The stock market has become a market of extreme swings in both directions. When declines or sell offs occur they are usually violent in fashion. Just look at the May 6th flash crash when the Dow Jones Industrial Average lost nearly 1000 points in a few hours before recovering over half of the intra-day decline. Take this recent rally from the July lows as another example of an extreme move higher. A few years ago a ten percent move was the most that an investor could expect for the year in an index and now we see that type of rally in less than thirty calendar days.
Remember the declining dollar is the driving force behind ever stock market move higher. Certainly a positive Shanghai Index (China) trading higher does not hurt the inflation rally as many believe that China is the savior of the market right now. Remember as long as China continues to grow investors believe that they will consume more commodity products. Just look at Cliffs Natural Resources Inc (NYSE:CLF) which is a leading iron ore pellet producer and you can see the stock is trading higher by 2.03 to $58.61 a share. When China rallies higher expect the commodity stocks to rally as well. Right now stock the stock markets are holding up well. However, when the music stops playing in the communist nation and the bloated fiat currencies around the globe start to lose there inflationary power this rally should come to an end.
Chief Market Strategist