Stock Market Bellwether Update: Going Nowhere Fast

by John Galt
July 4, 2016 13:30 ET

As America celebrates our 240th birthday and the central banksters of the world celebrate their short squeeze rally of the past five sessions, the truth about where this stock market is somewhat murky.

I listen to many of the stock market “call in” radio shows not for advice; but to gauge the sentiment of the sheeple, those poor, stupid suckers who held on to Bear Stearns, Washington Mutual, and General Motors because some “broker” on the radio told an old lady that they could never go out of business, even when they were all trading under $5.

Guess what?

The stupidity is back.

What I heard on the radio last week is no different than what I heard in the late summer of 2007 and the charts look hauntingly familiar; maybe not so much in price but definitely in pattern.

For example, here is the chart for Goldman Sachs in August of 2007 when mysteriously, their stock rose one late afternoon dramatically the day before the Federal Reserve announced a “surprise” rate cut; a surprise to everyone but GS as they are one of the controlling banks of the Fed, but hey, details and facts do not matter to this investing public:

GS_JULY_AUG2007jgfla

The people think that the banksters have all of this under control just like they did in 2007. “You can’t fight the Fed” is the market mantra, but they forget one key historical problem:

The Fed screwed up in 2007 as they did in 1971 when Nixon ended the gold standard and in 1936 with the rate hikes and decision to increase reserve requirements and they will, if not already, have screwed the pooch again.

Thus let us review my two bellwether stocks once again to see how they behaved in this so-called post-Brexit central bank injected and created relief rally.

An AAPL a Day keeps the 50 DMA Away

070116_AAPL_9MOjgfla

With the failure to meaningfully rally above the 50 DMA without volume, this is doomed to failure. It could rally to 98 or 100 but with volume lacking, odds are by Wednesday this will roll over as will the tech sector, again, triggering another wave of selling. The consumer is not back, despite the popular hysterical preaching of the financial media propagandists.

Things aren’t so Golden at Goldman

070116_GS_9MOjgfla
GS could not even sniff the 50 DMA nor could it even dream of holding $150 so this is a scary time to own this stock. Most of the financials saw a pathetically weak performance last week and despite the central banks buying index futures to force the short squeeze, the shorts and option players held on to their financials short positions as they smell a disaster due to a lack of real liquidity in Europe and Asia on the horizon.

Yet the 84 year old grandmothers keep calling in and asking if this is a good time to “average in” and buy more…YIKES!

Stay tuned, next week will be most fascinating in the markets.

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