China’s stock market now appears to be breaking down 5% below the lows of July 2010.

China’s stock market now appears to be breaking down 5% below the lows of July 2010. That means the tide that carries all ships is falling and we can expect many new shipwrecks on the China reefs because this could be the first major disruption of China’s credit and their first panic. It could also be China’s first venture into personal liberty and a much more prosperous future.

Our American economic system compares very favorably with socialist Western European countries that normally have at least twice the American unemployment level punctuated by the same world financial panics and depressions that we have… except often much worse. For instance the unemployment in Spain and Greece seldom is as low as 8% and today it is above 20%. If the Senate Banking Commission corruption of the national mortgage system had not triggered the last meltdown, the sovereign debt problems of the European Union probably would have created a financial collapse by now. In fact economists have studies that trace this boom and bust cycle throughout written history. Boom and bust cycles occurred with every type of government and economy known to man and even a communist country like China can end its perpetual communist economic depression with a little liberty, pay for performance, and free enterprise.

Our system compares especially well with the socialism of the old USSR (Union of Soviet Socialist Republics) which existed for fifty years in a perpetual state of depression during which many millions of their citizens were put to death by their government. Even so, there are some current day politicians who apparently agree with Communist Karl Marx that capitalism (American Free Enterprise) is now dead. Perhaps we can help dislodge such silly notions.

The real problem with Obama is he is that he is creating a voting majority with no skin in the financing of America.   And then you end up with a welfare state like Greece or worse yet a communist regime like Obama’s best friend, President Hugo Chavez has.

World markets
Gold is down 15% now from its highs and is testing lows getting ready for a downside breakout. World recession and depression always makes cash king and gold holders paupers especially when people use charge cards and no one has free cash in their mattresses anymore. Instead gold sellers all have their swimming pools full of gold like Obama wants to have with his $1billion shakedown for his election.
http://www.tfc-charts.w2d.com/chart/ZG/C0

Silver is also testing lows.
http://www.tfc-charts.w2d.com/chart/SV_/C0

China is now the first nation since Japan to try to start a trade war. China will impose punitive duties for General Motors Co. (GM) vehicles as high as 12.9 percent, and up to 8.8 percent for Chrysler Group LLC, the ministry said in a statement on its website because Obama bailed them out. The U.S. units of foreign cars will face duties of up to 2.7 percent. That is in addition to the tariffs of 25 percent China already imposes on imported cars. Remember how Japan did the same thing with American products before they fell from #2 in the world when everyone said they would be #1 by 1990? It turns out Japan went into a 20yr socialist recession starting in 1990 instead. That is what we predict for China. There is a book out that says China will be # 1 in five years. We think they will be in a chronic recession in three years unless the Chinese rise up and replace communism with liberty and a free enterprise system. China’s stock market has now broken down and 5% below the lows of July 2010. That means they may be headed for a recession or a depression right now.

India’s industrial output shrank for the first time in 28 months, pushing stocks and the rupee lower on concern faltering growth will force the central bank to suspend its fight against India’s highest inflation of the BRIC nations.
Production at factories, utilities and mines fell 5.1 percent from a year earlier in October.

Brazil cut their 2012 economic forecast for the benchmark interest rate for the second straight week on expectations of slower growth in the wake of the EU’s worsening debt crisis.

World markets are failing to break out some on the second and third times at resistance levels.
http://finance.yahoo.com/intlindices?e=asia

China testing recent lows. http://finance.yahoo.com/echarts?s=000001.SS+Interactive#chart1:symbol=000001.ss;range=2y;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Germany testing resistance level: Choose 2 or 5 years
http://finance.yahoo.com/echarts?s=%5EGDAXI+Interactive#chart2:symbol=^gdaxi;range=2y;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

The Swiss testing resistance level. Choose 2 or 5 years http://finance.yahoo.com/echarts?s=%5ESSMI+Interactive#chart1:symbol=^ssmi;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Emerging markets triple bounce but still testing resistance level.
http://finance.yahoo.com/echarts?s=^BVSP+Interactive#chart1:symbol=^bvsp;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefine

American Economy
The US economy may not dip as Americans increasingly hope that the Obama Regime will be thrown out of office so Americans can change back to an honest free enterprise system.

