The Risk Averse Alert: March 2011

Thursday, March 31, 2011

The Real Fraud David Sokol Reveals

"My own opinion is that none of the managers of these once successful [telecomm] companies set out to commit fraud. But as pricing and demand dropped, they did anything and everything to keep their stock up, to buy time to raise more money, or hope demand would return. By doing this, they crossed the line of honesty into fraud. It's a short walk."
—"Wall Street Meat," Andy Kessler (2003)

You really have to wonder if the sort of shenanigans that, the likes of MCI, Global Crossing and Qwest were employing in their attempt to hang on for dear life in 2001 — well before 9/11 — indeed, were encouraged by the very bankers who had provided these telecommunications companies the rope by which they were being hung out to dry. Think about it. Could it have been any other way? Such was but a stepping stone in establishing that zero due diligence as alone would be encouraged by Adam Smith's leveraged Ponzi scheme. Ever young America, we are proven yet again but snake oil fiends.

Considering this, then, how does one not laugh like an insane hyena in the face of CNBC's scam bots who today in putting a lot of meaningless focus on Berkshire Hathaway's David Sokol only exposed the blind eye they lend to a fraud 1000 times greater than this fake, the likes of which employ some of the most desperate attempts ever conceived in an effort to keep drowning bankrupts from being sucked under, never again to be seen. All I can say is, whether their complicity is witting or not, when the lug nuts fall off, someone will be blamed (a fact Captain Morgan, too, might better entertain).

Then again, what of this era is not about cultivating appearances, no matter their improbability? Being well-schooled, then, down with the ship it will be for today's "respected" players.

With 12,391.29 holding, this is how the Dow Jones Industrials could be rolling in completing its second wave of five waves down from 2/18 top.

Five waves up from 3/16 bottom labeled above form wave c of 2. Unlike the German DAX whose wave c of 2 completed a so-called "running correction" (signaling great underlying weakness), the Dow Jones Industrials Average has retraced all but 7.83 points lost during formation of its first wave down from 2/18.

Now, you're probably thinking this is insane. The market is so "strong" shielded in wads of QE. How many times these past 18 months has warning been given that, a hard turn down could lie straight ahead? Why won't this be yet another failure of anything material developing into that something more foreboding targeting levels last seen in the 1987-1994 period? What's to say a giant thud to this very well-substantiated target might be yet further delayed?

Nothing. And yet the possibility is none the more diminished acknowledging this.

(You can magnify the above chart by clicking on it, as [green] lines I have drawn to show circumstantial similarities to the late-April, early-May 2010 period might be difficult to see.)

No doubt, formation of the first and second waves of five waves down from April 2010 top (unfolding through the early days of May, pre-flash crash) resulted in a deceptive levitation along the line once supporting the Dow's advance off early-February 2010 bottom (a line turned resistance as these first two waves of five waves down unfolded). Indeed, as you can see, too, the second wave recovered much of the ground lost during formation of the first wave's fall. Then came collapse.

Now observe how rather similar behavior presently is being displayed in relation to the line once supporting the Dow's advance off late-June 2010 bottom. (This line happens to form the lower boundary of what still is believed a [bearish] "rising wedge" unfolding over the interim to 2/18 top.) And now retracement again recovering much of the ground lost during the first wave down ... and this resulting in the Dow's lift to its former line of support, now resistance.

So, now comes collapse. "Ill-placed" technical circumstance noted over the past week decidedly proclaims the time, indeed, has come.

(p.s. I do like today's lift in the volume of shares exchanged. Fitting on a day that could be the start of a devastating third wave down the crapper for the greater bulk of wildly overvalued equity.)

Jamie Dimon Says New Capital Rules Will Kill Zombie Banks!

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Wednesday, March 30, 2011

Captain Morgan and His Life of Lies

Gee, maybe those oh-so-behind-the-curve bond ratings agencies ought downgrade sovereign debt everywhere, that QE III thru infinity might be more greatly assured ("Most economists say a bailout [of Portugal] is all but inevitable." Oh please, oh please, oh please.). Then, those among the bankrupt employing these useless screws might gain another week to feed their yet more wildly overvalued equity stakes to the thinning herd of suckers willing and able to buy the crap.

