by John Galt
August 5, 2012 23:50 ET
Despite popular belief that yours truly has been abducted by U.S. government sponsored aliens from Area 51 and forcibly given an anal probe, I’m quite well, just busy preparing for the Tampa’s Pearl Harbor as the drones invade our airspace and the world shifts further into police state orgasmic pleasure.
Thus why a moment to analyze the massive economic data from the past week requires the pause that refreshes beyond the 151 Bernank being served on the rocks. While everyone is trying to twist words of the central banksters into promises of free money, the chart of charts last week indicates a potentially scary pattern, worthy of review. The “Hanging Man” in candlestick lore is not a positive sign and usually indicates a potential, I repeat, “potential” reversal. Why is this important? Bulls are everywhere. Everything is supposedly great despite the fictional economic numbers last week. Yet the media and banksters are pushing people to reinvest in the equity markets so they can cash out. This is not a positive sign and somewhat akin to April of 2008 when the “it is contained” Cramerbots came out and said “don’t worry, be happy” as the market gyrated in triple digit moves on a weekly basis.
Why am I concerned? Check out this graph from Stockcharts.com:
The S&P 500 weekly chart over the last years has been in a solid uptrend since 2010 when the Federal Reserve basically said “we’ll buy your crap” and guaranteed that all major financial corporations and multinationals could sell them crap and they would dump it on the taxpayer. This reversal however looks somewhat like the move in March of 2011 but with a longer tail. If the markets begin to tank here, look for a retest of the 100 DMA (the blue line above) around the 1220 area before the Fed accommodates for the upcoming Iran war. Personally speaking, you’ll have to be a fool to short this however unless you have the cahones of KCG launching a new bot.
Meanwhile, beware what the administration and political types wish for in August as history in recent years has been unkind and earnings in reality are far below what many expected as revenues have tanked. Adjustments are coming, it is however up to the central bankers and (ugh) politicians to determine if they create profitable opportunities or a disaster for Western economies.