After an overshoot that exhausts available buyers…where are good targets...

General Comment: What we are witnessing now:

Price Stability. 

Thank you very much Ben.

Financials…a breakout with no volume or something else...

Financials, have NOT broken out…they have ramped on NO volume for months and are simply at resistance in the apex of a triangle. On an fundamental level, bank balance sheets are now more misrepresented and precarious than most would believe.

S&P500 Proportionality and additionally an Overshoot

While EVERYONE and their brother sees any selling from this over believed, overhyped, over-marketed and extremely over-leveraged rally will lead to new highs…it is important to understand that overshoots in big rallies are nearly always terminal and represent the end of a move. Looking at the dollar pattern that I posted previously, I will not be looking for new recovery highs once this overshoot has been confirmed - and it has not been confirmed yet. We may still have more blowing off remaining. However, once confirmed, I will be looking for a persistent downtrend.

As a reminder, the chief bubble blower, Ben BURNanke and his predecessor are totally responsible for papering over reality, the results of which can clearly be seen in the charts I’ve posted over the last few days. Ofcourse, at some point Ben, in an apparent after thought,  will be trying to figure out what to do with the vast amount of leverage and currently precariously perched assets that he has procured, endorsed or blown into buubbles.

And to demonstrate symbolism of this overshoot, not to be left out, Bloomberg needs their own 16 year old now:

You just can’t make this stuff up!

High Yield bonds say…hmmm too...

While I was expecting the market to move to about 1515 for the last 9 months or so and subsequently to overthrow a bit to between 1525 and 1538, today’s enthusiasm was still on target yet intriguing due to the fact that my expectation was to see a pop today in the morning to complete a stop run that was setting up on Friday and then a reversal…though that pattern is still likely to soon be the result possibly tomorrow- today was not its day. To be sure, the High Yield corporate bonds are not endorsing bullish sentiment (which further increased today) and moreover, sport volume patterns that look pretty unsympathetic too. So, it looks likely that market optimism may want a little more upside and then the expected rejection…more or less what I was looking for today…but did not happen.

Weekly S&P500 and Dollar…hmmm

Everyone sees dollar head and shoulder patterns and a breakdown in treasuries…with all this consensus, should we not have a sneaking suspicion that new highs in Treasuries will come before they actually breakdown. In addition, everyone sees higher prices for equities. In fact, 70% of people see this week up as a sure thing and even more people see next month up as a sure thing. 

However, more importantly than any of this, the dollar has broken out AND retested a huge A-H pattern. This pattern projects in a way that does not allow for resumptions of the commodities up trends - which by the way, everyone is expecting also. As you can see from the chart below, equities have clearly come into their own but will likely soon need to acknowledge the excessive leverage, bullishness and ridiculously low volume not to mention argue with the dollar. This argument can be seen in the chart below…dollar is in green.

It seems to me that the minute a reasonably large block of shares in the financials index are offered at market - or there is even a sneeze - already scarce buyers will simply disappear all together…with the possible exception of one BURNanke…and this week is a slow for Fed liquidity operations... 

Today’sSentiment popped to an extreme nearly only seen at tops...

The most expensive condo ever sold in Miami...

In a gratuitous display that demonstrates the absolute most endearing qualities of some of our real estate professionals - this promotional announcement was sent by one Dora Puig…a sign of the times and lunacy going on in our world...

meanwhile…

At the END of the Line…make or break time...

Recommendation: Eat at McDonalds and Use as much Xanax as possible…it may soon be required if you follow the current fad advice

As Ray Dalio has missed the entire 2012 move…he will now be certain to get it right and in a big way…by recommending that we borrow as much money as we can to invest in every available asset…next his health recommendation will be an equivelant - to use Xanax every day and then go to Mc Donald’s and stuff yourself with abandon…Tepper, needs no comment…he only comes out when he’s talking his book…CNBC apparently loves a 16 year old stock picker and she’s probably about to get her own show…Sentiment is leveraged long and my sentiment measure is near record highs…hmmm 

Meanwhile bonds have not made meaningful downside progress…and the dollar is diverging with every other currency…I simply could not resist posting…cause there are so many buyers left…among other things…I apologize for my break in posting. I am planing on posting regularly again.

Treasuries conflict with equities...

Currently Treasuries are showing rather bullish patterns that contradict the asundry bullish observations out there…If the market wants to gain steam via intervention, its seems that that could be a long and torturous path…going potentially into the 1449 area on the S&P500, moreover, EVERYONE is watching the inverse head and shoulders pattern going on at these levels…however, as with everything with this tortured and totally corrupted market…things are never very rational…I will post a few charts today as it looks like things are getting interesting again…

I apologize for my absence in posting. I have not intended to quit blogging and thank you all for the feedback over the last weeks. I have been otherwise attended and very completely occupied. Additionally, I have found little reason to comment on the markets since last time since nothing has really changed…equities are still chopping around the same areas and the market is very dangerous indeed and getting more so every day.

Ben BURNanke’s bus has now disintegrated…time to cover some.

