What Is Missing To Complete a 'Crash Signature' for 2018

"Life is a school of probability."

Walter Bagehot

Here is a little more to expand on the posting I made last night here.

We have had a long run up, with only a few corrections, to new all time highs.

The market has finally broken and corrected significantly.

You can see comparisons to 1929 and 1987 in the first chart below.

This was forwarded to me by a long time friend with whom I discuss these things.

As I suggested to him and attempted to show in the posting last night, what is required now is a break below the current low, decisively.

That takes the possibility of an inverse head and shoulders bottom off the table, and gives us the 'failed rally' scenario.

As you can see in 1929 there was a decline from the top of 17+ percent, followed by a rally back of 11+%, that nevertheless failed to make a new high, and rolled back over.

Once the new low was set, the market started its slide.

But I cannot stress enough that until and unless the inverse H&S bottom is taken out and a legitimate signature is given this remains a low probability event.

One issue in the current situation is the calendar. The Thanksgiving holiday is fast approaching.

This is traditionally a period of very light stock market volumes with a bias to a drift higher in preparation for the year end tape painting known as the Santa Claus rally.

Therefore timing is a bit of a headwind to the failed rally. It may require more of a 'trigger event' but that is very hard to forecast.

So let us be watchful for a market break lower here to a new low.

Are US Equities Flashing a 'Crash Signature'

Asks my old friend, Dominique, from the Côte d'Azur.

No, not yet.

Close, but no cigar.

This is still just a correction.  It is steeper in the big cap tech, but that is natural given its high beta and outsized role in this latest bubble.

But looking at the three, they do not yet bear the mark of an attempt at a rally back from the first drop that ultimately fails, and breaks key support to the downside.  This would set up a more substantial plunge of around twenty+ percent.

Here are the three major indices that I watch.

The NDX looks promising, but the SP 500 must confirm this.  And its chart is remarkably clear.

There is a decided lack of panic, and more cynical trading than one might see at the threshold of a major conflagration.

But let us be watchful, especially for some 'trigger event' that would induce serious panic selling on volume.

Stocks and Precious Metals Charts - Equities Plunge Led By Apple and Goldman - Stock Option Expiration Friday

“It was not curiosity that killed the goose who laid the golden egg, but an insatiable greed that devoured common sense.”

E.A. Bucchianeri


"God has no pleasure in afflicting us, but He will not keep back even the most painful chastisement if He can but thereby guide His beloved child to come home.   A believer may pass through much affliction, and yet secure very little blessing from it all. Abiding in Christ is the secret of securing all that the Father meant the chastisement to bring us."

Andrew Murray


'A true opium of the people is the huge solace of thinking that for our betrayals, greed, cowardice, and murders we are not going to be judged.'

Czeslaw Milosz

US equities were pummeled today with the Dow Jones 'Industrial' Average dropping 600 points.

Selling was strong, led lower by big cap tech and the financial sector.

Apple led techs lower, with plenty of company in the richly valued land of unicorns and bubbles.

Goldman had one of its worse selloffs since 2011, dropping 8 percent. Malaysia says it will seek a 'full refund' from Goldman on the $600 million that they were paid in fees in the infamous !MDB scandal.

So basically it was an unwinding of the core industries of fictionalization, financialization, and leverage.

If healthcare would have joined in the selling it would have a hat trick for the princes of asset bubbles and hype.

The selling has been so broad based of late that the Russell 2000 has joined the club and given up all of its gains for 2018.

Gold and silver were lower on a much higher US Dollar. I have included the dollar chart as the first one below.

There are a number of theories about this dollar strength making the rounds. Some have a measure of validity, but most are just the typical wind that drives the liar's poker forex market.

As a reminder, there will be a stock option expiration on Friday.

A chastisement is coming for this generation.   I don't think we really need to ask why. 

Need little, want less, love more. For those who abide in love abide in God, and God in them.

Have a pleasant evening.

Harold Pinter's 2005 Nobel Prize Speech - It Never Happened. Even While It Was Happening It Never Happened

"To maintain that power it is essential that people remain in ignorance, that they live in ignorance of the truth, even the truth of their own lives. What surrounds us therefore is a vast tapestry of lies, upon which we feed.

Direct invasion of a sovereign state has never in fact been America’s favoured method. In the main, it has preferred what it has described as ‘low intensity conflict’. Low intensity conflict means that thousands of people die but slower than if you dropped a bomb on them in one fell swoop.

It means that you infect the heart of the country, that you establish a malignant growth and watch the gangrene bloom. When the populace has been subdued – or beaten to death – the same thing – and your own friends, the military and the great corporations, sit comfortably in power, you go before the camera and say that democracy has prevailed.

The United States supported and in many cases engendered every right wing military dictatorship in the world after the end of the Second World War. I refer to Indonesia, Greece, Uruguay, Brazil, Paraguay, Haiti, Turkey, the Philippines, Guatemala, El Salvador, and, of course, Chile. The horror the United States inflicted upon Chile in 1973 can never be purged and can never be forgiven.

Hundreds of thousands of deaths took place throughout these countries. Did they take place? And are they in all cases attributable to US foreign policy? The answer is yes they did take place and they are attributable to American foreign policy. But you wouldn’t know it.

It never happened. Nothing ever happened. Even while it was happening it wasn’t happening. It didn’t matter. It was of no interest. The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America.  It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good. It’s a brilliant, even witty, highly successful act of hypnosis.

I put to you that the United States is without doubt the greatest show on the road. Brutal, indifferent, scornful and ruthless it may be but it is also very clever. As a salesman it is out on its own and its most saleable commodity is self love. It’s a winner."

Harold Pinter, Nobel Prize Acceptance Speech

This is a hard speech to hear.  And yet, it is worth hearing.

You may not agree with everything that he says.  I do not.

And yet, it is worth hearing.  If for no other reason than to put aside the vain delusion that we are somehow perfect, benevolent to all, naturally good in all that we undertake, pure and above reproach in our motives, ruled by wise and kindly leaders who give all and ask nothing in return, a paragon of virtue at home and abroad—  exceptional.