Submerging Markets and Other Foreseeable Disasters ~ The Risk Averse Alert

Thursday, January 27, 2011

Submerging Markets and Other Foreseeable Disasters

"The protests effected the country's markets as Egypt's benchmark index recorded its biggest drop in over two years Thursday, plummeting more than 10 percent as anti-government protests rattled investor confidence."
—"Egyptian Stocks Tumble; Protests Turn Violent" (CNBC, 1/27/2011)

Do you suppose the type of investor whose confidence was rattled runs among "hot money" game masters whose playing board is being sacrificed by hyperinflation the Fed and U.S. Treasury have been relentlessly exporting in a bid to buy time, that the securitization Ponzi scheme might somehow be contained?

With the Financial Crisis Inquiry Commission concluding that, the crisis of 2008 was foreseeable, let's save some future Global Crisis Inquiry Commission the trouble of determining whether budding instability in so-called "emerging markets" likewise was the same. Nothing lasting and good stands to be gained when money — liquidity — creates conditions turning men into slaves — an "imbalance" of sorts seemingly well-summarizing the spirit of protests spreading throughout North Africa.

One question is to what degree is this hyperinflation-induced transformation of emerging markets into "submerging markets" an intentional act provoking a war whose unleashing ventures some larger, ill-spirited cause for which the sacrifice of great sums of wealth, and even great nations, is a necessary consequence?

Another question is how might any groundswell of protest in these United States toward policies likewise making men servile to what surely must be one of the most corrupt money schemes in history be stunted? Once again some extraordinary, provocative act of war might be in order.

"The market had tumbled 6.25 percent just 15 minutes into the session before trading was temporarily suspended. But the pause seemed to cement investor fears, and the drop continuing with the market's resumption."

This is exactly the sort of trading one could reasonably expect here in the U.S. ... even within a mere matter of days. Indeed, some fat, double-digit hit crushing the market over several consecutive sessions — total chaos — is by no means out of the question.

Let me assure you, I am not alone in sniffing out this fear...


Mr. Market also appears alert to some prospective, upcoming distress.

So, let's see what further indication of fading confidence might develop over the final two trading sessions of January 2011. There remains every reason to continue anticipating that measure of technical weakness discussed on Tuesday, as the fifth and final wave forming a "rising wedge" off late-June 2010 bottom nears completion.


I published a chart a few weeks ago contrasting the 10-day and 200-day moving averages of the daily NYSE Advance-Decline differential over the past three years. A closer look at the same chart offers assurance that, underlying technical weakness continues building in a manner fitting an advance nearing its completion...


Not a pretty picture.

What's more is evidence that, weakening upside participation of NYSE-listed issues coinciding in particular with the market's relentless levitation since mid-September 2010 raises the prospect of an upcoming throttling, and this even if stocks should begin falling simply of their own weight (as appears an increasing risk, judging by the persistent contraction of net advancing interest over the past several months).

Given weak underpinnings to the market's advance such as are revealed above, any strong move for the exits could rapidly precipitate an avalanche of selling whose run on the bank might surpass 2008, and likewise travel deeper into the vault than most presently imagine.

Fast Money
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