Monday, September 19, 2011

Update On Financial Markets

In Friday we completed an upside pattern in the NYSE volume as shown in the top graphic below.  That pattern is a W-shaped bottom, highlighted in red, with an upward projection equal to that pattern’s height as shown in blue. 

2011-09-19_1217

In the mean time the SPY ETF or the S&P 500 ETF looks like a shotgun blast over the last few months.   Price is scattered everywhere with gaps all over.  No one has been able to mount an upward trend or upward penetration of this messy chart.   If one looks closely, there is the possibility we are in the fifth wave and final wave upward that may propel us somewhere north of 1250. 

ETF volume and usage has picked up substantially since the return of market volatility a few months ago.  The SPY volume has increased 2-3x over prior months.  Additionally, while I would have to kill you if I showed you, many other derivatives and futures products are showing aberrant behavior.  This shows an environment we have said is going to come to pass is likely in the process of happening; that we are relying completely on derivatives to levitate the market.

I don’t anticipate future price based primarily on patterns but if one would project the next move in price based on the S&P price pattern in conjunction with the NYSE volume pattern,  we would see a next attempt to rally the market at about 1000 on the S&P 500.   But first we may have some brief unfinished business on the upside.   

2011-09-19_1104

I want to remark of something we have uniquely written about at least a dozen times over the past three years.  Wall Street and hedge funds have traded counterparties out of financial markets.   This is an unintended consequence of bailouts without reform and Wall Street’s massive corruption of the rule of law.  Anyone exposed to these markets in any fashion may be running the risk of eventual forfeiture.  Or counterparties not being able to fulfill their obligations on either side of any trade.  That isn’t just stocks, that is any financial instrument.  Especially derivatives like CDS’s used to destroy financial institutions, countries, etc.  (And is currently being used to terrorize Europe.)  Wall Street, hedge funds and the investor class are holding a tremendous amount of overvalued or, in the case of derivatives, completely worthless paper instruments.   And they aren’t receiving the necessary liquidity injections, either through the replenishment of a functioning economy or through wealth-shifting bailouts, to keep their legalized theft going forever.  At some point, liquidity will again dry up.  It’s the exact same dynamic, albeit applied to different financial markets, that we uniquely wrote was going to happen a year before the 2008 collapse.  This at a time when most no one in Europe or the U.S. under the age of 90 had even heard of a liquidity shock. 

One thing is certain.  Nothing has been fixed.  N-o-t-h-i-n-g    Fraud is still the primary economic and political model by which the world is governed.  

posted by TimingLogic at 4:20 PM

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