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Graham Summers’ FREE Weekly Market Forecast (Euro Breakup Edition)
The markets are rallying hard today for three reasons:
1) Traders gaming the usual manic Monday
2) The markets were oversold
3) Short covering
These are the real reasons the market is exploding higher. Traders are simply using the (since refuted) IMF bailout of Italy rumor to gun the usual manic Monday rally to shred the shorts.
Technically we were oversold and at support. So a bounce of some note here makes sense. However, a 3% rally? On rumors of an Italian bailout? Give me a break.
Regardless, this overnight move has already brought us up to resistance for the S&P 500. So we could easily see a reversal at any time (more on this in a moment).
The Euro also looks to be putting in a dead cat bounce:
I’ve received a few emails recently about my pessimism regarding the markets, even when they rally. The reason I am so pessimistic is because the bond markets, credit markets and interbank liquidity indicate that the situation in Europe is now into “2008 mode”.
Indeed, Treasuries have already exceeded their 2008/2009 peak. Tell me, what do you make of a situation in which the bond markets (which are far larger than stocks) are acting as though we’re in a Crisis worse than 2008… which stocks are rallying?
If you’ll recall from 2008, stocks rallied and held up much, much longer than the bond or credit markets. For that reason stocks are a terrible indicator for the real state of the financial system… which is why I remain so deeply concerned about the markets even though stocks have staged several very sharp rallies.
The reality for Europe is very, very grim. Among other items, we’ve recently seen:
1) Italy’s 10 year note pass 7% in yield (the end of the line level)
2) Germany post a failed bond auction
3) The EFSF plan scaled back with less leverage
4) German companies warning their Greek subsidiaries to prepare for contracts that are based in Drachma, NOT Euros
5) Germany to hint that it will leave the Euro if the ECB prints money
6) The currency trading house ICAP prepare for the dissolution of the Euro
Do you still think stocks “get” what’s happening today?
The reality is that we are already into a full-scale Crisis in Europe. Do you remember warnings of riots and systemic collapse in 2008? Well, we’re getting those this time around. Do you think these folks are issuing these warnings because we’re going to get through this mess easily?
And if you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.
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"Markets OverSold"???
Bullshit. There is no market anymore.
All that market-jazz amounts to a vehicle to defraud.
Really think any Nation is not going to screw their bondholders?
Really think any market remains where you are treated fairly in course of your entry/exit trades and have likelihood of being paid upon settlement?
Why carry the water for these criminals? Why ignore the obvious? They only intend to rob you. If you cannot see that, you identify yourself as a Degenerate Gambler who seeks only the thrill of the bet...
When did "Banks" get regulatory approval to "bet" a'la derivatives? How can chartered and regulated entities which all exist to serve some fiduciary duty to their customers, be enabled/encouraged/allowed to Gamble? When did investing become synonomous with Gambling?
This whole fucking last 3yrs is like some Damon Runyan update w/o any dolls or good-hearted characters. All the characters in the swindle are sociopaths who make Mack The Knife loook like an altarboy. They are murdering Nations and Western Civilization, not some other tough who was slower on the trigger...
The whole fucking thing is coming down and if you are living in its midst, you will be buried, literally in shit and debris. Yet, the game goes on... Like the junkie who's in it right up until they take that OD Mainline...
well put
>However, a 3% rally? On rumors of an Italian bailout? Give me a break.<
I say it's a multi-month rally.
Skip Danger
Depends where the HFTs see the most money applied. Found it interesting that short interest has dropped.
Volume continues to vanish.
The only thing I do not understand is why they will not a real correction occur.
If they want investors back, (like myself), they need to let it go.
Otherwise, I will continue to add to physical PMs on market pull backs.
The way it is going now, most will never come back watching these kind of games.
They gap shit up, like today, and then come back to fill the gap. Rinse and repeat.
The fools who chase get burnt every time for doing this.
Broken record.
Yeah, but a broken record that has called this Euro sovereign debt crisis spot on for over the past year. Going forward there are only two possible outcomes, continued failed bond auctions and the entire ponzi welfare states come to a screaching halt and with the loss of the ponzi money infusion in their economies, the economies will enter a depression within weeks. The second possible outcome is for TPTB to somehow buy all the bonds offered by the PIIGS and keep the countries ' afloat ', but with serious inflation. TPTB will do whatever they think is in their best interest, they do not care if people starve or die, they just want the fucking money.