QUESTION: Marty, I know you warned about a bubble in 2000, and I think you were talking about capital inflows from China and Europe because of the coming Euro. Is this the same outcome as the Dow rising now out of fear of war, and will it eventually create a bubble here like in 2000?
REPLY: Bubble are always a result of CAPITAL CONCENTRATION which our computer picks up in tracking international capital flows. This is the video clip from the February 1999 WEC. Back then, our number for the breakout was 9750 on the Dow. Once that was exceeded, the Bubble began.
In addition to the 40% of global savings in Japan was was shifting to US assets, the formation of the EU saw Germany demanding austerity and raising taxes on the rest of Europe. They were demanding that Britain shut down the Channel Islands that were being used as tax havens. Capital was fleeing Europe because of this austerity being pushed by Germany. So the 2000 DOT.COM bubble was more than just prices. It was enabled by the capital inflows.
The high formed the week of March 6th, 2000 while February posted the highest monthly closing. There was a two month initial correction down to 304266 from a March high intraday of 51352 and May was the Cycle Low that was a Panic Cycle with April providing the Directional Change. The bounce was into July and then August was the Directional Change and October started the Panic. The initial low formed in April 2001 followed by the final low in October 2002.
The market bottomed with the ECM in October 2002 with the ECM low being November 6th, 2002. That was an interesting ECM Wave. The next ECM wave saw the rally and peak in 2007 with the Great Recession crash into 2009 with gold peaking at the bottom of that wave in 2011 in the heels of the European Sovereign Debt Crisis which began with Greece asking for an IMF loan on the very day of the Pi Target.
The Next ECM wave bottomed precise with the start of the COVID Pandemic. Now we face the formidable turning point going into 2028. This current wave peaked precisely to the day that Putin was sworn in. That was sending up a warning flar that this wave would involve Russia. All we see now is Russia, Russia, Russia, and hail Zelensky.
As far as the NEXT Bubble and Capital Concentration, we will deal with that at the WEC. On December 18, 2019 (2019.964) the House impeached Trump on charges of abuse of power and obstruction of Congress related to his dealings with Ukraine. The Democrats again on January 13, 2021 (2021.035) impeached Trump for a second time on a single charge of “incitement of insurrection” following the attack on the U.S. Capitol on January 6, 2021. In both instances, the Senate subsequently acquitted him, and he remained in office. The difference was just 1.071 years.
The turning point 2026.496 was the reaction low in oil with July 20206 producing the intraday Low at 67.04, but June produced the lowest monthly closing at 69.50. Since that turning point we have witnessed crude oil rising again. We should be on guard for a rally into February and possibly into June 2027. We will review that at the WEC.