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MARKET(S) UPDATE
Market internals continue to worsen for stocks,
which is definitely being accentuated by what is happening in Europe. On a
purely technical basis, the markets have not yet reached the degree where a
bottom is imminent. Monday's sharp decline is likely part of a Wave 3-down of
C-down of large degree Wave 4 down. Wave C's down usually requires 5
waves to complete. Once it bottoms, a multi-month rally should begin its last
and final Wave 5-up, hopefully into a new all time
high setting the Greatest of all Bull Traps. (Perhaps that is just wishful
thinking, but it would sure as hell surprise everyone.)
However, declines below 12,200 in the Industrials
and 1,275 in the S&P 500 would suggest Wave 5-up has truncated and
is at the April highs. If these lows are taken out, it means a massive
decline is just getting started.
GOLD & SILVER
Precious metals are close to reaching the bottom of
their declining triangles. Looking for some new buy signals in the HUI
indicators, it would then suggest new multi-month mega rallies are starting.
The gold stocks have never been this undervalued as compared to bullion and
the rallies could be spectacular. They might be able to be compared to the
last month's explosion in 1979.
WHY THE STRENGTH OF THE RECENT SELLOFF?
Again Let's Look Back to Europe
There is a mad scramble for money going on in Europe by everyone including
the whole banking system. When that happens, they sell everything and
anything that has a BID; certainly assets that are still profitable. To some
extent that is also happening here in the good old USA. This is exactly the
wrong thing to do. Everyone knows that you are supposed to sell your losses
first, but rarely does anyone do that especially during a PANIC, which is
exactly what's going on. Will Greece survive? Will Europe and the Euro
survive? How would you be feeling if you had ALL your assets locked up in
European Banks and Securities.
If I lived in Europe, I would be mortgaged to the
hilt and have all my liquid assets in GOLD COINS and I would not be worried
about the current price of those coins. They will, without question, be worth
more in purchasing power in the very near future and certainly more than any
surviving Euro or any currency that replaces it and that includes the US
DOLLAR.
JP MORGAN
As far as what we now know, the only thing to be
concerned with this time around is that the Government and the press will
make a mountain out of a mole hill. So they lost 2 or even 4 billion, but
they made over $20 billion and their net worth is over $1.5 trillion. The
only question is what kind and how much toxic assets
do they really carry on their books. And there is no way of me finding that
out. The danger has more to do with politics. More Government regulation can
only make it worse. The only thing that has worked for some 65 plus years has
been Glass Steagle. So get rid of Dodd Frank and
bring back G.S. and reduce Government interference and sleep well.
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