The chart below is the ETF, FXE - the Euro currency. This is all you need to know. The 'stock market' is no more. There is no 'market'. Stocks and indices now move solely on the reaction to currency valuations. Forget price to earnings multiples or sales or any crap like that. When you even hear someone in the government run media talking about 'fundamentals', run the other way. All that matters now is currency. Why?
The central banks control currency volume and printing. It is their only weapon of enslavement. Unfortunately, the masses can't pay off their debt and that leaves the banks in a bad predicament. Fortunately, the banks have the central banks to print more money and restore their balance sheets absolving them of any responsibility to lending prudence. Europe is now following the United Banks of America into bankruptcy and the ECB is printing money like the Federal Reserve to try and resuscitate their shill banks. The result is a falling Euro currency and a reactionary rising US dollar. I'm not going to get too heavy but any amateur chartist can look at a long-term chart of the Euro (FXE) and see the bearish head and shoulders with the neckline at about $120. A breach of this level would imply a bottom target of something like $85. That's a 30% drop which therefore implies a 30% drop in the Dow as again, indices only 'react' to currency moves. There can no longer be an implied value to the markets. They are run and manipulated by governments who use them for affirmation that the banking controls of the modern era are 'working' to make for strong economies. Of course, this is the most ridiculous idea ever postulated by humans but nobody ever said banks were smart.
So, as the Euro falls, the dollar strengthens. Since there is no longer any value whatsoever in the markets, they move in reaction to currencies. The Dow is now simply a barometer of monetary inflation. As the dollar strengthens, inflation ebbs and so too does the Dow. As the dollar falters, inflation rises and so too does the Dow. Now, the ECB is frantically trying to save their garbage currency with admitted intervention. They learned this from our very own Federal Reserve. Meanwhile, we try to tell the Chinese to not manipulate their currency, the yuan. Of course, the laugh their brains out at this suggestion. The ECB raised a trillion I suppose from the 'fat finger' 1,000 point pummeling of the markets on May 6 when they dumped stocks. They are now using their trillion to manipulate the Euro. Good luck. I don't know if you guys checked on this but the countries that make up the European Union are all bankrupt. So are we so we are not pointing fingers. It seems that it is just a matter of time before Dorothy pulls the curtain back to find that the Wizard of Oz is just a man with a smoke machine of debt instruments. The manipulation has gotten so bad that in the last month, rallies have hit the stock market with the advance-decline ratio bursting higher than 9 to 1 on 5 different occasions. Thursday's rally came in at something like 40 to 1. Gosh, fellows - did you just buy everything that Goldman Sachs and BofA offered? This kind of ratio usually indicated a change in trend. That's what they want you to believe. That's why they try so hard to manipulate the markets every single day. Yet, the selling continues to expand the 'correction'. Or maybe, no one believes the vipers and thieves any more. Bear in mind that there were years in past decades that passed and never saw this kind of advance-decline absurdity.
I had anticipated Santa last week to come on Monday. The Dow was below 10,000 you know. Santa was a little late but he finally showed up on Thursday powering the Dow back over 10,000 with a 250 point rally. Shazaam! What a joke.
Anyway, watch the FXE for clues as to which way the 'markets' will follow. He who buys the con will soon be conned out of everything.
One month FXE
Chart courtesy StockCharts.com