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Guest Post: Preserve and Protect: Mapping The Tipping Points
Submitted by Gordon T Long of Tipping Points
Preserve and Protect: Mapping The Tipping Points
The economic news has turned decidedly negative globally and a sense of ‘quiet before the storm’ permeates the financial headlines. Arcane subjects such as a Hindenburg Omen now make mainline news. The retail investor continues to flee the equity markets and in concert with the institutional players relentlessly pile into the perceived safety of yield instruments, though they are outrageously expensive by any proven measure. Like trying to buy a pump during a storm flood, people are apparently willing to pay any price. As a sailor, it feels like the ominous period where the crew is fastening down the hatches and preparing for the squall that is clearly on the horizon. Few crew mates are talking as everyone is checking preparations for any eventuality. Are you prepared?
What if this is not a squall but a tropical storm, or even a hurricane? Unlike sailors, the financial markets do not have the forecasting technology for protection against such a possibility. Good sailors before today’s technology advancements avoided this possibility through the use of almanacs, shrewd observation of the climate and common sense. It appears to this old salt that all three are missing in today’s financial community.
Looking through the misty haze though, I can see the following clearly looming on the horizon.
Since President Nixon took the US off the Gold standard in 1971, the increase in global fiat currency has been nothing short of breath taking. It has grown unchecked and inevitably has become unhinged from world industrial production and the historical creators of real tangible wealth.
Do you believe trees grow to the sky?
Or, is it you believe you are smart enough to get out before this graph crashes?
Apparent synthetic wealth has artificially and temporarily been created through the production of paper. Whether Federal Reserve IOU notes (the dollar) or guaranteed certificates of confiscation (treasury notes & bonds), it needs to never be forgotten that these are paper. It is not wealth. It is someone else’s obligation to deliver that wealth to the holder of the paper based on what that paper is felt to be worth when the obligation is required to be surrendered. It must never be forgotten that fiat paper is only a counter party obligation to deliver. Will they? Unfortunately, since fiat paper is no longer a store of value, it is recklessly being created to solve political problems. What you will inevitably receive will be only be a fraction of the value of what you originally surrendered.
In the chart above, we see that just when the exponential expansion seemed to have run its course during the dotcom bubble implosion, we subsequently accelerated even faster. Cheap central bank money; the unregulated, off-shore, off-balance sheet increase in securitization products; a $617T derivatives market; and the domination of the credit producing Shadow Banking system then took us to even greater levels. Bubble after bubble continues to propel us, as more recently the Bond Bubble replaced the Real Estate bubble. Similar to trees not growing to the sky, something always happens which creates a tipping point, a moment of instability or a critical phase transition. Suddenly what worked no longer works.
I have written extensively in a series entitled “Sultans of Swap” and another series entitled “Extend & Pretend” the growing and clearly evident tipping points that are unquestionably now on the horizon. You can ignore them at your peril, but when the storm swells hit, don’t say you were never warned and no one saw this coming.
Consolidating the trends and distortions outlined in these two series, we arrive at the following ‘large brush’ death spiral leading to a failure of fiat based currency regimes.
The above cycle is well supported by recent and still unfolding developments. These have been mapped onto the cycle.
MAPPING THE TIPPING POINTS
Let’s now list the Tipping Points which have become abundantly evident over the last few years and which are continuously expanded on our web site Tipping Points. We track each of these on a daily basis on the site. The rankings shown below, though they do shift, we have found to stay relatively stable on a quarterly basis. Each Tipping Point has the capability of individually being a catalyst to advance the sector marked in red above.
SEQUENCE & TIMEFRAMES
We can never be sure of the sequence and time frame of any particular Tipping Point. Like a house of cards you never know which one, or what movement will precisely bring the house of cards down. What you know however, is that it will happen – you just need to be patient and prepared. Unfortunately few have the patience or think they can time it for even more profit. The greatest trader of all time, Jesse Livermore, wrote after a life time of trading, that his best gains were made when “he bought right and sat tight!”
Our current analysis on Tipping Points reflects the following:
DETERMINING MORE GRANULARITY – We are in the 2010-2011 Transition Phase
In my articles EXTEND & PRETEND: A Guide to the Road Ahead and EXTEND & PRETEND: A Matter of National Security I outlined even more granularity to the virtuous cycle turning vicious spiral.
We can now overlay the Tipping Points onto this map. We arrive at the following.
A – EXIT FROM ECONOMIC CRISIS STAGE
- Commercial Real Estate – Finally forced to account properly for mark-to market valuations.
- Housing Real Estate – Option ARMS come due and FHA / FNM / FDE / FDIC are seen as insolvent.
- Corporate Bankruptcies – Unfunded Pension impacts and debt loads (gearing) on reduced revenues.
- State, City & Local Government Financial Implosion – Non Accrued Pension Obligations, falling tax revenue and years of accounting gimmicks come home to roost.
- Central & Eastern Europe – The ‘sub-prime’ of Europe will soon erupt on the EU banking network as evidenced recently by Hungary and the Baltic States.
TRANSITION:
HIGHER INTEREST RATES
Significantly Increasing Interest Rates – A Major Global News Focus
A $5T Quantitative Easing (QE II) Emergency Action
It will likely be triggered by a geo-political event or false flag operation.
B – ENTER POLITICAL CRISIS STAGE
- Entitlement Crisis - The unfunded and underfunded Pension charade ends
- Credit Contraction II – Credit Shrinks Violently
- Banking Crisis II – Banking Insolvency no longer able to be hidden through Extend & Pretend.
