DJIA: Stair steps up, elevator down.

Here is an "all hands" post from Sept 19th calling for an imminent breakdown on the DJIA.  The actual chart below bears that out (no pun intended).   

The red arrow shows first confirmation of the breakdown and the purple arrow shows the second and final confirmation.  The bear is loose.  The back bite has been administered and this bull is dead.

So what's next?  In times like this it always pays to remember what happened in the past and these things are often memorialized in sayings such as today's legacy phrase that pays which is "Stair steps up, elevator down".  In other words, the old pump and dump.  2007-2009 was just the warm up.  The real show is unfolding right now as the fat lady is now singing.

I feel compelled to remind people that as we here are getting rich because of our understanding, most people are getting fucked.  I wish it was not this way.  I wish people could just receive what they earned, no more and no less. I don't like what I know this is going to do to our country.  And so we must never lose sight of the fact that this pump and dump crap cannot happen without a fraudulent money supply based mostly on the kind of credit that, when issued, actually increases the money supply.  This scam of a money system is known as fractional reserve banking.  There are systems in which loans can be made without increasing the money supply and those are honest systems.  But we do not have that.  We have the con man controlled fractional reserve scam at the global level. 

The reason I make such a point of this is that its collapse will negatively affect you and everyone you know in the coming years.  The con men will point to everything in the world except themselves as the cause.  But what else would you expect of thieving con men?  By telling you what is going to happen in advance I hope to prove beyond a shadow of a doubt that those who understand Austrian economics have always known it would happen and why it had to happen (even though timing the crash is always the hard part).  When the economic crash is over two years hence it will remind us of the twin towers - collapse at the speed of gravity into its own footprint.  When you see that, remember to review these pages so that there is no doubt in your mind that Austrians (who I learned from) knew it was coming and that such prior knowledge of future outcome shows deep understanding of the truth.  So when it all comes tumbling down, this house of cards of a global economic system, who 'ya gonna trust next time?  A Keynesian con man with his pump and dump or someone like Ron Paul from the Austrian school?

The forecast for the DJIA still looks very dark.  Nothing goes straight up or straight down but the break down from an ending diagonal tends to move pretty quickly as everyone begins to head for the door at once.  TVIX volatility is almost impossible for the average person to day trade because it is swinging unimaginable percentages per day.  But the volatility cannot mask the reality that the VIX has bottomed and at some point in the next 12-24 months it will put in an all time high of over 75.  I don't know what that will translate into in terms of TVIX but I stand by my long standing "20-40 bagger from the bottom" call.

I want to re-emphasize to people who are just coming online here at Economati who did not have the experience of walking (grinding..) the chart down to its expected bottom "in the mid to low 2s" that all of this was completely predicted by my EW models in advance.  I say again, the mechanics of the coming crash are inescapable, only the timing was ever in question.  TVIX will be very volatile but it will move up very rapidly over the next couple months.  There is nothing that a volatility derivative (like options or the TVIX ETF) loves more than rapid moves over unit time.  So while you have to be lucky to make profit on them during bull markets, when fear is running the show you buy the fear index (the VXX) or its double TVIX.

In any case, we will get retracements and they will be fierce but mercifully short lived.  If you can trade them effectively then you will make a heck of a lot of money but if you can't trade them then don't try.  Expect to make 25%, then lose 10%, make 35%, then lose 15%, etc.  On the short term charts these moves will look really scary but the profits will in fact add up big time over time. 

Also, right now there is little chance that any of these ETFs will BK.  It is too early in the collapse for that.  We will get through all 5 of the coming intermediate degree waves down without systemic risk being a real factor.  So, in the model below, we will be way off the bottom of the chart before there is real risk of institutional default of these bear market ETFs.  But during 3 of 3 as the DJIA falls below 8k,7k 6k dropping like a stone on its way to 1000, that's when I expect defaults to show up in the industry in general and it could happen to those running these ETFs. 

So make money while you can and then get your original investment out of the Ponzi (and out of any broker or bank into your hands) along with a reasonable profit (like 10x) and then keep playing the game with their money.  That's what I am thinking I will do.