Is a market correction or collapse on the cards?

There was a number of macro-economist who felt a correction in the international Markets was on the cards leading up to Christmas, particularly around October. I too felt there would be a correction and agreed with much of the logic I had read at that time. Whilst many more Banks and Finance Companies did collapse, their government's tax payers took the strain and the loses. Halting the systemic convulsions. It was also thought, that the end of year's economic figures of a number of States would also produce negative market responses.

In addition, the large market financial players like Goldman Sachs, J P Morgan, and Chase Morgan et.al but to mention a few, will require a new crisis (as with Goldman Sachs' Billion dollar bets on various industry sector's future crises ahead), to produce new crops for next year's picking; now that the harvesting has been completed for 2009 from March to December. As the realisation that 2010 will give poor value and gains, due to the lack of green shoots and the market peaking midway 2010. Following the market culling and with such disparity in the use of bailout resources. The polemic market sectors and government intervention make it difficult to judge beyond the short term market movements, with so much insider dealing and liquidity around for those in the right group.

Anyway, following the unprecedented market improvement since March of 2009, it's fair to say, that market confidence has returned and borders on complacency for many. The recovery since March has been as a result of the infusions thrown at the banks, who have fed the chosen few and used the free cash to stimulate their own interest in 2009, as well as starting from low bases in the markets, due to the crash 0f 2008. In addition, successful Eastern Markets and Commodities have strengthened the recovery of the Stock Markets. Some top banks particularly in the US have had their best year in three, as a result.

The overall system of Capital outside the banking fraternity have not recovered, particularly, the economies of the UK and US -and are unlikely too in the near future. If the condition of the T Bills and Gilts markets are a measurement of investor concerns for the future of these economies. There is very little interest coming from private national and foreign purchasers in the Bond Market.

The bad news is, that it looks as though its end is near.

After studying a number of market data going back to 1983, there are disturbing patterns in the data. There has never been a recovery so steep and over such a short period as we have at present. And, if my interpretation of the data is correct, two fault lines are on the horizon, one in mid March and again in late June. There is a possibility that the mid March drop of around 15 points could be stepped over, due to the mutated nature of the present government market interference.

This will only store the pressure until late June's pressure reaches its peak, all gains could be lost from 2009 and more. Again, if the governments interfere they will only bring about a stagnation of the markets, contrary to the last 12 month's movement, holding the system on the precipice. At that point, historically, when this point has been reach, the market has hovered for no more than 3 to 6 months, stagnating back and forth without any sustained held gains.

Equally concerning, is that if this data analysis is correct then there are those already aware of this possibility. We could see the UK and US using their Foreign Policies to divert and reconstruct development options under such circumstances. Fiat Currency can and is be printed with impunity during times of national conflict. And, with less negative effects to the economy than during peace time. It's only when that QE money reaches the streets, that major economic damage occurs.