Gangsta Dress Rehearsal ~ The Risk Averse Alert

Monday, July 25, 2011

Gangsta Dress Rehearsal

Will you just listen to that bi-partisan collection of intellectually bankrupt tools in Washington speaking about risk of a 2008-like market swoon caused by the debt ceiling impasse! Why these folks actually believe they can prevent such an outcome if only they find consensus on how best to piss on the Constitution! Truth is no matter their final solution, the stock market is doomed.

Now, why this crush to free a greater share of the U.S. Treasury's wherewithal from budget-related obligations? Does anyone really believe Treasury's outlays will shrink as a consequence of whatever cuts are agreed to? Truth is Treasury's debt cannot, and in fact will not, contract. The remnants of Adam Smith's Leveraged Ponzi Scheme absolutely, positively and without doubt need increasing support, lest the mountain of debt created in the build-out be left to crumble. Such is the way of Ponzi schemes generally.

There's little argument that, budget cuts, in and of themselves, portend economic contraction. Yet on the flip side capital freed that an insolvent banking system might gain Treasury's increasing support — this to sustain appearances of the banking system's viability — is the very fuel accelerating the economy's hyperinflationary breakdown. With Treasury and the Fed providing the means for massively faking the true state of bank balance sheets, capital freed as a result becomes finance directed toward a shrinking supply of viable "investments" whose final effect further consolidates "excess capacity," removing it from play.

So, in other words, the geniuses in Washington are doing their level best to accelerate the nation on its course to inevitable collapse, this by venturing policy sure to contract demand as well as supply. Thus, the task of faking growth will only become increasingly difficult from here on out. Assuredly, then, the stock market is doomed to collapse, just as the consensus of sophists in Washington are warning. What they simply do not understand is their role in hastening this end.

A final, relevant remark on this subject is to score anyone claiming the U.S. Treasury is at risk of default. The nation will sooner write off its sorry collection of intellectually bankrupt, Team Fraud marionettes before one thin dime of Treasury debt fails to be honored. Senate Democrats whining about Republicans reticent to raise taxes (remove capital from a banking system that needs every last penny? dream on!), too afraid to insist on Glass-Steagall's reinstatement, this forecast is for you. Such is fair price for buckling to casino thugs infesting the Republican party.


Something I failed to notice on Friday in identifying moments over the past couple years when cows were prime for the culling is seen above via the CBOE Put/Call Ratio itself. At moments when the herd was making haste (this being evidenced via MACD) purchasing rights to own a bigger piece of the farm (i.e. call options) there were indications revealing that, cows had been milked to the last drop, and these preceded the moment when the hammer was brought down on their heads.

Seeing as today's Treasury stickup dress rehearsal scripted by Bugsy Obama and Cry Baby Face Boehner had the effect at the shortest of time intervals (1-minute, 5-minute and 15-minute) of sending relative strength to fairly deep sell-side extremes, the "reset" today's heist attempt established at the open paves the way for further gains off last Monday's bottom upcoming.

Although I am not yet inclined to suppose with any measure of confidence that, wave 5 of (c) — the last gasp of the market's counter-trend advance off March '09 bottom — presently is unfolding, indications are this very well could be the case, while Doug Kass' call to buy the battle and sell the deal appear both technically well-justified and fundamentally sound thinking at this point...

Fast Money
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