Friday, May 25, 2012

Morning Charts 05/25/12 - Doomsday is Coming - $SPX $ES

What a lovely move that was last night in the minis when the EU opened. I guess the eurobond experiment is back on for now or Germany is coming off its high horse and is willing to at least engage in discussions regarding more bailouts of the insolvent everything in the EU.

Let's not kid ourselves. All the markets, banks, governments and everything related to the insolvent global financial system today is fueled by bailouts or easing or stimulus. Heck, it does not even take a real action to move the markets. As noted here and in other sources, all it takes is a rumor of more easing to rally the markets these days (just see last night's actions for example).

The bottom line is the entitlement state has evolved and expanded from the lower and middle classes to the governments and banks. Everything now functions on handouts. This is not sustainable.

Everything now has a fiat backstop (think JPM's big failed bet). There is no risk until the printers stop printing. I have tried over the years to tell you that this is real and it is the new norm. Maybe some of you do not get it when I Shanktify things (try hard to put complicated things into real and humerus terms). Read this post and maybe it will make the situation more clear. Guest Post: The Big Print Is Coming | ZeroHedge

You see the Fed, BIS, ECB, IMF are the duckt tape string unraveling threads that hold the system together now. Without intervention (or the rumor of) and a whole lot of it, this market collapses and everything goes with it. Intervention (printing fiat dollars to infinity) can not continue forever. An unregulated, unchecked, rogue, self serving wild west financial system has evolved and until that system is destroyed and sound REGULATED financial principals put in place (which should have happened in 2008) nothing will get better it will only get worse.

To emphasize that they are finally losing control and the end is near please read, "According to the latest figures out of Google Trends, Americans have been searching for the term “bank run” in record numbers in recent days, outstripping the level of concern displayed following the collapse of Lehman Brothers in 2008. " Google Trends: Fear Of Bank Runs Hits All Time High For Americans Alex Jones' Infowars. The sheeple are starting to get it and are waking up to the fraud.

I've been telling you for years to get out, get into gold, silver, guns, ammo, water filter, seeds, food and to store wads of cash at home. Get your money out of dollars and into real assets that can sustain and protect you and your family. Items that can be bartered work well too. It you think you will be able to walk down to your local bank after this crash hits and be able to walk out with say $5,000 you are ignorant. HA! You can't even do that now - go try it. They will tell you they do not have it and to come back another day. If you think the grocery stores will always be stocked think again., If you think FEMA will come and deliver enough food don't kid yourself. If you think order will be kept, ha, you are in serious trouble.

Here is the chart that I like the best to show you what I think is coming. Actually this chart assumes an orderly (but hasty) exit that will take about two years (2013 and 14). I personally think that is way too optimistic and when this crash happens it will be swift and true market capitulation (everyone running for the exits at once which did not happen in '08) occurs. The target box has a low end of about 630 SPX. I can see a 4 handle before this is all over and that could happen as early as  2013.

For years my calls have been for massive global default and a market crash that will include at least two market closures. It is the only fathomable way out. Don't forget that history has never experienced financial times like these and not been able to avoid a war of some sort.

Minis 5m - All the lines you should need to see. Backtesting busted green diag support here with red (old resistance off the 07 and 11 tops) being the big driver here.

Enjoy the holiday weekend. I'll be getting my usual does of Corexit this weekend. School is out for us which may alter some of my morning posts a bit (I like to sleep more in the summer). Congrats to all those with graduates! Welcome to the world of the student loan bubble. I suggest you familiarize yourself with that issue.

GL and GB!

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