by John Galt
May 10, 2012 18:45 ET
As the market appeared to find a footing today, J.P. Morgan Chase (Symbol: JPM) yanked the rug out from the bulls and Bubblevisionistas with an incredible 10Q release and conference call which imploded the market after hours (See Bloomberg News: JPMorgan Reports $2 Billion Loss on Synthetic Positions). the truth though is that before this announcement, enough gasoline was already on the fire to indicate that there is a nasty bear phase approaching which will create a massive panic in the banksters world along with concern from Washington political elites as this is an election year after all.
There are two stocks to watch which are sending a warning signal that indeed investors are beginning to sniff a disaster on the horizon. First is the FAZ, the triple inverse ETF for the financial stocks which appears to have put in a double bottom to match against the double top from last year:
Should this stock reach it’s minimum target area based on a nice bounce to near $40 per share, there will be at least a 20% correction in equities if not more should the FAZ reach closer to $50-$55 per share. It would be a damning indication that the financial stock sector is still in disarray and the nonsense that “it’s different this time” was just that; a big lie to buy more time until they figured out how to deal with the garbage bonds and now new wave of failing RMBS and CMBS on the books.
Interestingly enough, the DZZ, a double inverse gold ETF appears to confirm that the precious metals might be entering into a short term bear phase which would confirm the previous articles I have posted on the subject. I’m not telling anyone how to play these stocks or to invest in these markets but the DZZ does appear to be setting up for a “Golden Cross” which is generally considered a bullish indicator for an equity over the short term:
These two ETFs along with the UDN/UUP dollar ETFs could provide the best clue as to where markets will be heading over the next 4 to 8 weeks in my opinion.