news.goldseek.com / By Gary Savage, Smart Money Tracker / 7 June 2015
History has been pretty clear. When the Fed prints too much money, and holds interest rates too low for too long, it eventually it creates a bubble followed by a market crash. It happened in 2000 with tech stocks. Then again in 2006 with real estate. Followed not long after by a collapse in the banking system. Then a bubbling oil and commodities. And now I would argue we have the beginnings of a bubble in biotech. So the question is will we experience another crash like we did after each one of those previous bubbles? I think the odds are high we will. Especially if the Fed doesn’t immediately end its stock market interventions.
Let me show you what I’m seeing unfold.
Ever since QE3 ended, it’s been my opinion that the Fed has had to intervene much more often in US stock market to prevent it from collapsing like it did in 2010 and 2011 when QE1 and QE2 came to an end. These interventions are going to come with a price. By not allowing the market to correct naturally the Fed is causing more and more complacency to build in the market, and complacency is what triggers a market crash.
The current intermediate cycle is already extremely stretched at 33 weeks. It has for daily cycles embedded within it. It already contains one extremely stretched daily cycle, thanks to Fed intervention.