So far this week
Treasury Budget Nov -$137 down from -$150.4 last month, -good

Today
Retail Sales Nov 0.2% down from October’s 0.5% -bad
Retail Sales ex-auto Nov 0.2% down from October’s 0.6% -bad
Business Inventories Oct 0.8% surged up from October’s 0.0% -bad

This Week
Dec 14 7:00 AM MBA Mortgage Index 12/10
Dec 14 8:30 AM Export Prices ex-ag. Nov
Dec 14 8:30 AM Import Prices ex-oil Nov
Dec 14 10:30 AM Crude Inventories 12/10
Dec 15 8:30 AM Initial Claims 12/10
Dec 15 8:30 AM Continuing Claims 12/03
Dec 15 8:30 AM PPI Nov
Dec 15 8:30 AM Core PPI Nov
Dec 15 8:30 AM Empire Manufacturing Dec
Dec 15 8:30 AM Current Account Balance Q3
Dec 15 9:00 AM Net Long-Term TIC Flows Oct
Dec 15 9:15 AM Industrial Production Nov
Dec 15 9:15 AM Capacity Utilization Nov
Dec 15 10:00 AM Philadelphia Fed Dec
Dec 16 8:30 AM CPI Nov
Dec 16 8:30 AM Core CPI Nov


Market outlook December 14, 2011

Stocks still fail to break out of recent highs. Where is the breakout and short squeeze? It is starting to look less likely Obama’s luck will hold out. Shareholders may get out of the stock market before January if a rally does not break current resistance levels soon.

Real estate has possibly turned the corner but will not take off until Americans are confident that Obama and his leftist supporters will be thrown out of office or even later if he is re-elected.
http://www.martincapital.com/index.php?page=graph&view=permits_and_construction

When it comes to jobs, Obama has to manipulate the government statistics just like all communists do to pretend things are better. http://www.martincapital.com/index.php?page=graph&view=unemployment

We are at the critical upside resistance level now and it needs a breakout so the advance resumes and triggers a short squeeze that could rum stocks up close to previous highs of this year. If the rally occurs, then in a moth or two that will be the time to get back into cash. Complacency has not set in at all yet. There is still just not much short seller fear at this point. Look how low the VIX has to go before the market top is hit! A level as low as 20 would indicate complacency and the end of the bull market.
http://finance.yahoo.com/q/bc?s=%5EVIX&t=6m&l=on&z=m&q=l&c=

We advanced once over 60% of the total recent decline and predict we could possibly have as much as 95% recovery. Market Vector agrees with us. But realize that as the upside potential is approached, then the downside risk exceeds the upside potential and it is time to lighten up. View 6 mos. See: http://finance.yahoo.com/echarts?s=^NYA+Interactive#chart1:symbol=^nya;range=6m;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

China’s economy is cooling as their exports weaken and the Communist government cracks down on property speculation, banking irregularities and political corruption. Growth in bulk shipments in November was down and still at less than 20% of the bulk trade level that existed before Obama declared the USA was in a depression in one of his 2007 campaign speeches. Obama and Dodd caused the fear that triggered the only American bank run of the recent Obama/Dodd depression. Customs data released on Dec. 10 showed that when seasonal distortions are removed the Chinese trade surplus shrank from a year earlier Insert into explorer and look at the 5yr trend at the bottom of the page.
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Stock market update:
Asian Stock markets were down again last night. China down –0.9%, Hong Kong down –0.5%, India closed, S. Korea down –0.3% and Japan down –0.4%.

European markets are down sharply today in a range +0.1% to –1.8% half way through their day.

American market futures are down about -0.3% at 8:00 AM EST. It is an unreliable predictor.