Over the last 10 trading days, RAC has evaluated the sequenced stock patterns for its portfolio holdings. An overlay chart of the same or similar stocks that we held in the 2007-2009 indicated not only a massive head and shoulders formation but other troubling indications. The chart comparison overlay has an interesting footnote. In the 2007 footnotes of our review, the synthetic Collateralized Debt Obligations, (CDO), displayed a near perfect correlation of financial engineered bonds creating patterns that are once again being utilized by fund mangers to generate a sellable high yield to their investors. As Warren Buffet has been quoted, " be fearful when people are greedy and be greedy when people are fearful". These greedy fund mangers have escaped the to big to fail and now have performed the "Houdini Head and Shoulders" to big to jail escape performance. All of this while remapping the synthetic mortgage CDO's of the 2007 era. The reach for a higher yield for your investor should not be a criminally endeavor that comes with a get out of jail free card. The other interesting correlation of these charts will be the culmination of the Regulators reluctance to regulate the investors interest. The Wall Street Journal indicated that the regulators are being sued for basically malfeasance. The Quantitative Easing will disappear, interest rates will have a rapid rise to increase the dissected mortgage backed securities that will be refinance under the HARP and other lame duck programs. The government is selling their GM stock at the right time for their return and fees to their broker. If history repeats itself as in the stock market crash of the 1930's, our current market is due for some intense pain. Buying into a falling market is like catching a falling knife. Your going to get cut. The bright side of our reviews indicate a light at the end of the tunnel. This beacon is an increasing home and automobile sales even with the higher rates. The higher rates are a necessary evil as it allows for the less than perfect credit worthy consumer to reenter the buyers finance market. The hoards of cash reserves held by the financial institutions will trickle down to the lending trees as a disguised A grade investment paper wrapped in a CDO with D and F grade securities as the bow for the box. These cycles are necessary to restart the economies of the world as over 40 percent have what is considered to be sub-prime credit. Can you hear the usury hounds barking all the way to their bank? My money will be on the greyhounds!
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.