started to break down in a big way again. It looks as though we’ve entered a
wide trading range on the S&P 500:
If we don’t
bounce hard at 1,300, we’re going to 1,250 in short order. The $1 million
question on everyone’s mind is whether this is just a correction or the start
of another Crisis.
Dollar is indicating it could very well be the latter:
As you can
see, the US Dollar looks to have just
broken out of a falling wedge pattern. The ultimate target for this breakout,
if confirmed, is over 84. The only thing that could instigate that kind of move
would be a full-scale Crisis (the last two significant US Dollar rallies were
due to the 2008 Crash and 2010 Euro Crisis, respectively).
happens it will be the Eurozone that starts it. The debt problems over there
have no spread to Italy, a country far too large for the EBC to bail out. And
with the European banking system being just as, if not even more saturated with
toxic debt as the US’s, we could see a systemic collapse over there from just
about anywhere: Portugal could take
down Spain which could in turn take down Germany, etc.
Euro is hanging on for dear life at 140. A break below this level would
indicate we are at the beginning of a serious breakdown in the Eurozone. That
would be the trigger to watch for the beginning of REAL trouble.
thing is clear: we are fast approaching the REAL Crisis. And there’s no shortage of Black Swans
to hit either. The Euro problem isn't going away. In fact, it's now spread from
Greece to Italy and Portugal... the latter county now being officially rated as
China is experiencing a liquidity Crisis on par with the Lehman-collapse. In
fact, a recent bond auction there failed to sell EVEN HALF of the bonds offered
(there's not enough capital available).
And then of
course there's the US where we have only two weeks to deal with the debt
ceiling before we begin a default.
Crisis is literally at our doorstep. And it’s going to kick off another 2008
episode as all the over-leveraged players (read: EVERYONE) will have to sell
positions to meet margin/ redemption calls. However, this time around we’ll
also see civil unrest as people lose their social safety nets (unemployment,
social security, etc).
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