Ever the Team [Fraud] player, the Fed's announced intention to put lipstick on its Goldman pig probably is better seen cosmetic psychological surgery on a fantasy that quantitative easing soon will be ending (this possibly to forestall Trichet's effort to force the issue?). I would sooner predict the worst blizzard ever to hit New York City this coming July before suggesting the end of QE is even a remote possibility. All talk of strong demand among yield hungry suckers for the Fed's Maiden Lane II stake aside, effort to bolster appearances that QE is a success — another "mission accomplished" courtesy of the politically hapless — most effectively serves to grease the works with sophistry necessary for imposing the next round of Uncle Ben's hyperinflationary happiness.

Speaking of which, Jamie Dimon's stab today at becoming "King of the Sophists" in denying claims QE is causing global inflation was revealing. Just how vulnerable is JP Morgan Chase when the company's CEO is compelled to add this new bit of nonsense to his "no one saw the sub-prime mortgage crisis coming" defense of the industry back in '08 speaks of a firm whose life ultimately depends on the Big Lie. If nothing else, JPM's decade-and-running reign as dead money apparently has found the right captain to go down with his ship. (It stands to reason, too, that, in the post-industrial, information age, the warning "loose lips sink ships" would take on new meaning.)

So, the battle for additional quantitative easing is on, notwithstanding all idle chatter suggesting QE's end has arrived (this, of course, being rationalized with a weak dose of the "global recovery story"). Now, let's take a stroll down memory lane...

Just how was grease applied, that QE 1 and 2 could be imposed with scarcely any resistance? Were not both committed during moments of grave financial peril?

And now, with continuing efforts to bolster all manner of sophistry rationalizing this insane policy (this, of course, that it be indefinitely continued, as indeed is necessary) amidst growing resistance to the policy's hyperinflationary destruction of excess capacity, such as is leading to chaotic, physical economic breakdown ... well, how do you suppose QE III might be imposed notwithstanding the policy's increasing detractors?

If you answered by way of some grave financial peril, then welcome to what very well may be that overdue occasion's precipice...

It is becoming increasingly apparent that, something "Lehman-like" soon could unfold in the euro-zone. So, attention to conditions at the Euro's epicenter seems a reasonable point of analytical focus. Thus, my attention these past two days on the German DAX index.

And today an alternate view than was presented yesterday. It is inspired by a conspicuously suspect technical backdrop coinciding with the market's advance over the past two weeks, such as to the average, hope-filled sucker might register as an indication of underlying strength, but to the well-seasoned Elliott Wave geek in fact is better thought ill-placed in the context of all manner of confirmed technical weakness preceding it.

Just to reiterate this point of view (as was developed in a Date With Doom), fearless complacency is being revealed, and this is a condition typically in place when stocks are on the verge of collapsing. Notwithstanding the further extension these past two days of ill-placed technical strength, the conclusion to be gathered from this remains quite the same. Indeed, its implications seem only more stark.

Leave it to Shemp, then, to make it a point today to express his view that, "this market isn't complacent." Duly recall he was bullish in June 2008, too.

Not yet being sure what Elliott wave count since 2/18 top might best be applied to the NYSE Composite index, its performance in relation to that former line of support noted a couple weeks back nevertheless presents a fitting complement to the current state of the German DAX index, here, prospectively, at the precipice of collapse.

There is one thing, however, that came within a hair of blowing up this view that, a crash could be imminent...

The capacity of those bankrupts whose insatiable need for capital enough to delay their day of reckoning finds these pushing around global corporations well known enough to bait a shrinking supply of able suckers who willingly swallow belief that, in a company's global presence is their investment capital's safety today resulted in the Dow Jones Industrials Average rising to within less than eight points of its intra-day high on February 18th (12,391.29). As improbable as this might seem, any breach of this high likely would necessitate a rejiggering of my Elliott wave view toward the market's advance since late-June 2010 bottom. Were this to occur, the market's levitation probably will extend into summer.

Of course, there are countless reasons to believe the market's hard turn lower is at hand. Likewise, the Elliott Wave Principle makes clear that, second waves often retrace the entirety of the preceding first wave, so the relatively better performance of the Dow Jones Industrials Average versus broader measures these past two weeks just might be a fitting, subtle quality distinguishing the present moment as one fraught with extraordinary vulnerability (explaining the greater attraction for established names with a global presence).

