Crash Signatures

If you have been a long term reader here you know that I have something called a 'Crash Signature.'

One of the key components of this is a significant decline from a new all time high, that rallies substantially so that the fear subsides and most believe there is a return to 'normal' bubble conditions.

Unfortunately, IF this is a rally that fails, in that it fails to set a new high, but tops out and then falls sharply again, we have a higher potential of a crash in which confidence is shattered and a new lower low is set.

I have a correspondent in France who also does trend tracking such as this. While I have normally been using a composite model of several crashes from US market history (1929, 1974, 1987, 2001, 2008) he is concentrating lately on a comparison to the year of 1937.

It should be noted that the 'crash' of 1937 pales in comparison to the Crash of 1929. And it was largely caused by an egregious policy error by the Fed.

If you look at it carefully it does follow the 'crash signature.'

Here is the latest chart which he has sent to me. I think if we fail once again to take out 'The Wall' on my SP 500 chart, and drop to a lower low, there will be a higher than normal probability of a 'crash.'

Although I have to add that we are in the days of organized support, and mobilization of the entire country's money mechanisms, to support stock prices for the benefit of their primary constituents.

The next few months could be memorable.

David Cay Johnston on the Crony Capitalism, and Part 2 on Plans for Funding For Your Old Age

"A pension is not a 'gratuity.'  A pension is wages you could have taken in cash, but prudently and conservatively set aside for your old age.   It's your money.  If your employer, for every pay period, does not set aside and designate it to go into a pension plan, your employer is stealing from you. The way to get this is to require pay stubs to itemize the amount of money that has been contributed to your pension plan."

David Cay Johnston


“Capitalism is at risk of failing today not because we are running out of innovations, or because markets are failing to inspire private actions, but because we’ve lost sight of the operational failings of unfettered gluttony. We are neglecting a torrent of market failures in infrastructure, finance, and the environment. We are turning our backs on a grotesque worsening of income inequality and willfully continuing to slash social benefits. We are destroying the Earth as if we are indeed the last generation.”

Jeffrey Sachs


"We are coming apart as a society, and inequality is right at the core of that.  When the 90 percent are getting worse off and they’re trying to figure out what happened, they’re not people like me who get to spend four or five hours a day studying these things and then writing about them — they’re people who have to make a living and get through life.  And they’re going to be swayed by demagogues and filled with fear about the other, rather than bringing us together.

President Theodore Roosevelt said we shall all rise together or we shall all fall together, and we need to have an appreciation of that.

I think it would be easy for someone to arrive in the near future and really create forces that would lead to trouble in this country. And you see people who, they’re not the leaders to pull it off, but we have suggestions that the president should be killed, that he’s not an American, that Texas can secede, that states can ignore federal law, and these are things that don’t lack for antecedents in America history but they’re clearly on the rise.

In addition to that, we have this large, very well-funded news organization that is premised on misconstruing facts and telling lies, Faux News that is creating, in a large segment of the population — somewhere around one-fifth and one-fourth of it — belief in all sorts of things that are detrimental to our well-being.

So, no, I don’t see this happening tomorrow, but I have said for many years that if we don’t get a handle on this then one of these days our descendants are going to sit down in high-school history class and open a textbook that begins with the words: The United States of America was … and then it will dissect how our experiment in self-governance came apart."

David Cay Johnston, May 2014

Stocks and Precious Metals Charts - Just Another Comex Options Expiration

"Major commercial and investment banks—and the hedge funds that ran alongside them—were the big beneficiaries of the twin housing and equity-market bubbles of this decade, their profits fed by an ever-increasing volume of transactions founded on a relatively small base of actual physical assets.

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear. Recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup, May 2009


"The great enemy of freedom is the alignment of political power with wealth. This alignment destroys the commonwealth - that is, the natural wealth of localities and the local economies of household, neighborhood, and community - and so destroys democracy, of which the commonwealth is the foundation and practical means.”

Wendell Berry


"The ferocity of media attacks on him [Bernie Sanders] often indicates that corporate power brokers are afraid his strong progressive populism is giving effective voice to majority views of the public... For corporate elites determined to retain undemocratic power, a successful Bernie 2020 campaign would be the worst possible outcome."

Norman Solomon


"Today in America, the middle class is disappearing. For many, the American dream has become a nightmare. 