- Reduced Rating Levels - Falling Asset Values and Collateral Calls on $430T Interest Rate Swaps
- Government Back-Stopped Programs - FHA, Fannie Mae, Freddie MA, FDIC go bust
C - HITTING ‘MATURITY WALL’ STAGE
Lending ‘Roll-Over’ – Game Ends
CONCLUSION
A recent Zero Hedge contributing author summarized the current environment nicely:
“There is an entrenched insolvency problem in the United States, and a picture is worth a thousand words. Insolvency is not illiquidity; insolvency is about income that can’t service debt burden. Notice where things fall off the cliff: I believe we are getting close to this point. Just need a catalyst. Sequential bond auction failures here, a sovereign default there, massive liquidity drain all around, worse… whatever. The fumes running the engine (QE, or credit easing) are dwindling.”
There is an old sailor’s saying:
Red sky at night, sailors delight.
Red sky in the morning, sailors take warning!
Every morning the next batch of economic numbers is released and the indications are consistently red. Of course the market initially drops, and then miraculously rises on no volume. Since 2007 we have potentially constructed the largest head and shoulders topping formation we have ever seen.
This doesn’t mean the markets are imminently headed down. What it does mean is you should be meticulously battening down your financial hatches and checking your options for every eventuality.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain
Gordon T Long
Tipping Points
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Silver b*tchez
Got gold?
Have some, but silver has much more potential. Which central banks have stockpiles of gold they can dump? All. Which have silver? None.
As this UnWinds, you actually THINK they would dump the only Real Monetary asset they have left?.
Hell no.
Own both,70%/30% Silvers upside is Industral uses.......when the Sky is Falling, Industrial use's, will evaporate like Manna in the Sun.
We agree on having both, of course. However, silver's ultimate use would be as currency in daily commerce. It has been in the past and has an established function there. My junk silver for your farm products. Your silver coinage for my expertise in being able to fix just about anything mechanical made by man.
"my expertise in being able to fix just about anything mechanical made by man."
I have a 1/2 HP emerson 230 volt electric motor. It turns on, runs for 20 seconds, then "clicks", and shuts itself off. Motor runs the fan that cools the greenhouse, and with this failure, greenhouse temp just passed 145 F. What is wrong with the motor? Can it be fixed? Do you really know how to fix anything?
Rise up and take the power back
Its time the Fat Cats had a heart attack
Bad times coming to an end
We gotta unify and watch the flag ascend.
Try changing out C2 Reb.If that doesn't work, just solder shut whatever is clicking. Next replace whatever is smokin. Done...
Love it man, love it.
Rebel, does the fan get up to full speed right away, or is it dragging itself along until it clicks off?
Bad bearings or a short in the coil maybe?
Gawd, I hope not bad bearings...
Made in China?
lol
Do Chen Rolling(in the money as you endlessly replace our cheezy Chinese)Bearings?
I trust not Do Chen!
.
.
Do Chen is Mandarin for rolling bearing.
But, our lil ol bearing company in Peru mostly imports Korean and Japanese. Only a little bit of Chinese for the "Precio Nada Mas" (price nothing else) crowd.
We try to supply good bearings at reasonable prices there. Hence my remark about Made in China. Chinese bearings (in Peru anyway) have a BAD reputation...
The clicking is the internal thermostat that shuts the motor off if it is overheating. Check wire connections at the breaker, disconnect and motor for signs of heating/looseness.
Many motors are dual voltage so you need to look at the wiring diagram on the nameplate and make sure the internal motor jumpers are on the correct terminals for the voltage you are supplying.
Check that you actually have the voltage you are assuming you have at the motor terminals.
Do not let the smoke out of the motor. It will not work without the Magic Genie.
Don't know about the motor, but the tomatoes don't like 150+ temperature. The smoke came out of them some time ago.
Thanks for all the suggestions.
(Note to self: keep spare parts on hand for environmental control equipment)
Rebel,
Ck w/WW Grainger,or same type Ind Sply hosue, get a spare.1/2H.P. should not be overly expensive, esp on light of what your use for it is.
The motor is a stator/rotor type,so sounds like it may have bought the farm.
I would get the old one rewound, if $$$ reasonable for a spare.
i use to have a grainer catalogue or rather my hillbilly hick neighbor always told me to order it out of grainger's. yeah all the stuff to be fixed. cause they make the stuff with this premise in mind. the equipment will have to be fixed. F A I L . yeah, fuck W.W. Graingers.
C L E V E R
oh wait where did i hear this c l e v e r word used. mr clever. up in a plane in a seat 30K above earth.
clever |?klev?r|
adjective ( cleverer , cleverest )
quick to understand, learn, and devise or apply ideas; intelligent : a clever and studious young woman | how clever of him to think of this!
The possibility exists that the motor is simply overloaded. I agree that, from here at least, it seems like the internal thermal overload is tripping the motor. Is this something that used to work but no longer does, or something that you just installed and doesn't work? A 1/4HP motor will move a shitload of air, so a 1/2 HP should be adequate unless you have a monster fan attached to it. If the motor is tripping on thermal overload, it is trying to tell you something and you should listen. You are "challenging a safety device".
Yes.. Check the amperage being pulled by the motor during start-up. Check the rating.. Check your starter/overload switch to see where it is set at. This should be the first thing you eliminate before moving forward.
Check your starter/overload switch to see where it is set at.
you ended your sentence with a preposition...... ;-) ;-)
Reb, why are you using a greenhouse this time of year?
This is a good question. Maybe to shade some plants getting too much sun? Canopy is better.
shade cloth and AC down South this time of year....
As an industrial maintenance electrician one of the first things I was taught was to NEVER let the smoke out! All electrical devices come with smoke enclosed within and once you let it out - DOH!
