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Graham Summers’ Weekly Market Forecast (The Points Edition)
The Euro situation is coming to a point… literally: we’ve entered a triangle pattern. In fact, we have a second triangle forming within this larger pattern.
We’ve got just a little more room to run before we reach the apex of this pattern. However, given how things are going over there, we could see the breakout come at any minute now.
Indeed, the European debt drama was always about Spain and Italy: Greece, Ireland, and Portugal were the minor players (Portugal did pose something of a threat in that Spanish banks were massively exposed to its debt). However, when Spain or Italy go down, they’re taking France and Germany (the two most solvent EU members) with them.
And that’s when the Eurozone will crumble.
However, if you’re looking for the REAL situation in the EU, don’t pay attention to the Euro. There is simply too much intervention and political drama at work for it to truly represent the mess.
So keep your eyes on the French market, not the Euro. While the US markets may have exceeded their May 10 high, France is coming up to test it.
Watch this situation closely. The US is being pumped higher courtesy of the PPT. France is where the real action is. A breakdown there means the next round of the collapse is here. Remember, Italy’s collapse is already expected. France is a AAA-rated country.
Speaking of the S&P 500, that index is forming something of a bearish rising wedge pattern. Given how weak things got towards the end of last week, we could see a breakdown as early as today). However, the pattern does allow for a final thrust to 1,200 or so.
Big picture: I warned to get defensive several weeks ago. Stay defensive now. This snapback rally is not the start of a new bull market rally. If anything, the volatility of the last week has made it evident that we’re back in a 2008 environment: you simply don’t see 3-4% price swings on a daily basis in a healthy market.
In plain terms, the rally of the last four days is very likely not the start of something major, but a combination of short-covering and manipulation with the Fed very likely buying on the open market. This will end soon. And when it does, the markets will be hitting new lows and the Second Round of the Great Crisis takes hold again.
On that note, if you haven’t already taken steps to prepare yourself and your portfolio for the next leg down, I’ve just published Five Reports devoted to detailing precisely what will unfold during the Second Round of the Great Crisis and how to profit from it.
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Good Investing!
Graham Summers
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watching those narrowing bid/offers, then...boom down it goes again. trying (aint no computer here) to see a pattern on the mid week volatility and the narrowing ranges, thinking ( very rough calculation) it's Wednesday, or Thursday.
This is a false break-out on vapor.
thats why the guys (or girls) on ZH are smart playing the ES correlation trade, find that pattern and you can eat for the week
The PPT is most effective on low volume and when there is another positive catalyst in
the market like short covering. Often the Fed will wait until 11:00 AM when Europe stops
trading to initiate PPT. On strong volume to the down side, there is little they can do to
reverse the trend.
The 600-point-last-hour-meltup-after-initially-dropping-200-points-after-Bernanke-said-only-keep-ZIRP4EVA does beg for rational explanation. Here's one interesting hypothesis - Note that it does not prove intervention in last week's late-day lunacy, but Rubin is in effect admitting to one form of PPT-style intervention:
http://www.zerohedge.com/contributed/whipsawed
What fueled this rally? According to Jesse of Jesse’s Cafe Americain, the Exchange Stabilization Fund, part of the Treasury, may have been involved. Jesse wrote in an email correspondence with Ilene, our editor: “Robert Rubin said they could do their job best by buying SP futures to stabilize the markets, rather than let them fall and then have to clean up afterwards. When the markets are short term oversold, it does not take much to spark a brief rally, which is often the perfect environment to attempt an intervention.”
gotta hand it to graham
"Pumped higher courtesy of ppt, FED buying on open market, This will end soon." Why would this end now? Did they run out of ink?
Curious ... what evidence of the PPT would you like to include in your analysis.
Well, let's see here - there's plenty of evidence ... ON THE INTERNET.
Go look it up.
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The only thing the USA manufactures these days is YOUR OPINION !!