Lunacy and idiocy from bankers, especially Central Bankers like Ben BURNanke and his buddies, have driven exceptional amounts of speculation and via credit instruments and leverage throughout the world. It was just last summer that insolvent banks who could not get a loan from a car salesman were writing as many derivative contracts as they could possibly write. This of course, left them short. Short the premium and short assets. The reality is that, however, for the immediate term last year these idiots showed cash generated as a result of these transaction as cash on their books without regard for the obligations they had taken on. Funnily enough, when this was combined with “The Ben and Mario” shell game the world was convinced that there was a new bull market. In fact, many smart and reasonable people now have entirely disregarded logic and turned hopelessly bullish. All that’s left for a massive rush to buy call options in Apple Computer. After given rumor and innuendos, it appears that that has already happened. However, to summarize, I have NEVER seen market activity as deformed and unhealthy as this years. That is saying a lot since the last years have been anything but healthy - going from one crash to another with intervening headless rallies…not to mention the consistently collapsing real estate markets.
So, where are we now? Well, at the precipice of a MAJOR breakout in the dollar index, collapse in Europe and an impending unwind of the AAPL juggernaut among many other iBuubles and much to the dismay of Byrini and the many imaginative bulls who are looking of any rational to hold till $1,000. The reality is VERY different…AAPL is only a symbol of the excess in this market and it will break. The Dollar, the EURO and various over inflated risk assets are all at very important points…if, as I expect, the dollar breaks out, the market still needs to catch up with the EURO decline…and that places the S&P500 index in a position of needing to drop to well below 1,000 if it happens…
The irony is that we have a bipolar market, driven by credit instrument excess, that can either only go up and then just the same can only go down. Brutal as it will likely be, I think we will not be seeing very nice looking bounces here and that the huge megaphone pattern on the Dow and S&P 500 over the last ten years will not take wave E to a new high the pattern implies. Even if that were to ultimately occur…the reality is that NOW this market is in for a nasty unwind of the credit distortions that have occurred over the last years. In my impression, Ben BURNanke should be prosecuted for his inept and disastrous manipulations…that aided and abetted this evolution if not were the main reason for their occurrence…
To put it succinctly, this market is entirely broken…and its going to get much more broken. I have taken it upon my self to release systems at this point which no longer rely on any sort of normal market dynamics and are engineered to target the Central Bank driven HFT programs and the credit distortions that have eliminated nearly any renaming semblance of “free” to the supposedly free markets. These systems are indeed Fed killers - taking advantage of all available volatility and eliminating slippage entirely - I will discuss them in more depth in some future posts. In any case, these are VERY unusual times and I encourage everyone to be very aware just how unusual and take steps to prepare. I have gone to great length over the last months because I only see things getting more unhealthy and broken with the markets…It will certainly not be funny to see us go from a reverse crash and total euphoria directly into a persistent and powerful decline….but for this beast it is poetic and ironically highly likely.