It needs new brushes and and contacts. Easy fix but will require more silver. God Bless...
clean armature shaft with dremel and soft bronze brush. then clean all traces of dust out of motor. re-profile brushes/or replace. clean off all rust/gunk off all electrical contacts.
seeing as its probably outside most of the time its probably corrosion causing it to overheat and then thermally cut-out.
Brushes? I don't think he uses DC motor at that voltage.
AC motors sometimes use brushes as well.
i have a dremel well not on me right now but i still love my dremel, cute little tool.
Odd. Just plain odd.
"i have a dremel well not on me right now but i still love my dremel, cute little tool."
"Odd. Just plain odd."
You should see the attachents...
yeah the attachments are why co_ol. silica, diamond tough materials. etch, grind, takeaway, glass, metal, ceramic, wood. handy very handy.
Does your GF make you lay down while she screams "Lie to me!" as she straddles your face?
s h u t UP^^^^^^^^
the thermal cut out is probably right.
Its called a eutectic element, metal inside a little device that melts at a certain temp and breaks the connection.
sure you could take it apart, clean it and probably get it working.
I'd really like to see it to be sure -- but the "click" is the give-away. That is an internal breaker (probably not manually resettable -- bi-metalic probably). I assume it's a single-phase motor. You have an overload switch that is kicking in. I see some good advice below from others. I'm a hands-on guy so figuring out the exact problem is not possible. When we get together for the gold $50K soiree I'll check out that motor for ya. In the meantime go to W. W. Grainger and get another one. Keep the old one as a spare.
I have not forgotten about our little soiree when gold reaches $50K.
I will personally invite FOFOA!
Reb
If you are buying a new motor- make certain it is not made in China or you will be doing the job all over again.
If you are getting a lot of ambient heat, be certain the air is blowing back through the motor- that helps the motor cool down - especially in really hot climates.
Simple things like making certain the motor is not getting direct sunlight also helps.
And how long, and what guage is the subfeed wire ? Copper is best and going up one guage helps with the voltage drop. Make certain you are getting high enough voltage and ultimately enough amperage for the motor to start.
Finally, are you running single phase or three phase ? If it is 3 phase, you probably have one phase out, if it won't start up.
Oh and a good rule of thumb is- if you can hold your hand onto the motor for a 5 second count it is still cool enough to not have burned out and can restart. If not, motor is burned out or the windings are very weak.
And if you get an acrid smell at the motor, there is a good chance it is burned out.
If you have an ohm-meter, SHUT THE POWER OFF and check L1 to L2- you should get continuity (1) - if not the motor is burned out. And check L1 to ground and L2 to ground- if you get any continuity readings here, then your winding is burned out.
Good Luck
i had two pumps, in my life, i always had to replace. not fun. lots of pumps to pump water. pump water uphill. submersible (water proof) pump down far and deep. on a pipe, pump OHHH well probably several feet uphill. complicated system. especially when
c o l d. pump water through house. i could tell you it takes more than turning the water faucet handle on to get water.
Reb
I'll take Rocky's silver and fix your motor. Either the winding is weak or your overloads are not holding the amps.
Tell me when I can come over.
I couldn't grow a weed, but if it is mechanical or electrical I will survive.
Food or silver, I am into trading.
Industrial maintenance rule #1: Get the machine running, do forensics later.
Change out motor, get fan running again.
Then you can do bench teardown of old motor when you have time to mess with it.
Also check fan. Make sure fan bearings are in good shape.
Analogy: Putting up a new garage door opener. Also check door for problems ...and you usually find problems. Maybe why opener failed. Fix the door too.
c-o-g
I.M. Rule #1- Lock out -better safe than sorry.
I.M. Rule #2- Sort out the symptoms from the problem (cause and effect)- otherwise you will be doing the same job over and over again
I.M. Rule #3- Keep the dummies away from you- you simply cannot out-dummy a dummy
I completely agree with you that changing out the motor is a reasonable response in an industrial (time is money) scene, but from the information presented the motor could be the symptom, not the source of the problem.
One thing I don't know is if this is a fan directly mounted to the motor or if it is belt driven.
A visual would isolate the problem quickly.
what is with all the motor talk this sunday morning, b o y z?
OK, Kath, if you insist, let's play doctor for a while....
NO, robin hood P L E A S E.
Internal thermal sensor probably opening motor circuit - could be motor is overloaded due to inappropriate use or failing bearings in fan etc. Damaged motor bearings could be a problem too as well as an imbalanced fan blade.
Knowledge Bitchez!
Rocky,
"It has been in the past and has an established function there."
and we've talked about it in present tense:
http://www.zerohedge.com/article/michigan-says-enough-fed-takes-matters-...
I wonder how wide-spread this is and how it will grow next year with additional taxes and more in the way of creative capitalism.
- Ned
The growing band of dedicated, critical-minded and very vocal readers and guest contributors add substantial color and information. A must read for anyone interested in the US/Global economy and finance, and role the governments and large institutions play in shaping it.
Read more: http://technorati.com/blogs/www.zerohedge.com#ixzz0xIZUP7cZ
hey shorts, yesterday you were sporting a F I G H T C L U B avatar, now your back to your dumb ass looking avatar.
k a t h y , t h e f i r s t r u l e o f . . .
- N e d
yeah ok forgot. stayin on t o p.
i c
Hey New_Meat
Smokehouse
Nice site Rusty. We had a smokehouse just like that as a kid. Stained on the outside with used 30W motor oil, which I often refer to as "hillbilly stain"
We have used hillbilly stain also. The used product used to be "redneck driveway sealer".
you need to simply put a bloody bag over your face/picture.
used 30w will get rid of mange too.
+sulfur
eeeeewwww, that was my grandfather.
Rusty, I knew there was a reason I was uneasy about your invite to the smokehouse. I knew it.
You're just like all the others.
Eat more Chicken!