The business model of Wall Street is fraud. In my view, there is no better example than the recently-exposed illegal behavior at Wells Fargo.   We have got to end the two-tier justice system — one for the poor and working class and one for Wall Street and the wealthy — that has existed for far too long in this country.

Wall Street won’t change until we make it clear that no bank is too big to fail and no CEO is too big to jail.  Billionaires and Wall Street should not be buying elections.

The reason that Congress isn’t doing what the overwhelming majority of Americans wants has everything to do with the power of the monied interests. Let us bring our people together to take on and defeat a ruling class whose greed is destroying our nation. Our government belongs to each and every one of us, not just the few.”

Bernie Sanders

Gold and silver were mugged in honor of the day after the options expiration on the US Comex.  I have to say that this was pretty much as had been expected.   And that is a shame.

Stocks took another go at the big overhead resistance.

The spokesmodels noted that Wall Street 'looked through' the bad economic data that came out this morning.

A more elegant way of expressing this is that the lack of a recovery in the economy will have the Fed sidelined for the rest of the year, and will continue the hot money flows that fuel speculation in stocks and mispriced risks. The Fed feels free to continue pursuing the same monetary and regulatory policies that have cause us at least two bubbles and subsequent crashes so far in this century, and are working on a third.

This is no accident. It is a means to the greatest redistribution of wealth and record inequality since the Gilded Age.

And it is supported by an extremely well funded and determined public relations effort, with alternative media sites and think tanks, to lure people into proudly supporting their own economic pillaging.

Creating torrents of new money from nothing, and making sure that it reaches the hands of 'the right people' and no one else, is how to fuel bubbles without triggering a broader inflation. The Banks must be restrained, and balance restored to the economy, before there can be any sustainable recovery.

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

Have a pleasant weekend.

Stocks and Precious Metals Charts - This Century of Scandals - Pride and Presumption

"Of course, it was not a good idea for Australia to sell most of its gold and for Canada to sell all of its gold. The timing of these sales was also some of the worst ever. Beyond this, these central banks acted irresponsibly and had no accountability to the populations of their nations. Gold is the wealth of ages, the sovereign wealth of a nation. It is not some securitized financial asset to be sold and squandered by statist central bankers who answer to no one...

Some of the gold that the Western central banks still claim that they hold is in fact not there at all. It has been leased out in London, sold and shipped abroad, and now sits in China or India, and all the while the Western central banks still claim that this gold is on their balance sheets as they maintain the fiction that ‘gold receivables’ are in fact the same as physically held gold.

All central banks that store gold bars at the Bank of England should now sit up and take note that storing gold at the Bank of England is a wealth hazard fraught with political and confiscational risk.

It is irresponsible that Australia not only sold a majority of its gold at fire sale prices in 1997, but that it has since done nothing to rebuild its strategic monetary gold reserves. All the while, the Asian powers of China and Russia have been doing just that. As one of world’s largest gold mining producers, Australia also has the means at its disposal to rebuild its gold by tapping into primary gold production."

Ronan Manly, Australia's Gold at the Bank of England


"Do not say, “No one can have power over me”
for the Lord will surely chastise you.
Do not say, “I have sinned, and nothing has happened to me yet”
for the Lord is slow but sure in his judgement.
Do not be so confident of forgiveness
that you foolishly add sin upon sin upon sin."

Sirach 5:3-5

Gustave Doré, The Fall of Lucifer

“How you are fallen from heaven,
Lucifer, son of the morning!
How you have been cut down to the ground,
You who cowed the nations!
For you said in your heart:
‘I will ascend into heaven,
I will exalt my throne above the stars of God;
I will sit on the mount of the most holy
On the farthest sides of the north;
I will ascend above the heights of the clouds,
I will be like God.’

Isaiah 14:12-14

Today was an option expiration on the Comex.   And the price was knocked down sharply in the day trade.   What a surprise.

There was an interesting withdrawal of gold on offer at today's prices which occurred yesterday in the NY Comex warehouses.

The physical inventory in Hong Kong also continued to see net outflows.

Stocks continued to flounder at these levels.  The economy is out of balance, and is not sustainable without continuing infusions of liquidity. 

We do not suffer from an abundance of evil, so much as a broad lack of virtue and good.

Are we not exceptional?   Are you not entertained?

Have a pleasant evening.