How Low Can You Go?
This is going to be a very brief weekly update for two reasons. One – I’m extremely slammed this weekend as I have another looming deliverable for tomorrow morning. Two – there is really not much to be added to last week’s long term review – all those charts look pretty much identical. There is a lot of noise as of late related to the high frequency signing (HFS) scandal that’s slowly gaining traction in the MSM. Last I heard a class action lawsuit was filed against Countrywide, California’s attorney general called for a halt on all current foreclosure proceedings, Bank of America issued a moratorium on all foreclosures, MERS is on a PR mission to preemnt some heat lurking behind the corner, etc. – the list is long. And the pundits are livid – on both ends of the spectrum.
So I can understand that some the bears (well, the few who are left) are salivating at the possibility of equities finally taking a tumble to the downside. It’s a common mistake. You know – correlating major news with moves in the stock market. How can this shitstorm of negative headlines not put a dent in the market’s ability to melt even higher?
Here’s your answer: Let’s not be stupid, shall we?
Just ask yourself – how long has all that and more been leaking out now? I mean Wall Street has been embroiled in one mind boggling scandal after the other for over a year now. Corruption is rampant, enforcement is lax at best or non-existent at worst, and if one bothers to look beyond the MSM headlines there’s plenty of opportunity to ruin your mood over how yet another bankster got away with some shady game costing us taxpayers a bundle in the end. In short – risk has been socialized and guess what – you’re the one paying the tab.
Will there be a final reckoning and are we going to see handcuffs and orange jumpsuits for Halloween? Of course not!
Listen my dear steel rats – if you have been frequenting this blog for more than a week then I hope that by now you have learned one thing once and for all:
The top dogs always get away with it – they always have and they always will.
There is no final justice.
The banks are running our nation.
Until we see blood in the streets none of that will change. If we’re lucky we’ll see a few scapegoats being sacrificed, just in time to appease the masses before the mid term elections. But trust me when I tell you this – the boyz are not sweating. Think about it this way: what’s the worst that happened two years ago? If you and I plan some heist at our local bank and get caught with welding torches in our hands we’d be sweating bullets and probably look at some quality time with bubba for the next decade or two. But just imagine if the cops would just snicker and before letting you go tell you to ‘just not let it happen again’? What’s the incentive for staying on the straight path and working for a living? Exactly right – none! We’d be back at the drawing board the very next day planning our next sting. After all – the benefits greatly outweigh the risks of playing the game.
In short: Until hell freezes over there is no downside risk for the pervs running our financial system. And although some intrepid voices like Alan Grayson are trying to rail the masses, reality is that 99% of the public out there does not have a clue and is more focused on American Idle reruns.
So, abandon all hope for ultimate justice and thus a resulting downside correction in equities based on any news you come across. Focus on your charts – the few that make sense these days. Of course that does not mean that the market won’t tank – but as I pointed out last week – most likely it won’t happen when you expect it.
Besides there’s only one chart that really matters right now, which is the DXY. And the one question in all our minds of course is this:
Charts and commentary below for anyone donning a secret decoder ring. The rest of you guys will have to wait until tomorrow – sorry. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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This entry was posted on Sunday, October 10th, 2010 at 2:31 pm. Both comments and pings are currently closed.