- Ned ;-)
We always prayed for your grandpa before we ate him Ned!
LMAO, glad to see you around again Hulk.
hey meat steak smoke - ned.
k a t h y , t h e f i r s t r u l e o f . . .
- N e d
how do you get that thin typeface. i like it†
kathy, I dunno, but they keep feeding me (those whiskey mush slops were so good). Keep sayin' "too thin."
Then those global warmers talk about my natural ..er, you are a lady.. 'emissions' are causing harm to the planet. I'm good, but I'm not that good.
cya
- Ned
("I'm good" -- might regret sayin' that somewhere in here).
Fix This
http://espanol.video.yahoo.com/watch/4397309/11788984
"Sorry about the long break. I had to deal with my real job, even picked up some extra hours. Once I would have bitched non-stop about that, but I’ve noticed that everybody’s gotten real flexible about their schedules, now that they’re lucky to have a job at all. No more Monday morning jokes. We’re as cheerful as a bunch of Mormons getting root canals. And under all the gung-ho attitude, people are just plain scared. So naturally, everybody’s trotting out the end-of-civilization scenarios. There’s a whole bunch of guys out there (mostly guys, a few butch girls here and there) who sulk online for years waiting for somebody to bring up the Omega Man/I Am Legend scenario: what are you going to do when civilization collapses?"
http://exiledonline.com/war-nerd-apocalypse-never/
shorts you are preaching to the choir, here.
Good point but the gold is probably the only thing of value they'll have left to recollateralize after currencies blow up. I agree that silver is the opportunity of a lifetime (except shorting long term bonds sometime in the near future). God help us for what's coming next..
Possible scenario:
Worldwide debt is uncollectable and increasing. I look for a global reset. This may be the reasoning used:
All people, corporations and governments have been irresponsible in their use of credit.
All currencies are compromised and lack any real wealth backing.
Gold and silver are in too small of quantities to function as money on a global basis.(not true, but it is believable)
Further, the use of gold and silver could give some people an advantage over most who never invested in it.
The reset will allow the destruction of all debt, with the following requirements:
1. All countries will use a standard currency with legal tender status.
2. This currency and electronic credits and debits will be managed by the BIS
3. Credit and debt will have new and extremely conservative controls.
People will accept this to get out from under the debt issues causing austerity models to multiply. Taxation will become international and involve direct withdrawls from personal accounts. Currency will be slowly withdrawn from the system to a credit/debit system to eliminate "black markets".
4. No countries will be allowed to run deficits.
As economic control implies total control- a banking subset will have effectively taken over all governments in an international coup. Not that they will trumpet the fact or allow for the free expression of ideas in this regard.
Censorship will become necessary to combat terrorism from "revolutionary libertarians" and the people will accept this as well in return for some sense of security.
Slavery will be the new reality, not that it ever went away...
I'm worried you are right. Been having thoughts like this myself. We are so pacified it looks doable. If so, what do us sheep with a few bags of wool who do not want to be as fleeced as the rest, do?
I think the only option will be in black markets. The creation of well functioning black markets on a local community basis and with a local currency would allow for a degree of freedom.
We would probably need dual accounts- one for tax payments and items we cannot trade for. We would need to be debt free. The use of silver or gold could be useful and trusted. I think most government action would be focused on urban centers, so the country may be relatively more free.
The degree of governmental violence would probably be dictated by the level of citizen rebellion and the availability of troops. They might be willing to ignore some local activity if it doesn't rise to the level of open defiance.
"1. All countries will use a standard currency with legal tender status."
AGREE.......
Just what these azzholes are aiming for. Standard currency = TOTAL CONTROL!!
"1. All countries will use a standard currency with legal tender status."
AGREE.......
Just what these azzholes are aiming for. Standard currency = TOTAL CONTROL!!
I think it's time for Madame Defarge to start knitting again......
World currency ?? And Israelis and Palestinians will interbreed.
Shes running open BSD w/rc.oracle files now...
OH R E A L L Y!
can't control that one BIG G U Y in the sky.
Friedman said that the Euro would never work. Above is even more unworkable. - Ned
Well, if Milton Friedman said that it must be true...do you really listen to a moron like Friedman? The Chicago school is so compromised, they have no credibility. Monetarism- it is what has got us to where we are today. The propaganda of free market, the reality of socialism and government intervention.
The euro is a fiat currency and the present framework, it functions as well as any other. They are all paper backed by faith in a hope and a dream. When that dream is inflated to the point where debts are too large to be serviced the elites will be required to provide an explanation. They cannot begin to seize private assets to satisfy government debt obligations without risking revolution. The dollar is no better than the euro or the yen.
You cannot continue to expand the money supply indefinitely. Eventually, there must be a deflationary reset for malinvestment which would destroy banks or you must have debt forgiveness- which is perfect in the guise of a trade for more control over the population.
+100%. Parity with gold, bitchez!
What Do Silver and Gold Buy?
Hindenberg Omen, Bitchez. Long mentions it in his article above, but for those interested in learning more, please read the following from Robert McHugh, one of the best technical analysts when it comes to interpreting the HO.
Dear Subscribers,
The latest Expanded Weekend Market Newsletter, issue no. 1398, August 20th, 2010, is now available at www.technicalindicatorindex.com To access this report, simply log in and click on the Weekend button.
For those of you with busy schedules, here is an executive summary:
Did we get a confirming Hindenburg Omen Friday, August 20th? Yes. We now have a confirmed "official" Hindenburg Omen Stock Market Crash Warning signal. Friday, August 20th, 2010 saw a clear-cut, no-doubt-about-it H.O. observation, unlike Thursday, August 19th's more controversial "rounded" observation. Friday's signal confirms last Thursday, August 12th's first observation, so we now have at least two, a cluster, and are now on the clock of the far greater than normal possibility of a economy-rattling stock market crash starting sometime over the next four months.
