Volume changes precede price changes

In a past post relating to the Aussie real estate market (bubble), I reminded readers of the commonly known truth that volume changes precede price changes in markets.  In other words, if there is little trading in the prior direction of movement then the market for the item (stocks, commodities, housing, anything) is likely ready for a turn south.  Conversely, when the volume runs out of a bear market sell off, that signals that the herd is all run out of the market and that a buying opportunity is at hand. 

Today, Karl Denninger points out that the S+P futures market is seeing extremely low trading interest by market participants.  I've written many times that a con is over when either of two things occur:

• The patsy gets wise
• The patsy is fleeced so badly that he can no longer participate in the con even if he wanted to

The patsy in this con has always been the middle class and as the middle class shrinks there are simply less patsies to fleece along with the fact that the ones who have gotten whacked already are now gun shy.  Denninger’s conclusion: "The fraud, the phony bids and offers and the high-frequency ripoffs have driven everyone away."  

It cannot help that super-widely read economic blogger Mike Mish Shedlock is now writing, ”Embrace the fact: Banks cannot be saved”.  Mish is known for withholding his final call on a matter until there is enough evidence to support his conclusion in even the most cut throat debate.  When Mish makes such a definitive statement your odds are very poor if you bet against him.  The odds of another banking crisis in the next few quarters or years which is even bigger than the last one are very high.  When it happens the FDIC will be revealed to be bankrupt and people who foolishly believed government assurances about the safety of the banks will get creamed IMO. 

If that happens, don't look at me for a bailout.  I will wondering why you didn't heed the multiple warnings being given by the market.  I will be questioning why you didn't get out of the banks completely knowing that the FDIC is a bankrupt sham that cannot save itself much less insure your deposits in a real crisis.  I will also be concerned that you didn't store a significant portion of your personal wealth in something outside the global fiat currency scam (like gold and perhaps some silver). 

But not concerned enough to bail you out. 

The time is now to think and act.  Don't wait for the bottom to fall out and then whine for the sympathy of others because everyone will be in hard times of one form or another at that point.