As the wall and bus collided at full speed, the plan for the wall to disintegrate while the bus, minus wheels and now masquerading as a missile, blasted through it without barely a scratch falls apart…the market has collapsed and damage has happened faster than most anyone would have expected. We reduced longer term shorts and dollar positions yesterday and today…waiting for an opportune reload, which will be beckoning soon for certain, as one Mr. Ben BURNBus-anke and the driver looks for a new vehicle to try the drive full speed into a wall again…What a crazy world…For me the anti-Fed intraday and reticulation 5 systems I recently released are trading and quite frankly do not care what type of vehicle or approach that Ben uses to implement his destrcutive panacea. The markets may very well trend down hard (and no matter what happens near-term they are destined for HARD DOWN sooner rather than later) from here still and I will be trading to reflect that, however, given the desperate need for the markets and central planners to come up with some good news…I would certainly not be surprised with a short period of retracement from near these levels.

The “Ineptocracy” is running the show…alive and well

As JPM’s massive money amplification schemes unwind and reveal its absolute insolvency…I am reminded that we operate in an “Ineptocracy.” A system where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

An 80 Trillion Dollar Perfect Lie at the biggest bucket shop in the world...

JP Morgan would like you to believe that their trading losses are 2 billion and could increase by another billion. I believe the losses will be 100% to 200% more than that by the time this is said and done. They would also like you to believe that releasing loan loss reserves via accounting maneuvers is equal to earnings. Not to mention that having the audacity to reduce loan loss reserves while credit quality is contracting and risk is increasing - its just simply ridiculous. The reality is that the quality of the whole financial sector’s earnings (not to mention most S&P500 companies) has declined appreciably over the last 10 years and precipitously at the TBTF institutions.

On these pages you have heard many times before that JPM (or any other large entity or market participant) can not manage or hedge its derivatives risk sustainably and effectively without mismarking and accounting shenanigans. Perfect hedges simply just don't exist and certainly if a perceived perfect hedge is found it s not without introducing other new and unforeseen risk and consequences. Hedges, however, are the excuse for increased leverage. To look at JPM’s Bruno Iksil CIO portfolio is particularly disturbing in that the capabilities and resources brought to bear there are representative of the capability of the entire bank's derivatives methodology. However, JPM and Jamie Dimon want us to believe that the decisions and risk management of positions were “egregious" and that there were “...many errors, sloppiness and bad judgment” involved. They really want the public to believe that somehow they have an isolated pocket of ineptitude and risk takers who are the only ones related to the issue. Jamie of course takes responsibility because they work for him…but he definitely does not want anyone to believe that JPM put their crack derivatives resources on this and still blew up. The only problem is that when you build a trillion dollar notional exposure there are no accidents. There is no isolation. There is no sloppiness and egregious counts towards the the chutzpah of the bank to try to make us believe their case. These types of positions require persistent and deliberate action usually over an extended period of time.

In the case of JPM, the reality is the JPM is a bucket shop that makes profits via accounting maneuvers, backroom deals and outright malfeasance and conflict of interest relating to client assets. Moreover, the institution is totally insolvent - as I have indicated many times before…the pursuit money amplification for profit generation and as the illusory element to shore up hopelessly unshored balance sheets has been chief on large banking cartel members like JPM and also the Fed’s agenda.

I used to work at JPM and I can tell you from my view their capability with regard to managing their nearly 80 trillion derivative book is no better run than this disaster. This is why it was and is of utmost importance that the Jamie and Ben show misdirect so that no one could confuse this isolated incident with a larger pattern of risk and flawed and hollow methodology employed in their whole derivatives book to further balance sheet fraud rampant in the whole financial system,  executive compensation reward and ultimately to mask chronic insolvency.

If it were possible to move the marks to hide this particular blowup they would have done so. However, the outing of Bruno also made these trades and prices impossible to hide or cover up as they became the target of much smarter organizations than JPM. The really amazing thing is that this is just the tip of the iceberg with institutions levered 400 to 1 (Goldman Tax) and 80 trillion dollar derivatives books that are purported to be perfectly hedged (an impossible and implausible reality) we should be prepared that JPM’s problems will be growing dramatically as these perfect hedges are found not to be so perfect. Mind you, we don’t have to worry about the brilliant executives who built these positions they have all been paid and by the time the 80x losses from this debacle are being paid for by the bailout team at the fed and treasury these guys will be on their boat in the islands sipping pina colada’s.

As these huge money amplification schemes become unwound and are socialized all over the globe one can expect a very unfavorable outcome: persistent asset sales, further credit contraction and a gargantuan dollar shortage. So, don’t be surprised to see that the best trade of our era is long dollar and also don't be surprised by the social upheaval that comes along with this process. All these idiotic banks are short dollar via their massive and corrupt money amplification schemes.

Ben BURNanke defers to Jamie Dimon because he works for him and a few other cronyist interested parties. He will do so again and nothing substantial will come of his regulatory examination. In fact, men like Jamie Dimon, Lloyd Blankfein and Ben BURNanke should be criminally investigated for their, misrepresentations, theft and manipulation of US constituent’s assets.

For now, Ben BURNanke now has to go from worrying about stock prices to figuring out how to get "control-P" rerouted to the main branch of the Fed: JPM...

Ben and Mario and Brothers drive the BUS full speed into the wall...

Not such a pretty picture...