A Euro Detonator of Global Chaos ~ The Risk Averse Alert

Friday, November 26, 2010

A Euro Detonator of Global Chaos

Lo, there's a terrifying bear loudly growling at a wounded Europe...

Increasing disharmony with the globalization fraud, and this at a time when 72% of the CDS market insuring a collapsing (hat tip E.U.) global banking system's debt is in the hands of five American banks — JP Morgan, Bank of America, Goldman Sachs, Morgan Stanley and Citigroup — is not just risking a 2008 capital crisis repeat. Rather chaos ending all illusion of the global financial system's solvency clearly is at stake. Mr. Farage seems a courageous voice of a growing Mass Strike movement threatening social complacency. Extraordinary measures thus far pursued to prop up a dysfunctional arrangement are at risk of unraveling should voices like these resonate on our contemporary arrangement's bottom line — confidence (with the E.U. being but a political front to the wildcat finance enterprise presently imploding upon Europe's periphery).

Being suspicious that, a point of no return risks being crossed here ... and with history as a guide ... these days we find many necessary, volatile ingredients typical in periods marked by chaos. Thus, such unusual underlying circumstance, indeed, raises the likelihood of a calamitous setback ahead, wherein lowly equity is most immediately at risk of being cast to the wind.

OEX 5-min

This week continued formation of what is thought a second wave of five waves down from top earlier this month. These five waves are projected to throttle major indexes back to levels last seen in July 2009.

The Elliott wave count labeled above means to suggest the second wave of five waves down presently unfolding could further evolve over some days more. The holiday-shortened week clearly ended on a weak note (RSI remaining on the sell-side of its range all day). So, a challenge of recent lows appears in store. Yet any subsequent bounce might find an accommodating crowd wrongly judging present weakness a buying opportunity (right on cue).

The horizontal red line drawn at OEX 538 marks the lower end of the area to which wave ii might be expected to reach its highest. So far, though, resistance even here is proving formidable. Thus, weakness rightly preceding a wave iii down is being demonstrated by the market's lackluster recovery over the past seven days.

The entire week having evolved as anticipated sets up for a challenging year end period, wherein waves iii and iv of five waves down promptly could unfold (leaving wave v to January 2011).

(No CNBC Fast Money today, so this from RT...)

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