Indeed, all the more was this distinction revealed via RSI (top panel) from mid-January to February 18th top. Presented then was a most unusual technical disposition finding the Dow Jones Industrials Average's relative strength far more pronounced than was the case for broader based indexes. You might say that, suckers were revealing themselves by this manner in which their attention was more greatly given to those select issues widely perceived "blue chip" and safe.

Being rather tired of the thinly veiled ruse that, through and through, has well-characterized the market's advance off March '09 bottom, the prospect of its continuance nevertheless is acknowledged. Yet recognized, too, is prospect that, the ruse's date with destiny could be immediately at hand. No doubt, the market's technical state reveals profound complacency supporting an outcome that, virtually is guaranteed to catch the vast majority with their pants down were collapse to unfold stat.

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Tuesday, March 29, 2011

Team Fraud v. German History

Just think. All the bankrupt pricks need do is step away, let a great mass of wildly overvalued crap fall of its own weight, then squeeze the encouraged shorts that a few more "global recovery" suckers might take the bait, and willingly feed the capital needs of these many hopelessly insolvent enterprises who could not offload equity positions fast enough even if they had another ten years for which to do so — those TBTF's whose continued life is but one run away from extinction.

Yet the problem today is few suckers with a dime to spare remain. Apparently, they are all in, and as ready as they will ever be for the Great Fleecing ahead...

It hardly seems relative strength could be so thoroughly crushed as has occurred twice over the past week were there, indeed, a genuine bid from deep pockets underlying the market's move higher over the past two weeks. Today's instance of this no doubt came at some expense, too, as the standard, pre-market, CME jam job proved a miserable failure at the open, requiring the bankrupt pricks running this show to put up more juice than might be desired at this late hour in their walk to the gallows.

As I hinted last week, I do not believe Germany and Japan will find it much longer politically expedient to continue falling prey to the London-Wall Street axis of fraud too thick for a Congress of jellyfish. Indeed, those in Germany who wisely would make a break from the Euro in fear of a November 1923 repeat must be perceiving the rise of the Greens as but another warning that their greatest fears are on course to being realized. Of course, these are matters purposely obscured in the land of the fraud, home of the deceived. Yet maybe somewhat better discerned are game changing prospects seen in the context of wealth's accelerating movement toward the drain...

As you can see, the German DAX is further along in its descent from last month's peak than are major indexes here in the U.S.

As you can see, too, although the worst technical readings for the moment perhaps have been registered, there likely remains a process of forming a bottom yet to develop whose result could clobber the DAX further. This likely would coincide here in the U.S. with yesterday's view wherein the market's anticipated crash is delayed for some weeks, and this despite expecting considerable, near-term pressure.

One thing to consider in close examination is the manner in which the German DAX's downward momentum cratered once its measure (bottom panel) turned negative a couple weeks back. This condition is not one likely to precede a quick and lasting reversal. Rather a quick reversal (such as has occurred) followed by disappointment in forming a bottom is the more likely outcome. Thus, a technical view from the other side of the world substantiates my outlook here in the U.S. anticipating considerable downward pressure over days ahead (challenging respective 200-day moving averages).

Likewise, with Team Fraud's capital needs being immense, and with this need hitting up no lilliputian Brazil or India, but rather a major industrial power with a history of hard lessons learned at the alter of fascism (albeit a more brutal form than today's swindling, smiling and winking kind), it appears momentous decisions today receiving no attention have a very high probability of soon becoming the talk of the town. It is then markets across the globe are likely to be crashing...

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Monday, March 28, 2011

Where Have All the Bidders Gone?

With so many analysts and investors expressing desire to be fleeced (ready to "buy the dips"), and with Big Board-listed issues appearing destined to join their junior brethren of NASDAQ fame in a long, slow dance of years fallen from record peaks, capacity to further extend the market's levitation and keep so many bullish sophists in their present, wishful state might proceed as follows over coming weeks toward its ultimate exhaustion, leading to a spectacular crash in the stock market (if not the entire trans-Atlantic financial system)...

