Given their technical set-up and oversold conditions last week, stocks should have staged a bounce of some sorts. Instead, they went into full-scale Crisis mode falling over 7% as the US was downgraded and global debt collapse went into hyperdrive.
This brought the S&P 500 up against the critical support level of 1,200. However, we’ve already taken this line out in the overnight futures sessions. As I write this, the S&P 500 is around 1,172 or so.
The bulls have only one hope to cling to and that is for the Fed to mention QE 3 in its FOMC meeting tomorrow. The Fed will absolutely HAVE to actually mention QE 3 given that its previous hints of additional stimulus resulted in meager, short-lived rallies.
However, the fact remains that the market is on Red Alert mode. The financial system is more leveraged than it was during the Tech Bubble. Mutual funds are more heavily invested in stocks than at any other time in the last 50 years.
And the cause of the 2008 Crisis (derivatives) still hasn’t been reined in.
As I warned a few weeks ago, now is the time to be getting defensive and shifting to cash. We will see some sharp bear market rallies in the near future, but the End Game is now in motion. Even if the Fed does announce QE 3, the effects will be muted.
Consider that in just two weeks the market has wiped out ALL of the gains of the last 9 months and you’ll see what I mean: the Ponzi scheme that is our current financial system requires money constantly for it not to collapse (not correct, but COLLAPSE).
The whole world now knows that QE 1 and QE 2 were failures. Which is why QE 3 won’t do much. Which means the REAL Crisis is now here.
While most investors are getting taken to the cleaners, subscribers of my Private Wealth Advisory have already locked in SIX winners last week, including gains of 7%, 8%, and 9% in just one day.
They’ve also SAVED their portfolios from this bloodbath, courtesy of my well-timed warning (the following is an email I received from a client last week).
As of 9:45 this morning your well-timed note yesterday has saved 10% of my trading account. Thanks!!
So if you’re looking for someone to help you navigate the market AND make sure that you actually MAKE money during the Crises, you NEED to check out my Private Wealth Advisory. Because if the market drop occurring as I write this is any indication, this Crash isn’t over by a long shot.
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