Krispy Kreme is Krashing

While the top line headline stocks still have confidence of leveraged gamblers, the weaker players have been falling apart left and right since the start of the year.  The market internals - number of stocks advancing vs declining, and number of stocks hitting 52 week highs vs 52 week lows - are in steady collapse, just as happened in late 2007.  We don't hear anything about it because nobody wants the Ponzi feel good party to end.  But if you look at all the high flyers that have gotten crushed, and I don't mean by just a little, then you start to see how the smart money is trying to head for the door starting with weakest bets first:

• Twitter is down from peak of $75 to $32 today since last December.
• Groupon was $12.75 last November and now $5.55 today.  What a bargain!!  (LOL)
• Overstock.com, $36 last August, on sale for $15 today.
• SINA.com was $90 last October and now $44.44 today.
• 3D printing darling DDD was $96 back in January is now printing the 2D tape at $50.
• Best Buy was $45 in November, now on sale for $28 with few bidders.

In fact despite the headlines that feature Dennis Gartman throwing in the towel on being bearish, the list of companies that have crashed 30, 40, 50 and even 70% in the last year is not small and continues to grow.  Each time another weak player is shorted into the dust, the shorts become stronger and bolder.  It will not be long before they come for the big boys, the unstoppable, unsinkable, kant miss stocks like IBM, JNJ, KO and others.

Today's horror story in the making is none other than Krispy Kreme doughnuts, down a whopping 14% today.  That chart is a perfect Elliott wave a-b-c retracement from the 2009 lows where the shares were trading at $1.39.  Check the fact that the shares peaked right at the 50% fib and that a triangle signaled that it was the penultimate wave.  Look at how the Bernanke Pump Job breathed temporary life back into a company which the market had already priced for BK.  KKD will eventually BK. 

I suspect that the presence of sugar in American food is going to be cut back in the coming years as part of a move back toward conservatism.  It's not that the food vendors will willingly cut it out.  It's that they will find out that sales are being hurt.  If people can't be wealthy at least they will have their health.  I expect "can't lose" Coca Cola (ticker KO) to suffer the same fate.   People are tired of sugary drinks and they also don't want artificial sweeteners.  Not only that, but Cokes are the first thing that will be left off the shopping list as mom and pop middle class (Patsy and Mark) decline into a nearly hand to mouth existence (as if most people aren't already there...).

If KKD has a sucker's rally off of today's 14% shellacking, just look for the old a-b-c pattern and then jump back in short.  KKD should have gone BK before.  This time there is nothing that will save it.  That bastion of bullshit named Bernanke is no longer at the fed.  Yellen can either go down in flames by keeping up his legacy or she can attempt to make a name for herself by doing the right thing (cutting out QE wherever possible).  I watched a couple of financial videos over the weekend that were posted on Mish's blog.  One of them feature John Hussman (very smart guy) who suggested very clearly several times that Yellen and others on the fed board were not nearly so enamored with QE as Bernanke was and is.  Bernanke is a total con man.  He pumped everything up and when the data indicated that pumping was producing diminishing returns, he bailed out to go on the high priced speaking circuit.  What a scam.