Here's the problem with today's low volume. Those many over-leveraged, under-capitalized financial institutions held captive to the hollow prayer called the "global recovery story" are meeting in their attempts to offload risk ever fewer suckers willing to spare their last dime for a bigger equity stake in the giant dung pile euphemistically called the U.S. economy. So, either extraterrestrial life willing to back the U.S. Treasury had better soon materialize, or stocks must go on sale, that "cash on the sidelines" (there for good reason yet still) might be coaxed to its grave.

Thus, an inexorable increase in volatility where the capital starved act to entice a bid — furthering volatility's increase already evidenced since 2/18 top — might develop over coming days along lines depicted above.

This, right now, appears a best case scenario. Worst case, the market crashes immediately. Either way, everything is leaning toward that end, sooner or later — an awful eventuality whose passing presently is believed having a high probability of occurring sometime this year, indeed, even as soon as this week...

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Friday, March 25, 2011

A Date With Doom: MARKET CRASH LOOMS

Despite contrary appearances, Christmas is not just around the corner. Volume as light as during the pre-Christmas 2010 period — a time of year when trading typically is subdued — confirms yet again that it is not a broadening long interest propelling the market higher (as would be the case in a healthy bull market whose advance is likely to continue). Rather, increasing restraint among those already long — be they holding on for dear life, suckers for the "global recovery story," or both — in large part has been the force behind the market's advance, increasingly so, particularly over the past 18 months.

One seems hard pressed not to imagine that, following 2008's heart attack the need to migrate risk higher up in the capital structure — this out of sheer prudence — would become acute. Seeing an increasingly static long interest persisting despite many a contrived (CME) goose higher in the market confirms this dynamic. Thus are stocks vulnerable to simply falling of their own weight.

Indeed, the market's technical state continues strongly supporting this probability...

Consider, first, relative strength (top panel). During the market's late-February, early-March bounce RSI maintained a buy-side balance (above 50) while momentum (bottom panel) continued fading (although still registering on the positive side of its balance). Thus did selling restraint demonstrate denial of pending trouble. This is particularly noteworthy on account of abundant technical weakness displayed at the market's top on 2/18.

Then, last week, as the market fell to a new low off 2/18 top, RSI smartly confirmed this move. In the process, too, momentum accelerated lower and, indeed, was taken into the negative. Growing underlying weakness thus was confirmed by both measures.

Again, this follows on the heels of a multi-month advance in the stock market whose technical foundation has been specious at best (a point of fact exposing belief in the "global recovery story" to be woefully shallow), with no shortage of measures persistently deteriorating right up to 2/18 top. This critical matter of circumstance raises odds that, the market is on the verge of collapsing.

Now both relative strength and momentum (without so much as any positive divergence registering at last week's bottom) have come right back into balance. This, of course, yet further demonstrates denial of pending trouble.

Seeing both measures suddenly reverse upward without any indication registering concern that, further decline might yet ensue reveals how complacency rules — fearlessness — as is generally true right up to the moment the market comes unglued.

The very same is revealed by a remarkable surge in relative breadth accompanying the market's lift off last week's bottom. Again, seeing this occur following months and months of persistently building weakness, the likes of which was further confirmed last week, only more perfectly sets the stage for the market's upcoming unraveling.

For this week's very suspect start (entirely CME-driven) and pathetic follow-through to result in a further, upward shift in relative advancing breadth without any hint of trepidation as otherwise might have been displayed following last week's selling, well friends, this is a gift. Complacency is so thick a crash probably is imminent. In fact, I don't think one has to go out on a limb to give an 80% probability to the likelihood that, a 25-40% decline in major indexes is slated to develop over days immediately ahead.

Taking a longer view of the NYSE Advance-Decline differential we find the relationship between its 10-day and 200-day moving average just perfectly poised for a date with doom.

As a matter of fact, I was thinking today: given Bernanke's criminally fraudulent hacking away at excess capacity throughout the globe, what better way to get rid of that excess existing in the financial realm than to take out before the end of the first quarter (Thursday) those many high-profile bulls tripping over themselves these days with sophistry so thick as to possibly offer what might be the only way remaining to safely entomb Japan's damaged nuclear reactors? Their names are well-known. Their number is countless. Suckers every one...

