05.23.2011 Update Threatening to breakdown

Today we had a pretty broad based sell off. Nothing was being particularly smashed while others based. The Russel 2000 took it on the chin a bit worse than most, but otherwise it was a pretty even sell off.

Speaking of the Russel, I'll jump right on that first. Ugly breakdown in the Russel today, it closed under both the 50 and 100 dma's. It also appears to have broken well below support of any type going back 12 months. Pretty nasty.. have a look at that first;

(btw, in case anyone isn't aware, if you click on the image you get a large version)



Pretty ugly eh? Charts don't get a hell of a lot more bearish than that looks.

The S&P did a bit better job at holding onto support today. It's still in the down channel and while it did get below the 50dma, it bounced off of the 100dma, so at the moment the 100is still holding. The 100 will be key for further weakness here. Break the 100 and we almost certainly will test the 200, which is all the way down at 1240. I think we lost the Russel, but the S&P is holding on for dear life;



The DOW, not surprisingly, is holding up the best. The smashing of the dollar and pain at the gas station for us all has done wonders for the likes of IBM, Caterpillar, 3M, McDonalds, etc. When your products and services become cheaper across the globe, obviously you'll sell more of them as you become more competitive. Unfortunately, this has come at great cost to the American middle class and retiree's who don't enjoy paying 4.25 for a gallon of gas or 15$ for lunch at TGI Fridays. The DOW stopped at the 50 dma and reversed. So it's still above all moving averages. However, the dollar is doing some serious rallying, which obviously is not going to be good for continuing to grow profits at the mega multi-nationals.



Last but not least, we have our favorite giant turd IYR. It's threatening the bottom of it's very old wedge. It's becoming more and more apparent to me that the combination of a re-collapse of commercial real estate, double dipping residential real estate, popping of the emerging market bubble, popping of the Chinese, Austrailian, Canadian and recently London real estate bubbles all with the mega-banks at multi-year lows of loan loss reserves is what is going to re-smash the financial system and re-start the global collapse that we started in 2008. Remember, THEY'VE DONE NOTHING TO ACTUALLY FIX THE PROBLEMS. The can has been continually kicked down the road. You can't fix debt problems with more debt. You can't charge your mortgage on your credit card. It'll work for a month, but then what? You're fucked worse than you were before.



Elliot wave doesn't give us a lot of clues at the moment because there is possible long term bear and bull counts. The only thing I can say is that there are more long term bear than bull counts at the moment.

But other signs are flashing.