Salient to Investors:

In a bear market poised to plunge again. Markets drop twice as fast as they rise because fear is a stronger emotion than greed.

Bearish technicals:

  • Broken down from the 6-year bearish Rising Wedge pattern.
  • First bearish moving average cross for 4 years
  • Volume on the recent plunge was the heaviest for 4 years

Bearish fundamentals:

  • Global debt saturation and sovereign debt crisis in Europe
  • Insoluble debt crisis in an aging Japan
  • Ballooning US deficits
  • Bursting debt bubble in China
  • Collapsed commodity markets
  • Collapsing Emerging Markets
  • Record margin debt
  • Huge derivatives pyramid
  • A world in denial

The Fed wants to raise interest rates to start to reduce its huge balance sheet and head off a collapse of the dollar and Treasury market, but doing so would collapse the stock market and create a depression.

Market will crash whether or not the Fed raises rates in September.

The Fed would sacrifice the stock market in order to save the dollar and bond market – the resulting rate differential would induce fund inflows into the US and create a cushion: and end up supporting the stock market regardless of the state of the economy.

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