Here are the details on Friday's observation: There were 83 NYSE New 52 Week Highs, and 95 NYSE New 52 Week Lows according to the Wall Street Journal, the lower of the two coming in at 2.64 percent, above the 2.2 percent threshold required for a Hindenburg Omen observation. Total NYSE issues traded were 3,143. New Highs were not more than twice New Lows, the McClellan Oscillator was negative at negative -106.46, and the 10 Week Moving Average is rising.
Last Thursday, August 12th, 2010's observation had the following characteristics: There were 92 New NYSE Highs, 81 New 52 Week Lows, the lower of the two coming in at 2.55 percent. New Highs were not more than twice New Lows. Total issues traded were 3,168. The McClellan Oscillator was negative, at negative -120.03, and the 10 Week Moving Average was rising.
Thursday, August 19th qualified as a "rounded" H.O. observation, meeting all requirements except the lower of the New Highs and New Lows came in at 2.18 percent, missing the 2.20 percent threshold by one New Low, but rounded to 2.2 percent, so was an observation with an asterisk.
But no matter how you care to interpret August 19th's observation, we have what we need for an official cluster with August 12th's and August 20th's. So what can we expect from here?
We can rely upon the probability distribution table from past Hindenburg Omen events using all five conditions, and using Wall Street Journal data, to assess what is likely to occur over the next four months. Stated differently, the probability of the stock market failing to drop significantly after an "official" Hindenburg Omen becomes very low, and the probability of the stock market declining significantly after an "official" Hindenburg Omen becomes high.
But worse for markets, the probability of getting a stock market crash starting sometime over the next four months - now that we have an "official" Hindenburg Omen - is far greater than normal, far higher than random, meaning prudent investors need to take action to prepare for the possibility of a stock market crash. On any given random day, the odds of getting a stock market crash are less than one-tenth of one percent. However, the odds of getting a stock market crash over the next four months have now risen to 30 percent. This is a huge increase in odds.
Our research notes that plunges can occur as soon as the next day, or as far into the future as four months. In either case, the warning is useful. It just means, if you want to play the short side after a confirmed signal, or move out of harms way, you must be prepared to see it happen as soon as the next day, or four months from now, possibly after you forgot about it. About half occurred within 41 days.
If we define a crash as a 15% decline, as stated, there is a 30 percent chance we will see a stock market crash before year end. Further, there is a 40.8 percent probability that at least a panic sell-off will occur, a decline greater than 10 percent. There is a 55.6 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 77.8 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 13 times will this signal fail.
Here is an important point, and should be considered when you hear folks suggest the Hindenburg Omen is overblown: There has not been a stock market crash over the past 25 years without a Hindenburg Omen being on the clock. That is truly remarkable when you think about it.
It was on the clock just before the stock market crash of the autumn of 2008. It was present and accounted for a few weeks before the stock market crash of 1987, was there three trading days before the mini crash panic of October 1989, showed up at the start of the 1990 recession, warned about trouble a few weeks prior to the L.T.C.M and Asian crises of 1998, announced that all was not right with the world after Y2K, telling us early 2000 was going to see a precipitous decline. The Hindenburg Omen gave us a three month heads-up on 9/11 (2001), and told us we would see panic selling into an October 2002 low, warned in October 2007 that a multi-month 16 percent plunge was about to start, from the DJIA's all-time high. And it was on the clock three months before the stock market crash of the autumn 2008 into spring 2009 that wiped out 47.3 percent of the stock market's value. Our subscribers at www.technicalindicatorindex.com were informed immediately as these signals were generated.
Another observation to keep in mind as we move toward the autumn is that once you get two solid Hindenburg Omens in a cluster, the probability of a severe decline does not seem to increase as more Omens occur within the cluster. Sometimes a two signal cluster produced a worse decline than a 5, 11, or 17 signal cluster. But what can be said about multiple signal clusters is that the warnings are being given further out in time, keeping us on the alert. More signals also assure us a greater likelihood of better quality signals, which seems to matter. Multiple signals are telling us things are not getting better, that something continues to remain wrong with the market.
What does it mean for traders and investors when we get a confirmed Hindenburg Omen? This is really important to understand. A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, at 70.3 percent. However, since a stock market crash is akin to economic death in many circles, you can look at the situation like this. If you were hearing from your doctor that the surgery you are contemplating stands a 30 percent chance of you dying, that becomes a very high percentage probability - one you likely do not want to take if the surgery is not absolutely necessary. A 30 percent probability of a stock market crash is extremely high when you consider that there have been only eight over the past twenty-five years, and the normal odds of a crash happening randomly are only about one-tenth of one percent. You now also have to factor that the Fed is pumping liquidity to prevent crashes once these signals occur. So you do not want to go short the farm. You may want to think about taking prudent precautionary action according to your investment advisor given the much higher-than-normal odds of a crash. That may not mean shorting. It may mean increasing cash positions or hitting the sidelines for a while. Or it may mean a carefully constructed shorting strategy developed with your advisor that limits losses, and invests only the amount which you can afford to lose. Still, it is interesting that even with the heavy liquidity the Fed has been pumping around the time of the past two signals, the odds of a 5 percent decline or more remain pretty high at 77.8 percent.
Short-term, Thursday's decline was the start of wave {3} down, wave {i} down of {3} down. That decline continued Friday. As wave {3} down takes aim on its down side targets of 1,010ish in the S&P 500 and 9,700ish in the Industrials, prices could see surprising acceleration to the downside.
