Loving the Least Loved of All ~ The Risk Averse Alert

Friday, May 10, 2013

Loving the Least Loved of All

With the onset of national banking now squarely in the crosshairs, the continued survival of today's insolvent trans-Atlantic banking system propped up by equally bankrupt central banks now faces a degree of danger unlike anything since the disintegration of Adam Smith's Leveraged Ponzi Scheme in 2008. As ever in the evolution of developments over recent years, the fate of today's plainly unsustainable arrangement ultimately hinges on developments in the political realm.

Yet whether to come is a continuing hyperinflationary deluge accompanying senseless class warfare through the imposition of austerity—the fascist central banking approach—or speculative credit starvation—this now on the table with Senator Elizabeth Warren's bill directing the Federal Reserve to finance the U.S. Department of Education's Stafford loans at the discount rate of 0.75%—today's imperialist game of make believe plainly will be subject to increasing political scrutiny no matter which course ultimately gains ascendency. At stake, however, is more than just the rate of contraction in prices commanded by garbage at the bottom of the capital structure, an inevitability otherwise preordained no matter which politically driven course forward is taken. Hanging in the balance in fact is whether bottom ever will be found before all that we know and take for granted is tragically destroyed, as today's representatives of a corrupt western European oligarchy evidently intend through a "responsibility to protect" [terrorists] policy suiting a nefarious objective seeking to trash sovereign nation states, whose ultimate target, as ever, is fatally compromising the leading historical role the United States has played in defending the principal of national sovereignty.

The crack in the dike Senator Warren's bill forms with a foot in the door portending creation in the U.S. of a Hamiltonian credit system financing investment in the one and only thing whose leveraging is not inherently inflationary—human creativity—puts us at the precipice of game changing events possessing potential to establish a bottom wherein today's hopelessly insolvent morass proves to possess all the destructive power of a popped tulip bubble several centuries ago (which is to say the bubble's popping need not prove catastrophic).

One result of today's global central bank hyperinflationary deluge aiming to prop up a mountain of credit securities amassed over decades through "creative" financial mechanisms (derivatives) principally organized by the London-New York Axis of Fraud is a noticeable turn of late toward the least loved among bottom rung assets whose greater number are listed on NASDAQ. Least loved in absolute number, that is, as NASDAQ's cumulative advance-decline line has long testified.

We might assume a diminishing case for putting money to work on the NYSE for more or less technical reasons is disproportionately driving capital toward NASDAQ-listed issues over the past month, rather than some phantom "recovery" being behind the seeming increase in love for the more beaten and bruised among bottom rung financial assets. Again, long diminishing daily volume of shares traded across all major, global stock exchanges more or less quiets any "recovery" argument. There's far more garbage higher up in the capital structure requiring support than there is capital allowing love to broaden across all financial assets. That's the truth underlying so-called "recovery," as well as diminishing activity at the bottom rung of the capital structure.

The recent turn toward the least loved is better seen below. For the sake of gathering the big picture the Elliott wave count applied to the weekly chart of the NASDAQ Composite above certainly presents technical evidence supporting a view warning of imminent risk of a major market rout. Not only is this prospective Elliott wave count technically confirmed, but that greater measure of underlying conviction technically in evidence since March '09 bottom, while persistently fading as was the case leading into NASDAQ's 2007 peak, rather suggests current conditions are but more conducive to the lug nuts falling off the market than was the case back in 2008.

Although lacking in this formation of a prospective "rising wedge" off NASDAQ's March '09 bottom is typical 4th wave versus 2nd wave technical deterioration (RSI came close), that a "c" wave is seen being formed by this rising wedge otherwise might properly account for this lacking (a "c" wave being an Elliott 3rd wave which typically is the most "dynamic" of all Elliott component waves). Suffice it that NASDAQ's best momentum reading (see bottom panel) since March '09 bottom came during formation of wave c of 3 in February 2012—a 3rd wave of a 3rd wave of a 3rd wave (the latter 3rd wave being wave (c) [of B]).

Hope you're holding your nose! The distinct odor of garbage New York readers might be detecting (that is beyond the usual) probably is coming from the NASDAQ market site. One characteristic of Elliott "b" waves is the conclusion that, "something's just not right." A notably pathetic new 52-week high-low differential of NASDAQ-listed issues certainly fits the bill at the current moment finding the NASDAQ Composite at its highest level over the past decade plus.

The one place where prayers of a comeback probably have been most pervasive over the past decade likely has been NASDAQ. That only a connecting wave (i.e. a "b" wave) in a larger Elliott corrective wave has been forming over the interim since October 2002 bottom no doubt is confirmed by the above measure, revealing dead animal spirits amidst undiminished hope of their eventual revival. Chances are what's about to be proven at every level of the capital structure is what a big mistake this prayerful disposition has been toward what have been for a long time now the least loved of all.

Word on the Street
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