Technical Tipping Point Near at Hand

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Scales of Balance

In September, following five months of impulsive decline from its May high, the Dow has reversed abruptly, rallying incessantly after a fleeting 20% roller coaster drop from its secondary QE-2 bailout crest. The Dow is currently on path toward violently reclaiming more than 60% of these recent losses within the extremely short span of 14-sessions.

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The price action along with all of its key participants and influencers should be keenly aware that equity markets are nearing a potential tipping point similar to that following the like rally in 2008, which occurred just prior to the implosion and widespread recognition of outright systemic insolvency, which has yet to be resolved.

The Elliott wave rendition and implied bearish outcome below assumes that the recent history of 2008-2009 is drawing toward an imminent tipping point of repeating itself in the not too distant future. Do be advised that there are various alternate paths associated with the unwinding of longer-term bearish forecasts.

 

Dow-30 Chart

 

At present there appears to be two realities from which the financial sphere struggles to define daily values. The status-quo rendition of imposed reality courtesy of the monopolistic interventions and kick-the-can short-term band-aid fixes for long-term problems vs. the underlying truths of various mathematical impossibilities caused by blatant fascist interference in markets and the monopolistic micromanagement thereof, which deceitfully aligns itself under the protective guise of free market capitalism.

The first rendition of reality is associated with so-called Cramer-laden fundamentals of company earnings, corporate balance sheets, etc. If you trust and believe the official numbers reported by statist sovereign governments and the bailout-modified accounting standards of various corporations, then trade that version of reality, which would be long-term bullish with a stop loss for good measure beneath the September lows.

The latter and intentionally suppressed rendition of reality is associated with massive unsustainable debts, deficits, and the flawed paradigm of global trade, which is based upon the artificial currency arbitrage of one nations skilled labor and make-believe money vs. another’s. Such corrupt and imbalanced trade is by no means free, and benefits only those relative few who are in a position to profit from global fiat currency arbitrage. As we draw closer and closer to the end of this corrupt charade of supposedly free global trade, we are suddenly beginning to see the outline of its endgame effects taking shape. In this latter version of reality, nothing is more revealing or uglier than the underlying truth.

If you embrace the latter, then short the indices with buy-stops to cover above the May highs..

Trade Better/Invest Smarter
Joe Russo
Publisher and Chief Market Strategist
Elliott Wave Technology

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avatarJoe Russo - Elliott Wave Technology posted Tuesday, October 25th, 2011.

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