S&P 100 Keeps Pounding On The Door. Who Will Let Him In? Spain? China? North Korea? Trichet? Merkel? No, It Will Be President Obama.
Remember back soon after the market bottomed in 2009 we picked two possible dates for the next stock market top based on our volume cycle count algorithm. One of those two tops was May of 2010. As we noted at the time, that algorithm is not optimized but is instead driven by natural rhythms of financial markets. Listening to markets and not opinions is a much more healthy exercise. And the market is speaking through the volume cycle count algorithm. As we have written four or five times in the last few months, I believe this is a major top.
The S&P 100 has been pounding on the door of this level of 480-ish time and time again on the downside for the last eight months. We first hit this area on the upside ten months ago. It took ten months to convincingly break through and we are back here in only three weeks of market weakness. We remarked before the collapse in 2008 that coming declines would be too quick for investors to liquidate. Nothing has changed. Fundamentals dictate that markets will move too fast for bankers and politicians to react in a timely fashion and for investors to respond. True believers are going down with the ship.
I see nothing that points to an imminent bottom in equity prices. That might change in a week or some other arbitrary and unpredictable future date but it hasn't yet. Sure sentiment indicators such as put-call readings have turned constructive but we don't rely on sentiment on here because it's a fallacy that is not grounded in the fundamentals. Plus, sentiment is now a reflection of the herd that is Wall Street since this is a professionals-only market. ie, The "dumb" or losing side of sentiment is Wall Street as most Americans have been and are out of the market for the last decade. Those who rely on sentiment were beaten like a rented mule when trying to pick the bottom in the 2008 collapse. We stayed clear of such folly.
The S&P 100 has been pounding on the door of this level of 480-ish time and time again on the downside for the last eight months. We first hit this area on the upside ten months ago. It took ten months to convincingly break through and we are back here in only three weeks of market weakness. We remarked before the collapse in 2008 that coming declines would be too quick for investors to liquidate. Nothing has changed. Fundamentals dictate that markets will move too fast for bankers and politicians to react in a timely fashion and for investors to respond. True believers are going down with the ship.
I see nothing that points to an imminent bottom in equity prices. That might change in a week or some other arbitrary and unpredictable future date but it hasn't yet. Sure sentiment indicators such as put-call readings have turned constructive but we don't rely on sentiment on here because it's a fallacy that is not grounded in the fundamentals. Plus, sentiment is now a reflection of the herd that is Wall Street since this is a professionals-only market. ie, The "dumb" or losing side of sentiment is Wall Street as most Americans have been and are out of the market for the last decade. Those who rely on sentiment were beaten like a rented mule when trying to pick the bottom in the 2008 collapse. We stayed clear of such folly.
When you pound on the door enough times, eventually someone is going to let you in. This upper band is a very, very key long term support area and as we see over the last week, Wall Street is trying to hold this level; we saw substantial derivatives-driven (leveraged) buying in an attempt to hold current prices. Let's watch to see what happens from here. (This chart is a week old. I meant to post it last week but didn't get the time. The S&P 100 is currently sitting at 490-ish as a comparison to the week old chart reading.)
If we break this upper red price band, we could easily run down to the 410 price band very quickly. And if that happens, it's game over. It will be just a matter of time until we make new lows on the way to what will most likely be our downside price targets. That's getting ahead of ourselves for now.
The President, in failing to do what is necessary to deal with the fraud and abuses in our economy and in Washington, and the fraud of corporate personhood and elitist interests, has set himself up for failure. Of course, we have written this very fact countless times over the last year and more. All of his happy talk on the economy and reforms will then be greeted with the same 'talking to the hand' response that the American people now give to Wall Street and Congress who clearly aren't worthy of our respect, our trust or any role in society's stewardship.
If trust in the President is broken, there will be no institution (rule of law) within the federal government that maintains the public's trust. That dynamic will have potentially devastating consequences. So far many Americans have cut the President substantial slack because he inherited all of these disasters. But because he wanted the job, he can no longer blame his predecessors. The President ran on a ticket of change and reform. He has failed on every level to deliver anything other than more of the corporatocracy and Washington's perpetuation of democratic abuses.
The reality is the Congress is the people's representation in Washington. And the Congress, specifically the Senate for those who understand the political process, is the source of Washington's massive fraud. Yet a President with strong leadership qualities has the ability, through the bully pulpit, to transform Washington and Congress. If President Obama loses the public's trust, it might be time to stockpile your freezer with enough food to last a month or more. And ditto with getting supply of life-necessary medication to last quite a few months. This ties in with our post of a long time ago anticipating coming supply chain shocks. I don't expect our food supply to be impacted long term but short term crises may eventually create countless supply shocks.
The path to hell is paved with good intentions. (political rhetoric) The path to heaven is paved with good deeds. (uncompromising leadership)
If we break this upper red price band, we could easily run down to the 410 price band very quickly. And if that happens, it's game over. It will be just a matter of time until we make new lows on the way to what will most likely be our downside price targets. That's getting ahead of ourselves for now.
The President, in failing to do what is necessary to deal with the fraud and abuses in our economy and in Washington, and the fraud of corporate personhood and elitist interests, has set himself up for failure. Of course, we have written this very fact countless times over the last year and more. All of his happy talk on the economy and reforms will then be greeted with the same 'talking to the hand' response that the American people now give to Wall Street and Congress who clearly aren't worthy of our respect, our trust or any role in society's stewardship.
If trust in the President is broken, there will be no institution (rule of law) within the federal government that maintains the public's trust. That dynamic will have potentially devastating consequences. So far many Americans have cut the President substantial slack because he inherited all of these disasters. But because he wanted the job, he can no longer blame his predecessors. The President ran on a ticket of change and reform. He has failed on every level to deliver anything other than more of the corporatocracy and Washington's perpetuation of democratic abuses.
The reality is the Congress is the people's representation in Washington. And the Congress, specifically the Senate for those who understand the political process, is the source of Washington's massive fraud. Yet a President with strong leadership qualities has the ability, through the bully pulpit, to transform Washington and Congress. If President Obama loses the public's trust, it might be time to stockpile your freezer with enough food to last a month or more. And ditto with getting supply of life-necessary medication to last quite a few months. This ties in with our post of a long time ago anticipating coming supply chain shocks. I don't expect our food supply to be impacted long term but short term crises may eventually create countless supply shocks.
The path to hell is paved with good intentions. (political rhetoric) The path to heaven is paved with good deeds. (uncompromising leadership)
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