals however governments around the world are trying desperately to avoid such a downturn. It would be nice to be a fly on the wall for the G8 and G20 summit in a couple of weeks. They will be plotting how to pass on this mess to the next guy to take office. The money printing presses could run out of paper!

  3. Jeff Pierce Says:

    I believe we're heading much lower, but I'm not going to bet the farm on it. I don't want to get to bearish because the market can surprise us. All I plan to do is follow my indicators which are conflicting right now. Short term bullish/Long term bearish. I'm holding a few shorts now and will add when short term goes bearish or cover when long term goes bullish.

    As far as the money supply goes, that goes w/o saying it's going to cause our economy to stagnate or go into a deeper recession. When you add in unemployment…things can get real ugly. I don't care what the numbers say tomorrow…people are hurting out there.

  4. Merc Says:

    FWIW, I basically concur with you Jeff. Short term bullish potential but positioned for long term bear market.

    I thinking we get a big move up tomorrow and Monday that is the mother of all short squeezes.

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