Looking ahead, here is one thing than any thinking trader will note and that is that the July high of BKX was not a new monster high from the 2007 peak like the rest of the markets were. No sir, the banking index is nowhere near a new high. In fact it kissed the 61.8 fib from below and then sold off.
I ask you, how are other aspects of a debt Ponzi going to hold up if the banks don't hold up? The banks and their ability to create temporary money from thin air called credit are the energy source for these fluffy, frothy, pithy markets.
It amazes me that EWI and Avi and others are not looking at this and being vocal about it. Please pay careful attention to the chart above, it bottomed in 5 waves and not in 3. So the odds are that it was motive and not corrective while the bounce so far has been corrective looking. How can the DJIA and S+P really be headed to higher highs from here when the BKX looks ready to break down into wave 3 down?
Well time will tell but remember you read it here first. I think that C of 2 is only a couple days from arriving and after that a 3rd wave down will come that will make it a November to remember. This would mean that the DJIA and S+P are simply experiencing deep vee 2nds. If this is the case you will not want to stray too far from UVXY because if the markets put in a significantly lower low as a 3 or C play out then UVXY is going well north of $100.
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