The Brains Trust - 2016, page-13394

Good article Frank. I agree with it. The crap is about to hit the fan with a major market correction.

My long term target on my bearish butterfly pattern on the Dow, the year long reversal pattern I've been posting about since April or so is 19,162. Although it needs a bit of wiggle room of 3% +/-.

However I couldn't see a pathway of how we get there and then a catalyst for a market collapse. I can now. My Dow target has come into play with the spike up this week to 18,848, just 300 points or so away. We could see a further spike and reversal as early as next week.

My thesis has been that this recovery since 2009 pumped up on liquidity and low rates needs to wash out before a new long term bull can commence. We now have interest rates likely up in Dec plus Trump bringing inflation expectations. The malaise of recent times has now changed and we have a new paradigm. Bond market down with rates up should see high asset prices (shares, sydney houses etc) shortly start coming off.

Trump has never run govt or anything close to it. After the initial euphoria of markets is over, I can easily see a year of chaos as he tries to set up a govt and churns through various advisors whilst the media death-ride him for every error and mis-step. After that his economic changes may start to kick in and he hopefully has a successful presidency and we can get a longer term multi-decade bull market.

But the Dow index is now spiking up, shorters being forced out, everyone bullish and conditions for a major correction falling into place with a blow-off top.

Updated Dow weekly Butterfly chart below. Point D is my target top which I thought would occur end of July, interim target was hit then instead. Now stretched in time, but Primary price target the same.