By Thomas Henning
In order to feed the hustle, the parasitic one-world-order needs a viable economic populous to plunder, a viable cohesive international central banking system to facilitate the money flow of the plunder, a continual inflation to keep the debt and interest rate payments flowing, and a denial of the territorial imperative. The one-world-order has none of the above, which is why it is inherently flawed.
The hustle has reached the bubble stage, and like all bubbles, is successful until it pops. This bubble is popping.
The economic populous is busted with unserviceable debt; the international banking system is insolvent trying to hold together its component banks loaded with bad paper; the needed inflation that is necessary to keep the debt and interest payments from imploding is morphing into deflation as defaults evolve; and the territorial imperative is beginning to assert itself with the shout of "Every man for himself."
In short, the central banking hustle, the Ponzi scheme, is imploding. This doesn't mean that the Banker Bilderboyz won't pull every plundering stunt not in the books to try to keep the hustle alive. You can count on that. But as debt defaults rise, so does their impotency.
The savvy player must adapt to the form of the implosion, the form of the thievery, to transition from the old inflationary epoch into the new popping-bubble, deflationary epoch and the chaos that is beginning.
The view of the various markets has this perspective. No concept is ruled out, starting with the bond market.
The bond market is ready to move up in a bear market rally. I'm well aware of the fact that the bonds aren't worth the paper they're printed on, but when a market shapes up as the bond market has, it's not smart to fight Mother Nature.
The Weekly Bond chart, which is overlaid with the inverse interest rate chart, shows that the bond market topped at 140 and has waved down to the 112 level in a 5-wave move which is probably the first downleg in a cyclic bear market. The wave count is illustrated on the bonds as well as the inverse overlaid interest rate chart. The count is clean.
Harmonizing with the suggested count, the internal technicals have turned friendly with the usual internal buy signals and bullish divergences. A close above 117 would cause the Daily Hard Momentum to turn bullish. A close below 110 would tend to negate the count but would compound bullish internal divergences.
If this count is right, the usual Fibonacci patterns suggest a rally up to the mid-120s that should last about six months.
Of course the whole world is looking for a bond market implosion. The world is right, but first a rally will evolve before the bonds tank downward in a probable financial meltdown.
Interestingly, the Fed has been buying bonds as the world has begun to sell them. They're up to their noses in this junk, along with various mortgage-backed garbage, which is also worthless.
The cynic in me says that somebody will have to get stiffed with this junk. The obvious question remains as to who will be the "stiffee." No doubt some pack of Fed-babbling suckers will be found.
If the various clowns were stupid enough to buy mortgage-backed garbage at the top of the real estate bubble, it's a cinch that they're stupid enough to buy U.S. Government Bonds in a bear market rally when they're running scared.
Refer to the Bucknic/Gold chart. The Bucknic has waved down in a 5-wave move, has bottomed, and has been in a 3-wave A,B,C upside consolidation. This is counted out on the chart.
Nearer term, the C wave has started up within the consolidation. To confirm the C wave to the upside, a close above 83 by the Bucknic Index is needed.
Gold has been running inversely to the bucknic and the favored count suggests that we're probably in a B wave, which is an irregular form, or a "runner." The strength of the higher B wave suggests bullish internal momentum, and if the count is right, a C wave down in gold would complete the digestive phase.
The gold stocks, basis the XAU, have not confirmed the strength of the metal. Silver has done likewise. Both have assumed the shape of a "flat" correction with the B wave not scoring a new high. This suggests that the C waves are not done.
Obviously the euro is the inverse picture of the bucknic as the one-world-order implodes as the various countries have begun to go busto. I'm not going to detail the various war stories here - Greece, Spain, ad nauseam - except to say that the various central banks are scrambling to hold together their imploding Ponzi scheme as the insatiable helots, who voted to slop at the free lunch trough, have taken to the streets as their milk of pacification has begun to dry up.
To combine the Bucknic/Gold/Euro action, the C counterwaves do not appear complete, but the jury is still out. Sorry folks. I don't like it either, but that's the way it is. If the markets abort this pattern, so be it. We'll live with it.
The stock market is in the terminal stage of bull cyclic that started in August, 1982. The upleg off of the November low is the 5th wave within a larger count. I've used the Amex Index as a surrogate for the general market simply because it's relatively free of the various games being played.
The favored count as illustrated suggests that the market is at the end of the 3-wave of a 5-wave move. The internal structure of the 3-wave can be counted out a couple of ways, but both suggest that the 4th of the 3 ended in February and the upleg off of the February low is a 5th of the 3.
From a Dow's Theory viewpoint, the recent upleg was confirmed, but internally the upleg was loaded with divergences. This is typical of a terminal stage of a #3 wave, in this case the move up off of the March low. A corrective #4 wave is due.
The coming correction will most probably be very severe: #4s usually are. In this case, intermediate indicators are very overbought, and once the correction starts down, the indicators will lock to the downside, which will rule out any upside sustainability until a fully oversold condition evolves. A 5th wave upward should then evolve, one which, I suspect, will probably be feeble.
Until the daily Hard Momentum signals a sell signal by closes at Dow 10,800, Transports 4290, it must be assumed that the 3 wave is in gear. Note: These levels are tentative as of this writing.
To sum up the situation, the best call suggests a bond market bear market rally. The stock market is extended and most probably at the end of a 3-wave with a severe #4 corrective wave due. In all likelihood, the stock market correction, which could turn out to be more severe than anyone anticipates, will probably run inversely to the bond rally. Of course, if the bond rally is confirmed and the stock market cracks downward, the herd will likely run into bonds for "safety." As the volcano erupts, the herd will run to the Fed Temple imploring the high priest Big Ben to save them. He will. He'll sell them the Bonds.
Editor's Note: Thomas Henning's column, "Musings of a Stock Market Curmudgeon," appears regularly in The Bull & Bear Financial Report, in both print and online editions.