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Thursday, March 24, 2011

Fleecing the Willing

Anyone thinking those first-world, export-oriented nations arrayed upon the globe today (Germany and Japan) are about to docilely subsidize forever those among the hopelessly bankrupt of the Anglo-American sort really ought have their head examined. Likewise, while the doctor is inside, one would be wise to ask: could some element within Germany be prodding the Irish to threaten collapse of its foreign-domiciled banks?

Let's put it this way: for the Irish to come off threatening (as was reported the other day) is easy with the right backing. Haven't heard a word since. Go figure. (It stands to reason that, some alternative arrangement would need some time to coordinate appropriate agreements.)

You can be certain that, the thinnest of bids sustaining the market's advance over the past few days leaves me by no means the only person on the planet who perceives this imminent threat of chaos unleashed on those private enterprises that otherwise are wont to label today's dilemma a "sovereign debt crisis" when in fact it is a crisis of their own making.

So, with yesterday's sub-prime lender no longer on the menu, today's sub-prime financial services provider is left to fill the void with but meager support for the riskiest claims existing within a hopelessly bankrupt financial system. Plainly, this capacity is exhausted.

Believe it or not, since March '09 bottom there have been only two instances similar to the present one. Both, if nothing else, suggest last week's low was not bottom to the market's decline from 2/18 top.

That being said, nothing yet alters prospect of the market's imminent collapse over days ahead. This view garnered from the state of the market's underlying technical condition remains unchallenged. Not one thing strained or overlooked might be thought defying this conclusion.

Yet there appears some room to further fleece the willing. The above view of the past two days — a move seen ending the lift off last week's low — presents a typical RSI configuration coinciding with a five-wave advance. So, some hours remain before the willing at last are fleeced, and this quite possibly, still, with a vengeance...

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Wednesday, March 23, 2011

Goose, Goose, Goose, Duck!

There might be no such thing as a sure thing, but if to every rule there is an exception, then resolution to an entirely unworkable debt arrangement throughout the trans-Atlantic sure appears imminent. Judging, too, by the recent rush for "things" (commodities) there appears no hyperinflationary scheme remaining able to delay much longer this resolution's appointed hour.

Too many years spent profitably scheming to maximize gains seems to have vacated from anyone's consideration a prospective, new dynamic now geared toward minimizing losses: an approach whose necessity a collapsing Ponzi scheme, indeed, would require. No one thinks to imagine how fear among strong hands might be driving capital to seek its relative preservation. Instead, some call increased demand for basic materials the result of a "global recovery."

Tell it to gold. Tell it to Greece, Ireland, Portugal. Tell it to most every U.S. state governor.

Tell it to the sitting ducks who can scarcely absorb shares from a goose whose still bloated leverage must find it all the more desperate to raise capital given a persistently deteriorating foundation supporting its precarious position.

Such growing inability to mask the insolvency of the trans-Atlantic financial system as is being exposed in the EMU can only raise the intensity of this new, loss-mitigating dynamic mentioned above. Detractors to this view — fearless bulls spewing irrelevant empiricism backing their sophistry — hold sway only over what for many months now are proven rather stretched interests. This is reality ever-diminishing volume plainly has revealed over the past year-and-a-half.

Given the likelihood that, desperation and denial will persist to the bitter end, then for the sake of raising capital in a climate becoming more widely acknowledged as doomed, we might rather expect vacillations in the stock market's volatility to become more intense. Indeed, since February 18th top we have seen this come into play already. We should see a lot more of it over days and weeks ahead...

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Tuesday, March 22, 2011

Top of the Mourning!

Did you notice via yesterday's NYSE Bullish Percent Index that, this measure of the market's technical state has markedly deteriorated versus November 2010, this while the NYSE Composite trades higher than it did then? Thus, long-noted underlying weakness accompanying the market's advance since late-June 2010 finds continued technical confirmation substantiating probability that, a "rising wedge" forming off that bottom ended on February 18, 2011 and is in the process of being rapidly retraced (as the Elliott Wave Principle indicates is typical).

Indeed, the market's bounce off last week's low notwithstanding, there is plenty of reason to stick with this view.

Already since 2/18 top there have been two momentum bounces (see bottom panel), yet the market's decline subsequently continued. With momentum now negative, odds are the present bounce likewise will fail to reverse the market's decline, particularly given myriad indications of growing underlying technical weakness revealed over recent months (contrary to what was the case late-August 2010).