We believe wave 3-down has started, which should be a dramatic sell-off. We expect stock markets could lose 20 percent from here. That downside target comes from Head & Shoulders top patterns from November 2009, as well as the proportional decline the Elliott Wave labelings suggest is possible. Prices will not likely drop straight down, but will consist of many corrective rallies, some of which could be strong, but at the end of the day, stocks should be much lower several months from now. We would not be surprised by a stock market crash event some time during this wave 3 drop.
The Industrials fell 57.59 points, closing at 10,213.62. NYSE volume fell to 99 percent of its 10 day average on the decline, which is Bearish. Downside volume led at 71 percent, with declining issues at 58 percent, with downside points at 55 percent. S&P 500 Demand Power fell 4 points to 368, while Supply Pressure rose 1 point to 382, telling us Friday's move was weak, with a lack of buyers allowing weak supply to push prices down. The Supply Pressure Indicator rose above the Demand Power Indicator Friday, August 20th, triggering an "Enter Short" positions signal. New NYSE 52 Week Highs fell to 83, with New Lows rising to 95 Friday, generating a confirmed "official" Hindenburg Omen, the second clean observation since August 12th, 2010's first observation.
The McClellan Oscillator fell to negative -106.46. The Summation Index fell to positive + 2,875.14.
We present the next two phi mate turn dates in this weekend's report, along with commentary on how this could play out. The Industrials rose 10.6 percent from our last phi mate turn date, July 2nd, 2010.
The NASDAQ 100 rose 2.75 points Friday, closing at 1,825.75. The Russell 2000 fell 0.18 points, closing at 610.78 Friday. The HUI fell 2.82 points to 468.37 Friday. September Gold fell to 1,227.2; Silver fell to 17.99, while October Oil fell to 73.82. The U.S. Dollar rose 0.61 points to 83.05. Bonds fell 11 ticks to 134^00. The VIX fell 0.95 to 25.49.
Check out our AUGUST Specials, good through Sunday, August 22nd, 2010, including an amazing 8 month offering for only $189, or 2 years for only $459 at www.technicalindicatorindex.com . If you are enjoying your subscription, please tell a friend. We also offer a 3 months for $89 budget friendly deal this week.
Best regards,
Robert McHugh, Ph.D.
Good post. Am now going to the store to stock up on popcorn. This could be a helluva show.
you really need a new avatar honey. you have made your point quite well,
on this elegant website.
have you ever had or heard about B L A C K popcorn?
- what are you, the avatar police?
Thank you, Rusty. I tell you what Pinocchio, tell me what it is and I'll change it.
So, when looking for cause and effect, is HO independent of HFT ? Maybe R2D2 and CP30 are generating this event ? But does a slump necessarily follow ?
Wow. I "so" don't want to play in this market. Skin the bears now? Why not.
K-man
Been wondering about that correlation too. If the 100 or so stocks that the HF are playing do not fit into the ups or downs (which I'd guess they do not), then the HO could be played separately on the side.
As everything else is, what, 79% correlated to SPX?
I'm with Ms.
- Ned
Hear that?
That's the sound of freedom.
That's the sound of GGgggollllllld.
The merchants of the earth will weep and mourn over her because no one buys their cargoes anymore–cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and bodies and souls of men.
Revelation 18:11–13
No, I'm not religious, yet.
Thanks Rusty, for keeping it real.
"clearly evident tipping points that are unquestionably now on the horizon. You can ignore them at your peril, but when the storm swells hit, don’t say you were never warned and no one saw this coming."
As savers, compounding interest works to your benefit. As a debtor, it is your death sentence.
The end of The Great Keynesian Experiment is upon us. Prepare accordingly.
great point....but what savings vehicle do you recommend - Federal Reserve Notes? High yield stocks? Gold? Lead?
The chart above labeled "Tectonic Shift" has the phases of the coming collapse laid out correctly.
It will be possible to make money as we move around the circle but the issue will be timing. Along the way, there will almost certainly be counter-trend rallies and selloffs that could wipe out the average individual trader.
My best advice would be to plan for the end, the "Brettton Woods II" phase. Not knowing the exact timing of when we will arrive there means that the most prudent course of action is to plan for that end stage and overlook everything that happens in the middle.
It is quite clear that the holding of dollars is a losing strategy. Begin to eliminate your dollar holdings now. In the end, the world will not replace fiat money simply with a new fiat. It will be demanded that the new, global currency be backed with tangible assets. Therefore, to prepare for the end of The Great Keynesian Experiment, one should begin moving out of "paper", dollar-based assets and into physical, tangible assets.
Good call.
Mike Krieger says it best.
"where else but Disneyland could you print money out of thin air and buy real resources in an unlimited fashion"
http://www.youtube.com/watch?v=pL3n_dqRfQg
Neo-Feudal Gulag Economy?
Hummph. The current economic mess is easily solvable. All we have to do is to make everyone a Wall Street Banker.
Presto. The unemployment rate drops back to zero.
Then all these new Bankers just sell various forms of paper back and forth, and they not only generate lots of new profits, but even earn their absurd bonus at the end of the year.
Since we'll have to stop producing what little we do now, we'll have to import even more. So there, with the wave of a wand, we also rescue the entire world's economy.
So there you have it, folks. A simple solution that's not only guaranteed, but is in complete alignment with the problem solving thinking of Wall Street, the Fed and the Treasury.
The humor impaired need not reply.
Bravo! I always advocate that solution, we have to improve our accounting rules to achieve full success though. Government got smart also that's why it's supporting banks as a main stay of US economy, we will reach shortly 20T GDP if those banks are smart enough in their trading, all indicators will improve and everybody will run to lend us money for the coming decades.
ok, I'm game. Where do I sign up? I'm just an uncouth, uncultured, & base member of the labor pool, though. I can try to pretend, though.
