Which brings me to today's headlines that now smack of desperation with respect to drawing new participants into these overstretched Ponzi markets. Over the past two weeks we have heard "this market makes new record" over and over again in the media. Well, OK, but why now? We NEVER heard all this "new record" talk before even though new records have been landing on the books for well over a year now. Shouldn't we have expected to hear "new record" at least once a week since early 2013??
The market internals are weakening. You can't tell by looking at the headline numbers which is why I started up my subscriptions to Elliott Wave International again recently. You have to look at the various sector advance/decline ratio, put/call ratios, financial adviser sentiment reports, and for the presence of meaningful negative divergences. Few average people in the herd have the time or money or patience to track and to TRY to make sense of these things.
So while the internals are weakening, the mouth piece of the mood of the herd, also known as the main stream media, have been pumping for all it is worth in order to see how many suckers can be drawn into their ruin at the last minute. The "another record" message to the herd is clear. It says "where are you man? Why aren't you part of the herd? Don't you feel isolated over there all by yourself? We are having another RECORD party over here. Man this is sooo nice. Don't you wish you had it so nice? I bet you wish you were over here with us enjoying another RECORD day in the markets, well, if you want to be a loser forever then I guess that's your bag but we are looking forward to a new RECORD every day for the rest of our lives!!"
Yes, it is now nearly that blatant. In fact, they don't even care if what they say is accurate any more. Check this headline which states that the Dow hits another RECORD today, for the 4th day in a row no less. WOWSERS!! 4 record days in a row??? Woah!!! I must be missing out on something big here. Let me put my work down and see if I have any money to buy in at the tippy top. What's that knocking at the front door? OH! It's the paper boy and he is pointing to the headlines that another RECORD happened today!
Well, the pumping would be bad enough if the headline were true. But it's not! In fact, not only is it not true, but this wave is looking mighty tired and owlish if you ask me. It might still find a higher high before this Ponzi Peak is finally hit. In fact the prior peak yesterday looks like a tiny ending diagonal and those have been 3rds very commonly for some time now. Also, the retracement to date was clearly a-b-c and not 1-2-3-4-5. So we could actually be working on the 5th and final wave right now. But this is how owls form. The final wave of an owl is usually a failed 5th. It simply means that the market is completely exhausted from leveraged buying. This is far from a confirmed owl yet but I think the odds are better than even that we could see a failed 5th here simply because of that reporting gaffe about the Dow hitting a new record today.
CORRECTION / UPDATE
Below is a screen capture added just now which is several hours after I first posted. My post was driven by the fact that this story showed up on the front page of the web site today which a reasonable person would think meant it was today's story. In fairness to the web site, while my eye was drawn to the "6hrs ago" circled in red, I did miss the date on the caption (June 2). So, while their headline was true back on June 2nd, they still spoke out of both sides of their mouth today IMO. When the story teller requires you to read every word of fine print in order to get the full truth, expect there to be a significant amount of bullshit in the story...
END OF CORRECTION / UPDATE For the record, the large ending diagonal model is still intact (and it would be all the way up to 17060 should the Dow go that high because only then would wave 5 break the ending diagonal rule which requires wave 5 to be shorter than wave 3).
I think the desperation for new money to enter the market is becoming palpable. Even more important, when I look at the record margin debt being employed, at the 90%+ bullish sentiment, at the record amount of money that is in stock vs bonds and at a whole host of "risk on", leveraged indicators, at the fact that the new generation of stock buyers has not materialized because of high structural unemployment and low wages and high cost of living for the lower ranks of society, I see the market participants are very, very, very close to being tapped out. When I see Obama offering students the opportunity to be in debt for life in the name of "helping them", I see a debt Ponzi government struggling with its own viability deep in the end game. All of this is related folks. Credit is everything in a debt Ponzi. Leverage is everything in a debt Ponzi. Credit is in fact nothing but leverage and when the lever works against you it is not a pretty sight.
This baby looks primed to capsize. Unfortunately, even if it doesn't capsize this time, the captain will decide that he is thus invincible and unsinkable and so he will make another run at it in the near future turning even harder the next time. He will keep ratcheting up the risk and the danger until at some point he will certainly lose the boat.
While this may sound colorful, it is essentially the truth as told to us a few years ago by Chuck Prince, beautifully enshrined on the web by writings of the immortal Yves Smith on July 10, 2007, just a couple months before the big collapse began. Chuck Prince was CEO of all-powerful Citigroup at the time. Yves so nailed it when he wrote that Chuck, "said something I expect he will come to regret". He was of course referring to Prince's now infamous quote to the Financial Times that the credit game was not about to go bust and that, “As long as the music is playing, you’ve got to get up and dance... We’re still dancing.”
That's how it works with a pump and dump money supply. You just keep blowing the balloon up until it pops. You hope that you can hand it off to someone else two nanoseconds before it goes boom because every breath you take to fill the balloon is one in which you are breathing and in which someone else who isn't holding the balloon is holding his breath. This is the game that a fraudulent money supply forces us into and it is very, very counterproductive because waaaaay too much energy is spent trying not to get screwed by con men which could instead have been spent on productive ventures. It's a game that favors market timing by insiders, not those in society who are efficient producers of stuff that we want to consume. This is the scourge of fiat currency and fractional reserve banking.
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