Now, returning to present similarities to April 2010 top, we see via momentum as well as relative strength (top panel) that, a more "balanced" deterioration in both measures has been evidenced in the battle between buyers and sellers thus far since 2/18 top. Intuitively, this might be thought an appropriate state of underlying conditions during the initial phase of the market's reversal lower. Next on the agenda, then, appears an acceleration of technical deterioration coinciding with a market dominated by sellers, much as occurred in early-May 2010.

Seen in this light you get a sense of how the decline thought upcoming offers to bring a good deal more pain than was delivered last May, too. Both a technical setup indicating considerably more weakness now versus then, as well as the greater depths to which the market's initial turn lower have carried major indexes off 2/18 top evidence a more negative backdrop supportive of the likelihood that, the U.S. market is on the verge of collapsing to a similar degree as did Japan's market last week.

Will Ireland Threaten to Default?

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Monday, March 21, 2011

Come To Pappa

What to say on a day when the King of the Bankrupt headquartered in lower Manhattan consumes 20% of today's relatively meager volume of trading on the NYSE while falling 1.5%, and this on news of its 1-for-10 reverse stock split and penny dividend, as yet another CME-driven short squeeze delivered a general price increase to those many suckers convinced the low man on the capital structure totem pole is "undervalued" in relation to trillions of dollars of debt marked to fantasy?

I think that pretty much says it all.

Just one more thing...

Come to Pappa.

Both Quakes and Rebellions Could Be Factors
at This Week's EU Summit

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Sunday, March 20, 2011

Post-Industrial, Information Age Quaking: The ATT Signal

With today's announcement that, ATT is buying T-Mobile USA for $39 billion, Ma Bell is to be congratulated for yet another poorly-timed purchase once again signaling a market top.

Back in 2000 it was their MediaOne purchase (making ATT America's largest cable company) occurring near the tail end of the "New Era in technology" (fueled by the shadow banking system's still-functioning infinite multiplier) — a merger that marked the beginning of the end of "benefits" accrued to equity following 1998's Long Term Capital Management panic (whose effect was to capture the Federal Reserve's commitment to prop up at all costs leverage over physical assets put in place via a mountain of mis-priced credit risk).

Ever a slow-moving behemoth, ATT in reacting to competition ravaging its telephony-based data communications capacity took the "easy money" bait from those Fed-backed scam artists financing the so-called "new era" and further levered its balance sheet that the company might remain relevant in an environment whose unlikely sustainability apparently defied the imagination of those managing the company's finances. Shareholders have been paying the price for this poor decision ever since...

Bottom line, industry consolidation becomes rather necessary when too much leverage exists atop a physical economy not growing fast enough to sustain the debt. All of today's nostalgic spin suggesting a status quo employing the power of a wink and a smile might indefinitely sustain a mountain of credit securities marked to fantasy simply finds too many crippled, Titanic-like vessels still taking on water and in peril of suddenly sinking under the weight of Captain Bernanke's hyperinflationary attack on excess capacity.

So, in keeping with Friday's U.S. Treasury blessing allowing bailed out U.S. banks to once again offer a dividend — this as reward for yet another "stress test" revealing all is well (go figure) — ATT's proposed acquisition of T-Mobile USA appears just as much a show specially made for those whose calendar reads March 1999...

(Eat 'em up while they're still hot, sucker, before they turn cold.)

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Friday, March 18, 2011

Everything Screams Look Out Below

You must understand how reassuring it is to have in our midst such poor grasp of the market's precarious state, technically speaking, as brings weak hands — the vast majority of vested interests — to fearlessly act on the notion that, simply because stocks have been levitating for about a year-and-a-half nothing worse than occurred in 2008, therefore, is likely — as though time's passage has vindicated [insane] policies put in place since — and so every dip should be thought an opportunity to add to long positions.

Today, these suckers made their presence felt. Yet they did so without making a dent in an underlying technical configuration that screams, "Look out below!"

Add to this a consensus of sanguine attitudes toward an outbreak of currency warfare this week and you get conditions ripe for a giant letdown.

