In tonights chart, I threw in what I think is now a completed EW count.
There are other options, but this looks like a clear complete count. To be proven wrong, 1370 needs to get taken out.
I dont normally use EW as a major indicator, but I use it when it is supported by all other technical indicators.
In this case, it is supported by the daily Stochs, MACD, trendlines, timing, and sentiment.
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Key Levels
Upside -- here to 1370
Downside -- 1348, 1332, 1317, 1290, 1279, 1257, 1242
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SPX Daily;
Here's the labeled count and where we stand. We are essentially just sliding up the upper trend line as it rises each day, so we are rising slightly continually to new recent highs but without breaking resistance.
This is pretty self explanatory, so i'll move on.
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I think most of you who read this blog know that we are heading in a direction that will ultimately lead to bad things. We just don't know how long it will take to get there.
We are essentially blowing a bubble in global central bank balance sheets.
How far that can push markets is anyones guess.
It certainly would qualify as by far the largest and most insane bubble to ever be created.
In the end, trying to predict it seems silly though.
Will anyone even ever know that you were the one to call the collapse as the world sinks into a global depression caused by a soverign debt and central bank balance sheet bubble?
A global central bank and sovreign debt bubble is not a tech bubble or a housing bubble. It will be a global bubble and a devastating bubble. If you had the choice between global nuclear war or global exploding soverign debt bubble, I just might choose nuclear war.
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Some numbers..
I think some folks lose sight quickly of how large these numbers have become. 7 or 8 years ago, throwing around numbers like 50 billion would have been enormous. The 400 billion deficit under Bush seemed tremendously huge.
These numbers have gotten so enormous they are leaving comprehension for most.
Lets talk for one minute about one number in particular. Lets assume for a minute that the IMF hands over 50 billion dollars to help bail out Greece yet again.
Now lets assume that the 50 billion is funded mostly through US tax payers.
Keep in mind too, 50 billion is less than 1/20th! of last years fiscal deficit.
50 Billion is equal to approx. 160$ for every man, woman and child in the United states of America.
If you have a family of 4, giving Greece 50 billion is like taking 640$ out of YOUR wallet and handing it to Greece. You may not feel it now, but you will in the future when this money must eventually be paid back.
Now compound that into our fiscal year deficit.
The US Treasury borrowed, in excess of tax revenue, the equivilant of over 3500$ for every man, woman and child in the US last year.
Or over 20x the 160$.
So a family of 4 is on the hook for 14000$ in accumulated national debt for last year.
We've done this for 3 years in a row now.
In 3 years, we are on the hook for 42K dollars per family of 4 in just 3 years.
This is just borrowed debt in excess of tax revenue.
Obviously Bernanke keeps mentioned how fiscal policy must be addressed, yet at the same time, he continues to allow them to spend uncontrollably by keeping borrowing rates at zero.
But think of it like a mortgage.. even if your mortgage rate was zero, you still owe money every month on the balance.
Then lets say you have a 300k mortgage at zero percent interest. You pay 1100$ a month, it comes straight off the principal. BUT.. at the same time that year, you take out a home equity loan for 10x the amount of principal you paid off that year. So you paid off almost 15k, but took out another loan for 150k. Now you owe 450k next year. Rinse repeat. This is what the government is doing. This is what governments around the world are doing.
This is unsustainable.
We will either see treasury rates blow up on us or government spending must be drastically reduced.
Either way, the economy will be harmed badly.
This is the essence of this bubble. The worst we have ever seen.
GL
CJ
