RiskAverseAlert

Five Reasons the Market Could Crash This Fall

Positively spot on. All the technicals quite agree. There's no doubt this rally off March bottom largely is a short squeeze. No doubt whatsoever. To wit, find me one instance in the market's bull run from 1982-2000 when RSI shot straight up like it has both in March and July. You can't, and so here's the rub...

The "wall of worry" the market is said to climb is no subjective notion. Indeed, the absence of worry is reflected both by RSI behavior since March as well as increasingly diminishing volume of shares exchanged (as you noted). What is most shocking about this is the seeming lack of fear following last year's collapse of structured finance. And now, who will back Uncle Sam? Any word yet on benevolent life forms found by rovers on the planet Mars? Notta!

You are right. We are on the verge of the most spectacular collapse since the 14th century fall of the house of Bardi. The name of the game for decades has been "Inflate or Die." With the collapse of structured finance a seminal event seizing capacity to inflate, now is time when the death of monetarism soon becomes apparent to all. The Fed already is finished. The degree to which Treasury continues its adherence to belief in the viability of the present financial system will determine whether the United States itself survives what history quite likely will call the coming Great Calamity.

The path of least resistance in the stock market, therefore, is down. Indeed, I believe equity is dead money so long as bankruptcy reorganization of the entire financial system continues being desperately forestalled for the sake of opportunities this presents to the thinnest of interests who in their extreme vulnerability likewise recognize an extraordinary circumstance in which incredible power stands to be consolidated.