A New Case of DSK-a-Toastis? ~ The Risk Averse Alert

Thursday, June 09, 2011

A New Case of DSK-a-Toastis?

It looks like Windmill Willie over at the White House has got himself a situation. Secretary of State Clinton's rumored interest in becoming World Bank President certainly has a distinct smell to it. Could she be signaling that, Treasury Secretary Geithner has a bad case of DSK-a-toastis and therefore must be isolated? That would be my early diagnosis.


Poof! The positive among the negative noted Monday virtually has vanished. With the NYSE Bullish Percent Index still indicating the market remains at risk of suffering further weakness, and with no substantive, positive technical divergence suggesting a bottom at hand, it appears wave 4 of (c) will be unfolding for some days more before it has completed.


Despite put option hedging remaining elevated the market still is struggling to find bottom. Just more evidence supporting my view that, end of the market's counter-trend rally off March '09 bottom is fast approaching.

Having seen the interview with Fairholme Fund's Bruce Berkowitz on today's Strategy Session touting financials in general and Bank of America in particular, my conclusion is no different now than last October when I wrote, "Whose 2009 Low Might Be Defended?" It remains true that, many financials and banks could be clipped by 70-80% and still remain above their 2009 lows. However, if similar devastation were to visit the broad market, major indexes would be headed for levels last seen in the 1987-1994 period.

The likelihood of this outcome only increases as resistance to a Great Global Restructuring fades.

Fast Money
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