With today's CME-driven distribution — likely executed by that concentrated collection of desperate interests whose delusion of solvency now is being stressed by the death pant of the Japanese carry trade — the "you are here" marker indicated yesterday (in noting technical similarity in the formation of second waves unfolding as wave 3 down from 2/18 top forms) is appropriately adjusted above (see RSI).

Tricks like this are all these bankrupt interests have to keep weak hands paralyzed with hope while capital is raised on the backs of those dumb enough to take the bait.

This is where it all looks to lead. With the market's technical state considerably more negative now than was the case early-May last year, an outlook projecting a much deeper decline than occurred last May gains substantiation.

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Thursday, March 17, 2011

A Whole Lot of Nothing

That well-summarizes today. A whole lot of nothing, at least technically speaking.

Then, after today's close, the G7 — most emphatically those treasuries in the trans-Atlantic — saw this a fitting moment to signal a sense of panic re: the Japanese Yen. Let the swindle begin.

Apparently, "the Bank of Japan is typically reluctant to intervene." And their reluctance was reported this morning in response to last night's Dollar/Yen crash, blaming it on "speculators."

Yet, alas, comes the spin from Dennis Gartman, saying, "They intervene when the markets are unstable. And when the yen moves from 80 yen to the dollar, to 76 yen to the dollar in 30 seconds that’s instability – that will probably trigger intervention."

What well-schooled swindler insatiably starved for capital would not salivate at a BoJ possessing "all the firepower they need?" We will see where this leads.

Returning to an unchanged technical backdrop pointing to prospect that, over coming days major indexes could fall below their respective 200-day moving averages, and decisively at that...

Assuming the third wave down from February 18th top has been unfolding over the past ten days ... we might suppose that, the first wave of this third wave down completed at Tuesday's open ... and the second wave of this third wave down presently is forming.

Now, we have a recent instance of a second wave unfolding whose development might provide a template to the second wave forming right now. We see it forming last week right up to last Thursday's sharp decline at the open. Critically, this is a second wave within the presently unfolding third wave down from February 18th top — it is just one lesser degree than the second wave thought forming right now.

The manner in which last Thursday's sharp drop at the open was disguised (yet well-signaled by RSI's struggle to maintain a buy-side bias above 50) is the similar effect we might look forward to over the next day or two. Then in the cross hairs would be a rapid decline taking out respective 200-day moving averages, all in a matter of a day or three next week.

As long as underlying technical conditions remain supportive of a view supposing U.S. markets are fated to imminently follow Japan's, then if a whole lot of nothing today followed by a whole lot of nothing tomorrow is what it takes to confirm complacency's pervasive presence while a few more bucks are raised on the backs of suckers, then so be it.

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Wednesday, March 16, 2011

Briefly Revisiting the 1987 Meltdown

There is but one, present risk of meltdown whose impact will threaten millions upon millions across the globe in a most direct fashion, unlike anything a half dozen crippled nuclear reactors could surmount even if they were to simultaneously explode. That is, namely, the meltdown of the trans-Atlantic financial system. This, and this alone, is the threat whose imminence has become elevated by the natural disaster to hit Japan last week.

Much as a growing mass strike movement throughout the globe likewise threatens financial meltdown, so too does anything upsetting the applecart making impossible the necessary gouging of society required to marshal every last penny available for bailing out a hopeless cause. We will see if an economically advanced nation like Japan — suckered these past twenty years into ransoming its treasury for the sake of propping up its banking system [also turned insolvent via real estate speculation] — will further sacrifice its future for the sake of remaining a player in Team Fraud's globalization scam.

Indeed, it appears blunt tools are being pressed into service, that Japan's answer might be promptly given. With a 233% debt to GDP ratio, the Japanese appear ripe for swindle, as well as being provoked in such a manner as could detonate a collapse of the trans-Atlantic casino.

Yet could there ever have been better cover given to such ongoing effort as seeks to paralyze sovereigns the world over (including the U.S. Treasury), that some neo-feudal, post-Westphalian fantasy might be furthered? Surely, this seemingly incredible goal's reality stands as a testament to why such perfect misfits as Bernanke and Geithner (and many, many others) could ever be thought "qualified" for their respective offices. These men were built to fail (much like that Herbert Hoover, Jimmy Carter clone who was made our nation's blundering fascist-in-chief, following his election season coronation by the Financial Times of London).