Everyone's pretending, afterall.
Ah, yes, Bonuses all around, gentlemen, Bonuses all around.
+1
Also, a minor quibble, which is not really a quibble, quoted from the article:
I concede that it has become that, due to accounting fraud that is institutionalized (through regulators, standards bodies, reporting requirements, and international agreements).
However, I cry out into the night for the "old school" standard: Nations and companies are insolvent when their liabilities (including all future possible claims) exceed their liabilities. That's insolvency, and we had that a long time ago.
What we're now seeing (like the quote illustrates) is forced recognition where even accounting fraud no longer works: When all income this month (including what we print this month) is not sufficient to pay this month's "minimum" interest payment on existing liabilities, it's over. Not even accounting fraud can hide that. True, it's not illiquidity, it's insolvency. But, we had insolvency a long time ago (we are not suddenly insolvent merely because we are forced to recognize that the "jig is up" when we can't make this month's payment).
Nations only fall because of cashflow issues (i.e., when accounting fraud no longer works). So, I concede my quibble really doesn't mean much. However, my point is that Greece was insolvent years ago, obvious to anyone paying attention with either firing neuron. It's only accounting fraud that delayed reckoning, making the problem worse, forcing its people to suffer so much more.
'Nations and companies are insolvent when their liabilities (including all future possible claims) exceed their liabilities.'
I guess you mean assets at the end of the sentence
Ooops! Yes, thanks -- good catch. I meant to say, "Nations and companies are insolvent when their liabilities exceed their assets (including all future possible asset or tax claims)."
I agree with your comment, insolvency has been in evidence for a while now. Nowhere more than the banking system, which is insolvent from the start under the traditional definition. A ridiculous world we live in.
Ahh... but as a reward for your brazen theft of the publics money- it's
BONUSES ALL AROUND, GENTLEMEN, BONUSES ALL AROUND !
The credit card "minimum payment" mentality has infected most of society, including the government.
Solvency test is still FMV of assets exceed total liabilities, but cash flow and ability to pay bills when they come due (even if just minimum payment) is now lumped into solvency.
"As savers, compounding interest works to your benefit."
I'd like to float one or two by you, Turd.
If every citizen saved $1000.00 per year and were paid 10% interest per annum and we held it to infinity, the nominal amount owing to the holders from the banks would be enormous. Where do the banks earn the interest if we are all savers? If the purchasing power of the initial savings are a week's wages, what will be their purchasing power if the $ is inflated to infinity? As the dollar is no longer recognized as a store of value (Printed at will and backed as it is by nothing other than faith, hope and credit, talk about mass delusion), as the gentleman said, what are you prepared to surrender, the value of your stored labor?
Inflation of the money supply has an consequence inversely proportional to the rate of distribution and that is purchasing power. Ask anyone crazy enough to save a depreciating asset.
Interest earned adds to supply but always below the rate of printing. You will never beat the press, even with 100% compounding. So, how does % compounding work to your advantage if you are adding to supply?
...consume what you need and don't confuse greed or fear with substance...
The one clear "Tipping Point" that is coming is the Greek restructuring. You can bet that Lazard has not spent their summer just lounging on Mykonos. The unknown will be how the markets will react to the repudiation of the debt.
Mitch, I'm looking over all of club med, including Hungary and Turkey. Trying to figure out the firing chain and initiating events (like Greece-German spreads). So among the PIIGS (such a perjorative acronym) and H&T what would the sequence be?
- Ned
(and, well if you redo the scrabble tiles, you get PIGSHIT--someone else mentioned this, but I kinda' like it. Maybe from beer and whiskey mash that has served its first purpose so well.)
HA! And iconic too... ;)
I don't know what the chain is going to be. Maybe Hungary. But in my mind, the true wild card is Belgium.
please expand--not on any of the info I've been looking at.
Of course, all of BeNeLux will be smoking dope and foolin' around when the knives come out.
Maybe that's it.
- Ned
The country is tearing itself apart along ethnic lines. The country is evenly divided among Germanic and French lines but the Germanic half provides 90% of the tax revenues that go to the indigent and lazy French half. Everyone is upset about the Australian hung parliament, but Belgium has a worse hung parliament in that it is split among a large number of splinter parties and not along a two-party line. In addition, Belgium'd debt to GDP ratio is stratospheric.
thanks
I'm looking for different things. Turkey I don't expect the default. Firstly, because of the rivalry between Greece and Turkey, the Turks would love the situation where Greece goes, but they prove themselves stronger. The western banks constantly underestimate the productiveness of the Turkish economy, and much of it is underestimated because it is smaller scale manufacturing. Also, they have much higher inflation rate, which the economy can withstand (and own currency) so much easier to deflate. Hungary is actually a lot better than most Eurozone economies, but the reason for the panic is the exposure of Western banks to personal credit in a foreign currency, so they are scared that HUF will be devalued and the courts throw out non-local currency claims (or make some ultra vires ruling.)
By black swans are Austria - I don't know what the total extent is, but they are not tellig the truth. They have been smart a they have much longer term funding, but they have massive exposures to CEE nations at a domestic level and they consistently hide things, so the markets could get a shock if certain things come out.
Italy is the big one - too many people are aware that there are far too many tricks and little things done. Parmalat was a warning of this and it is not isolated. First sign of trouble, there will be such a run on Italian banks (Italians love to talk about love of country, but it is merely a dramatic effect, they will take cash out of the bank and hide it wherever tey can).
For the record, I don't trust the Belgians much, but I'd bracket them with the French - don't think they would be the first wave...
Anyway, the big problem is and remains the US economy. Not only is it totally screwed, but the population is in a state of denial. The country is heading towards and end-game that is totally beyond their comprehension, having been brainwashed for decades about the greatest power the world has ever known, etc etc.
