No doubt a decided technical breakdown has accompanied the market's turn lower this week. Yet uncertain is whether at hand is the market's anticipated break slated to challenge its early-October lows...
Having some better sense of the present moment's extraordinary vulnerability — a reality well-spoken by the market's volatile swings since August — one is inclined to consider prospective acts of desperation employing well-known technical means by which bids are manufactured. In other words, in these the dying days of sustaining appearances of the trans-Atlantic banking system's solvency technically-driven machinations extending on those behind early-October's massive short squeeze targeting hopelessly insolvent banks and financials rather seem wisely anticipated right up to the precipice of fast approaching, chaotic collapse.
This view most imminently applies to prospective development of an a-b-c Elliott Wave form down from late-October peak slated to challenge early-October lows. There's enough "reason" to assign to the likely desperation of those interests whose position is at grave risk of disintegration a supposition that, any and every opportunity to delay collapse — an end otherwise appearing only the more inevitable — will be exploited ... or, more accurately, will exploit resources available for accomplishing this end for the sake of sustaining appearances systemic solvency is not at risk. More than enough captive interest enamored with hyperinflationary bailout exists to play the game of make believe right up to the moment when "the final solution" — shakedown, and in such a manner even threatening all out war — becomes the path of least resistance forward.
For the moment it appears a well-hedged, short equity position is due to prosecute its interest. So, continuation of this week's decline appears immediately in store. Yet every effort to forestall collapse seems the most reasonable view over days ahead. This is all the more supported by way of several technical measures still positively poised in absolute terms.
Experience since March '09 bottom strongly substantiates this posture, no matter the present view that, the market has begun to turn over, this in resuming an Elliott corrective wave whose beginning tracks back to October 2007. If ever there were a moment when echoes of the market's prior resilience might be evidenced — resilience finding the market holding up amidst various technical measures respectively maintaining a positive, absolute bias — this reasonably seems one such moment, albeit likely among the last.
Substantiating good reason for maintaining a dire outlook, though, in the grand scheme of things (while supposing any present "resiliency" probably is a dying trend), is Doug Noland's Credit Bubble Bulletin this week titled, "ECB to the Rescue?" The Fed's discrediting is at hand, as it seems those weened on a fascist outbreak's hyperinflationary prelude a la the 1923 Wiemar Germany experience are of no mind to play along any further with reckless central banking community machinations of the Anglo-American variety. No big surprise here, for sure. Yet informative reading nevertheless.
Then there's Kyle Bass' recent appearance on BBC HARDTalk. He says, "Only massive debt restructuring can save the EU." Once again, old news, yet one wonders if the likes envision the "Iceland model" for restructuring brought to your attention here the other day. Truth is such an approach is no less an act of kicking the can down the road than has been hyperinflationary bailout attempted thus far. Indeed, there is no solution possible — be it debt write down, or continued hyperinflationary liquidity provision — without there first and foremost being investment in physical economy to the tune of trillions of dollars per year. This fact must capture everyone's imagination, and likely will, as there is no other sane way forward.
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