Saturday, June 22, 2013

If Ben Wants a Depression

Well I was half right, gold took a cliff dive, and looking at the fib lines I follow, and my view where SPY is heading GLD 116 is still my bottom target, and we will get there in a month.  I am wrong if GLD moves higher than the 132.50 next week.  It could gap fill and roll back over, as well.

Now for SPY; I think more is going on than meets the eye.  First off we had Quad OPEX and obviously the bets were skewed bullish so we had pressure on the markets to correct that imbalance, and there is China.  Chinese banks appear to be under a lot of stress, but much of that is manufactured.  Their banks are hoarding cash for quarter end regulatory reporting, and the Central Bank is not lending to them because they want to force new lending to go in other directions than real estate, so they are playing a game of chicken.  This resolves itself next week.  

There is simply no way Ben allows the bond market to crash, this is how currencies fail, and you already saw the back pedalling on Friday.  Also, we all know the reason given for the bond rise is how great everything is in the U.S.  LOL, the housing market only exists due to cheap credit, ditto for the auto industry.  I have three friends in the Mortgage business in three markets, and they immediately saw loan apps plummet.  The MBA reported extreme falloff in demand, etc.  The banks are still sitting on massive inventory, and no way they are going to let the one they control, the CB to cut their throat.  If Ben wants a depression, he'll just stand back, but judging the public's mood about how all Americans are being played by their government, I doubt the banks want to be lined up in the crosshairs right now, and you will see a miraculous recovery in rates.  If I am wrong, I will have buy stops set on EDZ as the dollar will go through the roof.

I see SPY moving up through the 50, and to at least the 20 by the 6th of July.  A close below Friday's lows by Wednesday will have me rethinking the above rant.

A bonus chart is YGE.  It is defying the selloff and forming a nice cup and handle.  I see a 50-75% move in its future.

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