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Posted by Larry Edelson: Uncommon Wisdom

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There’s no question in my mind that in the years ahead we’re going to see …

  • A sovereign debt crisis tear the euro apart and the European Union collapse.
  • The United States drown in its debts, the U.S. economy become officially mired down in a depression, and the U.S. dollar lose its world reserve currency status.
  • Inflation, despite seemingly deflationary forces, will soar through the roof, reaching unprecedented levels across the globe.
  • A crash in European and U.S. bond markets.
  • Gold soar through $5,000 an ounce, silver to at least $135.
  • Oil to at least $200 a barrel.
  • Food prices become a major cost and problem for every family on the planet.
  • And more, much more, including the complete collapse of today’s monetary system, capital controls, and eventually, an entirely new monetary system based on a single world currency that will be commodity-based for all international transactions.

But that doesn’t mean that in the short term, say the next few months, the markets can’t fall, and fall hard. It doesn’t mean there can’t be bouts of what will appear to be across the board deflation.

In fact, I expect one now. In the last several trading sessions we have seen …

  • The Dow Industrials break key support levels at 12,000 and 11,900.
  • Crude oil crack hard, plunging more than 4% last Thursday, and now threatening to break below $90 and head, first, to $80, then $70.
  • Silver starting to roll over again to the downside, and gold taking out short-term support at the $1,533 level.

In addition, we have seen …

  • The Nasdaq break key support at the 2,700 level, indicating that tech stocks, which were previously leading the rally in stocks, are now cracking.
  • Even the agricultural markets, grains like corn, wheat, soybeans and more, cracking hard, with wheat down more than 6% in the last week, and corn and soybeans showing a failed breakout pattern.
  • Plus, importantly …
  • Nearly all short-term cycles I monitor are now heading lower into at least late July, with the potential for an extended cycle low reaching into mid-September.

Just consider this monthly cycle chart of the S&P 500 Index, showing the important 24- and 40-month cycles. Notice how the market is peaking now in accordance with the cycles, and how they show a sharp slide heading into late October, early November.

Also consider this chart of the 62-day trading cycle in gold, which is clearly rolling over and pointing to a low heading into the mid to late July period.

….view chart and continue reading HERE