08.02.2011 -- Stab twist

Ouch.

God damn, I'd hate to see what would have happened had they voted no.

Key Levels

Upside -- 1285, 1306, I'll update further than that if necessary tomorrow

Downside -- 1249, 1175, 1129. yeah.. we are pretty much in crash land, theres like 50 point chunks between support and none of it is strong.

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This is why I said that I was confused about what we are pricing in. We obviously weren't pricing in a possible NO vote. I believe we are pricing in an unavoidable bout of deflation. You see it in the treasury market and you see it now in the stock market. It only needs to start becoming very obvious in the dollar.

It will be interesting to watch gold. Gold will continue to be the hedge against world order collapse, but at the same time, we may see the dollar soar here. If we ever get to a point where the dollar is soaring, we are deflating, but it becomes obvious that the world isn't going to devolve into mad max land, we could see a gold collapse. It is not impossible. I know Tyler Durden will argue that to the end of the earth and he certainly has reasons to think that, but it is possible that we deflate without destroying civilization. Gold would not like that. Zerohedge though could correctly surmise that the overlord Bernanke will continue on his money printing extravaganza to the point of causing the end of civilization, thus Gold is certain to win, but.. honestly, do you really "win" if that happens?

Charts are fugly folks.. If the market is going to drag in bears and then do a mega-reverse, it will do it soon. If it doesn't do it soon, it is most likely doomed.

SPX Daily;

We might have broke that 7 month Head and Shoulders. There's still a pin bottom to contend with at 1249. The market BETTER hold 1249. Below that on a close would be an obviously broke pattern and a very large one at that.

Spread between the 50 and 200 is 21 points now. It will be less tomorrow.

Russel 200 (IWM) daily;

We lost the Russel 2000. It seems to have broken some type of either megaphone or messy head and shoulder pattern. It's well below the 200dma. It's a pretty convincing break too.

DOW Transports;

The Trannies are on the very edge of breaking a 7 month mega-phone top. They haven't broken it yet, but it's right there. It best make a stand here. Trannies are the only thing that isn't quite broken yet. It's well below all moving averages though, it just hasn't quite broken this huge pattern.

DOW Industrials;

DOW looks broke too, although it has some decent support around 11600. But it's also below the 200 and appears to have broken below a big channel.

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Don't know what else to say here. The market better reverse hardcore here within a few days. If not... not good things are going to happen. There is very little support down here, and what support there is was built on such low volume churn that it's like standing on super thin ice.

I think we're toast, but of course usually when I think that is when a huge reversal comes out of nowhere, but it's hard to argue these charts.

Almost every index and sector is well below the 200dma..

Semi's
Financials
Russel 2000
Trannies
S&P 500
Industrials
Even the Fucking REIT's and DJUSRE sold off below the 200.

There's nothing left to support. I'm not sure when the last time I've seen a state like that is... probably well into the 2008 collapse.

AND on a freaking YES vote to the debt ceiling. I kind of saw that coming yesterday, but wow. It seems like nothing short of announcing QE3 for something that has trillions in it is going to move this thing.

Put yer helmets on... and stock up on food, water, and cash.

GL

CJ