Needless to say, the stage still appears perfectly set for some series of events astronomically raising probability that, first, over days ahead western stock markets are swept into the downdraft battering Japan's this week, leading then to what could become the worst year ever in the U.S. stock market's history. All things technical continue their weakening, and with no sign yet of a letup.

Leading to March options and futures expiration on Friday (3/18) it will be interesting to see if respective 200-day moving averages are challenged. If so, then next Monday could set up to be a day like October 19, 1987 (itself a Monday following an options expiration)...

S&P 500, August 1st - October 31st, 1987

Duly note the respective, relative positions of the S&P 500's 50-day and 200-day moving averages, and the fact that, both were rising right into the week of October options expiration.

Note, too, the depth to which relative strength had fallen (and so, appeared "oversold") upon October options expiration (green line).

Remarkably, conditions presently are much the same. If past is prologue, then, it appears Mr. Market could be in for a serious hurting these next few days.

Oddly enough, I recall there being a dollar crisis at the time of the October 1987 crash, and a lot of hubris about Japan's trade surplus, too. So, if history never repeats itself, but will sometimes rhyme, we might be looking at one such demonstration of how this sort of thing works...

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Tuesday, March 15, 2011

Tsunami Approaches New York

First, a Bzzzz on me for a misplaced RSI read supposing the market's bounce off yesterday's bottom might continue today. Distressed Japanese investors saw things differently...

May we all be so fortunate that this is the closest we ever come to facing a tsunami. Indeed, that apparent consensus believing today's rough start served to "wash out" sellers might better watch their language. What you see above is a huge wall of water whose destructive force, like the ocean, equally threatens the entire globe with a financial shock wave coming from the Japanese capital.

This thing is doomed. Forget "washed out!" More like well-poised for collapse. But don't just take my word for it. Listen to those capable of putting a floor under the market and making it stick...

It appears their better judgment sees this not the best moment. Quite fitting! Very foreboding...

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Monday, March 14, 2011

The Emotion Behind An Evaporating Bid

Some are claiming today's sell-off largely was emotionally driven. Well, judging once again by volume, it does appear one might objectively say the sentiment being displayed rather reflects a growing distrust toward equities...

Thus, we see stocks falling of their own weight. In a climate undoubtedly rife with complacency unwillingness to snap up "bargains" now trading at a discount to prices just a few short weeks ago presents a DEADLY undercurrent.

Yet as this occurs, many voices shout their conviction that, dips should be bought. Never mind a volume trend these past 18 months revealing there's simply little dry powder available. Today's consensus crying "buy the dips," then, only exposes complacency's fullness — wishful thinking — at this late hour in the long absence of an expanding bid most likely ensuring the market's positive progress.

"It takes buying to put stocks up, but they can fall of their own weight." No doubt, stocks are made heavy with fearlessness supposing they can only go higher. Those still holding — talking a game rationalizing this decision — sure look to be in for a rude awakening. Make no mistake, many insiders are among these, as are friends in Washington. Here comes the reviling. John Law once was popular and powerful, too ... and then become neither.

Now, unlike late-November 2010, momentum's decline is accelerating as its measure — MACD (bottom panel) — is near going negative. Thus, again unlike late-November 2010, the market's decline appears poised to accelerate.

But right away? Maybe not. Enduring complacency amidst an evaporating bid notwithstanding, there's likely a crumb or two remaining in that bag of tricks emptied following 2008's implosion of securities-based finance. So, still in store might be a lift back up to the area where support was turned into resistance (green line above) last Thursday (3.10.2011).

Only a slight change to the Elliott Wave count presented on Friday.

Relative strength's behavior during today's turn higher displays more balance than accompanied Friday's reversal. This improved, underlying condition better supports an outlook projecting five waves up from today's bottom forming wave c of 2.

On this count, too, note peak RSI during formation of wave c of a of 2 (at the open on Thursday, March 3rd). Peak RSI during formation of wave c of 2 likely will exceed this, being a like, related Elliott wave one degree higher.

Supporting the view that, today's turn off bottom was qualitatively better than Friday's is relative strength at 1-minute intervals ... closing today on the buy-side of its range (above 50), as opposed to Friday's close below it (thus setting the stage for today's setback at the open).

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