Silvio Schwartz Boxed In ~ The Risk Averse Alert

Wednesday, August 03, 2011

Silvio Schwartz Boxed In

It should be obvious why the likes of me have been left to penetrate the silence about the (shhh!) collapsing euro-zone. Not a peep during tonight's Fast Money(!). Was there some confidential "Censored!" memo sent out? Well, I didn't get it. Why do you suppose this is?

Could it be the trans-Atlantic banking system rapidly is unraveling, and every minute fear is subdued becomes a bankrupt swindler's blessing (no point trying to quiet little old me anyway)?

Berlusconi said that Italian banks are adequately capitalized and reiterated that the government has to do more to boost growth.

A worthy candidate for the Alan Schwartz Award for boxed in leadership, indeed!

Apparently, too, European parliaments are on holiday during August, as is the "Jobs Are Our #1 Priority" U.S. Congress. What better time to provoke crisis, then, that haste might be made imposing some new swindle (or other assorted political abomination) upon return in September of the bought-and-paid-for marionette class.

Truly, the market's present position is highly supportive of many wildly awful possibilities, even beyond those lighting my fingers recently...


Last time the S&P 500's relative strength (top panel) sunk to its present level (early-June), the market was not done declining. Moreover, in the present instance underlying technical conditions should be recognized as qualitatively worse than was the case then.

First, going into May 1st top, volume — although still further muted during the market's advance (a consistent tendency since March '09) — was markedly more robust than was registered during the market's advance into its early-July peak. In other words, the vested interest of suckers at that prior instance was greater than the interest that stepped up during the market's latest gasp higher from late-June through early-July. In fact, these analytically blind souls probably were but milked into pressing their bets during the recent lift, as volume rather plainly reveals no substantive (expanding) bid underlying it. So, by objective evidence showing a painfully increasing dearth of suckers to whom Team Fraud could offload its wildly overpriced Charmin during each of the S&P 500's two most recent advancing periods the latter rightly is judged a qualitatively worse technical backdrop preceding respective, subsequent turns lower.

Furthermore one simply cannot in their right mind expect weak hands to step up and support the market here. Indeed, by all appearances these simply are quite spent.

This is all the more problematic when one considers the other volume-related matter likewise making qualitatively worse this current instance finding the S&P 500's relative strength flat on its back. Do you see anything, volume-wise, during the market's decline from May 1st top to late-June bottom rivaling its present increase? Thus is fear objectively judged elevated, relatively speaking.

What power, then, could weak hands unwise enough to step up here have in reversing the market's present decline? Not much, my friend. Not much.

Oh, and let's not ignore a likely qualitative shift in programmed trading with the S&P 500 now below its 200-day moving average. But breathe this in and you rightly should smell the distinct odor of bad juju. The market appears quite doomed.

Fast Money
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