What worries me is the Dems may have a plan for the run up to the mid terms. They need to prove they are doing something to make it better. Problem is, they can't improve from hear, so maybe they facilitate a panic, then step in to (temporarily) arrest the decline. Or maybe, they decide that it is better to lose power, Obama becomes a one term President and then the right wing nut jobs elect some idiot (Palin?) who presides over the final collapse. Who knows, but the elite know they are being backed into a corner and it is power that brings wealth, not the other way round, so they will do anything to keep that.
Qualities-I like the handle (every time I look at mine, I'm reminded that there are wolves out there, as well as that Rusty with his smoke house ;-) )
EU insight, thanks. Italy, well, I have some colleagues there, will ask and report back.
These dems? Yep, and I smell hickory smoke that O and Rahm and gang are working their way into the '46 "had enough yet campaign" that finished off New Deal, then Truman ran in '48 against the "Do-Nothing" Congress. And won.
Elite? Roger that: "do anything to keep that."
- Ned
Tyler is one posting motherfucker this morning. "He" usually relaxes a little on a Saturday and the pace picks up again Sunday evening. Rock on brother man, rock on.
Someone junked you for THAT!
ROFLMAO
Some of the sensitive, pussy motherfuckers on here junk any and all posts that include profanity.
If you use the term cocksucker, asshole, motherfucker, shit, fuck, prick, sonofabitch, cockfuckingsucker, asswipe, dickless, fuckface, shitforbrains, pussywhip or buttfuck, you will consistently and anonymously be junked by the Prissy Police.
Excellent Turd!
And Jennifer Aniston makes front page news for using the word retard. Pathetic!
DavidC
Aniston can suck my cock ... that ignorant narcissistic airhead.
I'd rather listen to Ben Stein ... NOT!
Her personality flaws do not influence my desire to have her suck my cock, to be honest with you. She can suck it now and we'll worry about those other technicalities afterwards.
All those words describe the current (and prior) administration
You may find this amusing... takes a bit to get going but it's worth it....
http://www.youtube.com/watch?v=y57nkL7Ucak
Steal from the best. This is? an old George Carlin routine? verbatim.
Slimy language doesn't impress anyone but adolescents. It shows how limited your vocabulary is and lowers the vibration. Maybe a geek affliction. Too bad we need geeks.
+1. Couldn't fucking agree more. I'd expound on that, but the coffee's kicking in and I have to go take a shit.
nice +++
Isn't there a correlation between the hardship of a society and the number of cuss words. Guess we're in for more
Fuck N A
Turd, George Carlin would be proud!
Must be Tyler
Nice to see you Ms C.
I am in LOVE! Would you happen to have an older sister, aunt or divorced mother? A woman who uses the F word and even more importantly the MF word understands where we are at. Not to mention how truly sexy it is:)
MsCreant,
I agree, he is doing WELL!.
Getting junked for that, is, well....Junk!
still need an unjunk button. then could have junk wars. I'll bring the popcorn. - Ned
The ONLY paper to hold for investment, Literally is TOILET PAPER. It NEVER loses its value, and when it goes down the toilet,,, you got your full value for it.
Thanks for the chuckle. Amusement is getting harder to come by. The last good giggle I got off ZH was Tylers perfect 'feces' references regarding the GM IPO.
I actually have a two year supply in my attic. (That's assuming I cannot convince the females of the house that it doesn't take a half a roll to dab some piddle off)
Not only will it be used eventually, it serves as insulation. I even got a $500 tax credit for "Cash for Caulkers" to buy it.
Charmin Bitchez!!!!
Dual purposed TP, way to go Colonel! Make sure the rats don't get to it first....
that horrible looking thing. now i like all the monkeys and dogs.
stop POSTING.
BwaaHaaHaahahahaha!
Tell me what it is and I'll think about getting rid of it.
It looks like a severely prolapsed vagina to me.
Nope.
prolapsed anal aperture???
Lie detector test gone really wrong???
The charts alone are worth the time to print out for study and matching of the next step. Thoughtful to say the least. Scary as shit if on target. Milestones
As posted by Village Idiot on “Second Hindenburg Omen Confirmation In As Many Days, Third H.O. Event In One Week”
"Good Morning fellow ZH'ers -
As you read through this thread, you may come to the conclusion that there was some nefarious reason for the "hot potato" I dropped into this post. Not the case. However, I would like to bring your attention to concerns some on this site have. How about an open forum post, as suggested by Crockett? We can discuss our points of view from a clean slate."
The post you see below was in response to my act. I agree with this commenter’s post. We should talk. I'm ok with waiting for the appropriate time. Thanks.
NumberNone
on Sat, 08/21/2010 - 07:01
#534601
OT post shoved down throat of ZH members on an inflammatory topic that is clearly designed to draw the participants into a debate that will inevitably end up with the 'racist' label hurled at the right leaning participants from the left leaning participants.
The information being brought to light on ZH is contrary to the rainbows and unicorns image of the market and economy that powers that be want us to accept. You really have to wonder if it is being done deliberately by nefarious sources so that they can bring to light the true 'racist' nature of the site with the end goal being to discredit it. Best to flag as junk and move on.
In light of the WikiLeaks founder suddenly being charged with rape, you really have to wonder.
NumberNone
Warrant dropped.
Yeah, he plied the CIA with beers, then took advantage of them.
The only thing we have to fear, is fear itself.
'whore' has many definitions. Mine would exclude some of the more common. I got no beef with 'whores' who don't know what else to do. The criminals are the pervs who don't just give 'em $100 and walk away.
The real sluts are the trolls who try (in vain) to fuck with our heads.
Those whores ought to be shot.