S+P breaks down below 1 year support trend line

Over the past several months I have been warning about toppings in many of the big stocks on the market including IBM, Wal-Mart, etc.  In many of the related posts I ended things with "watch the S+P 500, this [big company name here] will likely not be going down alone.  In mid August I also posted my thoughts about the S+P 500 itself.  While my S+P model did not pan out exactly as stated (there was an extra unanticipated bounce), the main theme that the upper resistance line would hold has so far been correct.

And so today the S+P 500 broke its one year support trend line.  You can see it as a big red candle breaking down below the blue support line which has been strong support since about this time last year.  This indicates to me that the herd is becoming less certain about the standoff between Arrogant Obama and Cry Baby Boehner.  Obama is a narcissist and Boehner is trying not to appear to be the pussy that he actually is (just look for yourself in all the teary eyed pictures of him on the web).  Obama doesn't think he needs to compromise with a weakling and Boehner needs Obama to compromise on something else his weakness will be a matter of fact.  Thus, both men have something to prove and both believe that the futures of their parties are going to be impacted by the outcome of the standoff.  The market senses this and the smart players are taking money off the table.

Note how this follows 5 rail bumps in an upward angled direction (shown by 3 blue touches of the top (resistance) rail and 2 brown touches of the lower (support) rail.  Note how support was broken over the past 2 days "with gusto".  The next test will be the 2 year support line as shown below.  If that cannot hold then expect the markets to begin to show increased nervousness and volatility. 

I think all the factors are in play for  breakdown:

• A nice A-B-C pattern upward patterns since the bottom in 2009.  This would indicate that the bull market is a correction, not the primary direction.
• A government which is in great internal conflict with itself cannot be trusted to bail out banks and funds in the future as it has in the past.  The Tea Party influence is gaining momentum and power and backing by more and more average citizens who now see that they have been right all along.
• New, higher taxes taking effect with Obamacare leave less money for investing. 
• An overvalued stock market.
• A global recession that simply will not end despite all the best efforts of Bernanke to buy people's happiness.

Under circumstances like this the markets can easily collapse without blaming Wall St.  Government can now be blamed even though a collapse has always been in the cards because the value simply never existed to pay out all the claims that retiring boomers are now putting in against their 401ks. 

Again, I'm not guessing that a collapse will occur.  I KNOW it MUST occur just like Madoff knew his Ponzi could not last forever.  Let there be no future doubt about this fact because it is driven by Ponzi math which I know to be in play.  The only thing I don't know (and am happy to admit that I don't know) is when it will collapse or what the final catalyst will turn out to be.

Maybe this will be the time, maybe it will take a few more months or even a couple years.  But the collapse of the markets and of paper investments in general and in fact of other classes of investments is coming.