All you need to know about the stock market is in this S+P chart.

Ever since Bernanke started pumping money into the economy in 2009, he blew a gigantic asset bubble  in the hopes of re-igniting the Keynesian animal spirits.  Of course, Keynes was a con man and a fraud, well versed in the art of the grift.  He would preach 90% good truth mixed in with 10% killer bullshit.  Things like "government can stimulate the economy as long as it unwinds the position when times improve".  But what if the only reason for any improvement was the stimulus? 

This is the game that the con men play.  This round of it has been ongoing since 1913 when the Federal Reserve was created out of thin air in order to cheat us all our of our labor (an act that used to be called slavery).

Let me ask you something.  If I came into a room and tried to talk to people about things which I am pretty well versed in, would anyone listen?  If I was wearing tennis shoes, jeans and a tee shirt, would anyone take me seriously?  Of course not.  If I came in wearing a $1000 suit and $300 shoes then I would fare much better regardless of the fact that the information would be the same.  But if I had the suit and the shoes, was driven to the door in a limo (or landed with loud fanfare in a helicopter) and had a business card that said "Federal Reserve" or some other big sounding title then I would get instant credibility.  Now, lets also say that I practiced the art of sophistry before I came in.  Let's say Greenspan coached me in "green speak" or "fed speak".  Let's say I had a staff of people behind me (not paid for by me of course...) and all kinds of media propaganda backing up every word I say.  Let's say I worked in a big, pompous, impressive granite building in the heart of an expensive city (paid for by someone else of course)...  Armed with these things, people would listen to anything I would tell them.  None of this was accidental, it was all planned.

I hope you get the picture but if you don't then I strongly urge you to read a little book by a man named Robert Ringer.  It's called, "Winning Through Intimidation" and it is a real eye opening gem; a glimpse into how the human brain works.  You see, most people simply don't think in these terms (using passive aggressive techniques, subtle intimidation, etc. to screw their fellow man over) and so we normal, non-sociopaths don't ascribe those kinds of thoughts to others.  In fact, if someone mentions to us that con man (intimidation) tactics are being used, our herding instinct and built in, herd-enforced peer pressure (AKA herd intimidation) will cause us to directly accuse the offender of being a conspiracy theorist (which is to say that the person is crazy, unstable, requiring of psychological evaluation and borderline dangerous...).  Calling someone this trigger phrase is a passive aggressive dismissal of the facts using the old fallacious argumentum ad hominem.  Of course, let's just forget that conspiracies happen all the time and all throughout history!  They can't possibly happen today!

People think like this because they are intimidated and they don't even know it's happening.  That's how we foolish people allowed the con men running the show to initially replace our gold and silver coinage with paper markers for same (AKA IOUs or "notes") and then ultimately even remove the IOU from the paper.  Since the dollar is now a promise to pay nothing, we are trading monopoly money for our goods and services and anyone who says this obvious truth is considered a whack job at best or dangerous at worst.  Of course, once the con collapses and the people see that in fact the king really has no clothing, everyone is all angry and hostile about it.  Not so much because they lost everything in the con but rather because they were such Marks and Patsies. It's the recognition of abused trust that hurts our herding human species the most.

Folks, the stock market is a scam.  It is NOT a store of wealth.  It is in fact nothing more than a gauge of how much debt we have taken on.  Margin debt controls the price far more than any real "fundamental" value (whatever that is...).  As the credit crash unfolds, margin debt will be unwound and stocks literally have no place to go except down and down hard.   As hard as the stocks were pumped up on debt, they will be wound down when the credit crash unfolds.  What "credit crash", you might ask,  "I don't see no stinking credit crash".  Well I don't know what to tell people when I hear this.  The math is obvious, the logic is clear, and the historical precedent is legion.  You cannot pump everything up using debt without someday having a credit crisis.  The credit crash is measured by the asset value crash (stocks, houses, assets of all kinds).

The only question is the timing and that's where Elliott Waves come in.  The model below is a perfect wave count.  Maybe the count is wrong, nobody can be 100% sure of that so early in the process.  But the stocks are breaking down right on schedule, right as the count would predict.  It's not conclusive yet but there no none so blind as those who will not see.

Folks, the S+P 500 is now breaking down right now.  The channel is broken, the technical damage is now insurmountable.  Everyone is already "all in" so there are only sellers, no buyers.  Bullish sentiment is at 27 year extremes.  A major, major, crash of historical level is about to unfold over the next 2-4 years.  It will happen in fits and starts but the average direction will be clearly down, just like it was from late 2007 through early 2009.  Any surprises now will be to the downside.  People will whine that stocks are going down despite good news from company XYZ.  They think the news and the share price are directly correlated.  They have no idea that the real driver of share prices for many years now (in fact starting in 1980) is institutional leverage.

This crash will be much worse than the last one because those sons of bitches Greenspan and Bernanke didn't fix anything.  They simply pumped the Ponzi up to the next level drawing in ever more Marks and Patsies.  There will be swing trade opportunities for sure.  Nothing goes straight up or straight down.  And some few stocks might buck the trend but it will not be the big names that we all know.  Those are already swarmed and infested by leveraged gamblers.  Some new leaders will emerge, for example, in Turing Machine grade AI and that sort of thing and they will be invest-able.  But the easy money is on the short side and that will be the case for at least 2-4 years going forward.

Keep in mind that huge 1, 2, 3 day drops are possible at times like this.  It generally should occur during a 3rd of 3rd.  Here's a list of the top 10 one day drops in history.  I expect the coming collapse (being a C wave) to contain a drop that rivals the worst drops in history.  More and more the real risk to traders will be found in not being short this market when the big collapses take place.