Tuesday, August 9, 2011

Point of Recognition Aftermath -- Day 5

We continue to see a high level of volatility in the aftermath of a Minor degree "point of recognition" that was reached last Thursday. The VIX continued rising, reaching the upper 40s, a level comparable with the aftermath of the "Flash Crash of 2010". Social mood has been deteriorating at a very fast clip in the last several days.

We are still on track to complete Minor wave 1 down by early October 2011. Yesterday, the DJIA plunged again, down 633 points to end the day at 10809. In addition, the RSI is now indicating that Primary wave [3] down will unfold as an extended third wave. This has serious implications for civilization in 2013 and beyond (more on that later).

Here is a chart of the DJIA. Notice the bearish divergence that is indicating that the March 2009 low is going to break down.

We continue to see a volatile social mood at work in many areas of the planet. Earlier developments in the aftermath of the "point of recognition" are in the previous blog entry. More trouble spots have erupted in the last few days. Here are some of the latest developments:

1 -- The G-7 is making a desperate attempt to stabilize markets and promote economic growth. This development started shortly after the downgrade on US debt.

2 -- The European Central Bank is buying Italian and Spanish bonds in a desperate effort to keep interest rates from rising out of control. Italy and Spain are both facing a debilitating debt crisis and both of those fault lines are on the verge of going critical. The result of Italy defaulting on its debt is a global ripple effect that reverberates through every nation on the planet. Both Italy and Spain are "too big to bail out".

3 -- The U.S. Postal Service is on the verge of default and is bleeding money at a fast clip.

Existing trouble spots have escalated in the last few days.

1 -- Riots in the UK have spread to 7 cities and a larger portion of London is affected by riots. This is already the worst social unrest in the UK since 1980, and yet the bear market is still in its infancy. This was started by a police shooting several days ago, and has turned into a massive conflagration of anger over austerity measures in the process of implementation.

2 -- 45000 Verizon workers are on strike with no end in sight for the standoff. Expect this standoff to possible continue for several months as discord, anger, and protectionism increase. This is playing out like the debt ceiling standoff that ended earlier. In the aftermath of the "point of recognition", workers are realizing that corporate elites have been giving them the shaft on wages and benefits. Expect more labor strikes of this type as the Grand Supercycle degree bear market continues to unfold.

3 -- We continue to see a lot of vitriol in the political arena, especially in the aftermath of the downgrade of the debt rating. Mitt Romney hits Obama on the downgrade, Tim Pawlenty jabs Obama on the economy, and Tim Geithner accuses S&P of poor judgement.

4 -- A ground swell of anger continues to build in Wisconsin as a very high voter turnout is expected for the recall elections. With a volatile social mood in play, expect one or more Republican state senators to get thrown out of office by voters.

Here is a potential trouble spot to keep an eye on.

1 -- The Earth could possibly be hit by coronal mass ejections (CMEs) around August 10, 2011. This creates the potential for blackouts if a hit occurs. Given the volatile social mood, any population affected by a blackout will be affected by extreme social unrest. This will continue to be an issue for the next couple of years as the Sun approaches its solar max. The worst case scenario here is a large CME hitting Earth during the central portion of Primary wave [3] down in the second half of 2013 -- the potential for panic is immense if it occurs.

We are in a period of high volatility. Expect the volatility in the stock market to continue throughout this week. This is a smaller version of the "Panic of 2008".

No comments:

Post a Comment