Break the Resistance line?

It's a foregone conclusion.

The Euro will destruct. The path to destruction is not a foregone conclusion: could be a new treaty where members are kicked out, could be a dissolution, could be a reformation which might include Turkey. "Will See". In any case, it will take time, and the Eurozone will be in our sights for awhile on the psychological side of the market because any solution will take a long time. Same as with our debt resolution.

In the short term, EuroBanks are in serious liquidity trouble, and will sell assets. Will they sell price-depressed assets? Or valuable ones? Like Gold? Is that why gold’s falling? Again, that's not clear but in order to re-capitalize, they will have to raise capital on their own. That model is formed by Merkle. So during this liquidity problem I think we'll see the U$D will strengthen, and the Euro will grow weaker. Putting pressure down on the market.

I will trade this by buying SKF on pullbacks. The reasoning behind this is that US banks are swapping assets with foreign banks, and we know what’s happening in Europe.

Here’s the Stockcharts.com $SPYA50, the number of stocks trading above their 50 day MA.



Notice the chart is at a high, but in actuality, the number is lower than the chart indicates because of the market’s volatility. The current value is dislpayed in the middle and is 245. Just slightly less than half. So we’re seeing yet another turnaround. It’s so fast, the 3LB can’t keep up. And because we’re in the middle, there’s more room to go downward.

Finally, here’s the SPY. I’ve drawn a retracement, (ignoring the bear trap) and it’s interesting how many times we’ve hit the line labeled support/resistance (see the red lines), and how it aligns with the 38% fibo retracement of our latest big move.



So technically speaking if we see a break of this support/resistance line, and we see some significant rise in volume, we could easily have a bear flag formation, and some capitulation down to WolfStreet’s 120 or lower. But volume is the key. Volume will tell us there’s more short money entering. I said before I didn’t think we’d see 120 or below. I still believe that, and will be waiting the next Policy Manager’s statement to halt the market downturn. However, if we don’t get a PM statement soon, well it’s to 120 and below we go.

The next statement may come from S&P. I heard that a French sov debt downgrade is imminent.