Henning: Musings of a Stock Market Curmudgeon

The Sheeple Aren't Schlepping

By Thomas Henning

        The world's economies are imploding. To create the one-world-order, the assets of the economies had to be plundered via taxes, debt, inflation, and phony fiat currencies.
        To prosper, central bankers need the in-hock sheeple on every level - sovereign, state, county, city and personal - to schlep through the front door and make principle and interest payments on the debt in a timely fashion to keep the hustle going. The debt has become onerous, the payments can't be made, and the banks, the necessary element to maintain the one-world-order, are busted. The sheeple aren't schlepping.
        To discuss the minutia of the implosion, such as Greece, California, etc. is a waste of time.
        In 1913, the Fed was established. U.S. money control, and therefore U.S. sovereignty, was ceded to international bankers. This is when the U.S. ceased to exist as a nationalistic entity. International bankers controlled the money and, therefore, the nation. Thus, it was the beginning of a century-long asset plunder via fractional banking, taxation and inflation. In terms of buying power, in 1913, the Dollar was worth a hundred cents. Today, the Rasbucknic is worth less than a nickel. Remember that the Curmudgeon's first rule is that truth is the ebb and flow of money to the absolute exclusion of all other factors. I rest my case.
        This inflationary epoch established a set of economic relationships, myths, and theories that facilitated the plundering through debt on every economic level: Keynesian economics.
        As the debt has become onerous, it has begun to default and the inflationary epoch is evolving into a deflationary epoch. Thus the century-old inflationary relationships, myths, and theories have become questionable or, more probably, invalid. To analyze markets in view of these old questionable relationships and theories is a problematic effort.
        The implosion must be analyzed on an individual market basis only. The new deflationary relationships will no doubt reveal themselves as the deflationary epoch matures. As we analyze markets, hints as to the new relationships will probably develop. We'll start with bonds.
        In the last couple of articles, I've been looking for a bond rally. It has come in on schedule. While the rally has evolved, the internal structure of the rally has assumed two potential shapes - one suggesting more rally life remaining, a second suggesting that it's done. No matter, because, when the next downleg starts complementing the 140 to 110 downleg, a downside target area of below par is suggested.
        Given this scenario, the financial world's balance sheets will be smashed to the point that even the phony rating agencies won't be able to cover it up. We're talking melt-down here.
        In broad terms, the Rasbucknic rally has evolved on schedule, having assumed the anticipated A,B,C counter-rally shape after a 5-wave downleg as illustrated.
        Near term, the slightly-favored count suggests that the C-wave is not complete and more upside action will probably evolve. If it does not, I'll identify it in future articles.
        If the broader suggested count is right, after the C-wave of the larger correction is complete, another major downleg is implied that should carry the Rasbucknic to below 50.
        Let's move onto gold. The bad news: the corrective II wave counts have turned to chop suey. I've had three counts and all have developed serious flaws. However, I still have a favorite, but I need more input, so meanwhile, we'll go "mechanical."
        The gold complex is in a cyclic bull market, and there is little doubt that the I-wave ended as marked on the XAU. The question is what is the shape of the II corrective wave? Given the extreme bullish action in the metal that was non-confirmed by the XAU, I suspect that the XAU upside move was a B-wave and that the C-wave is triangulating.
        If this questionable count is right, the extreme strength in the metal suggests very strong internal upside momentum. However, what needs to happen is an upside breakout in the gold stocks and, until that occurs, it must be assumed that the II corrective wave is still operative. The shape of the II corrective wave is open to question.
        Meanwhile, we'll restate what was said in last month's article: The only way one can mess up the bull cycle is to trade it. Don't get cute.
        The stock market is in the terminal stage of a bull cycle that started in August, 1982. The 5th wave of a larger count started in November, 2008, with the internal structure counted out on the Amex Index. I'm using the Amex as a surrogate for the market simply because I suspect that it is relatively free of the machinations of the Plunge Protection Team and the front-running by the computer jockeys employed by the controlling Wall Street firms.
       Nearer term, in the last article, I suggested that a 5th wave up was probably starting. It has. The form of the 5th is open to question. We could see a new Dow high, or it could turn out to be what I call, a "feeble fifth" or a Gann "failure rally." It really doesn't matter, given the high probability of the looming bear cycle with a life expectancy of about a decade. A little perspective is needed here.
        Pragmatically speaking, the market is in a transitional "no-man's-land." To quote an old trader pal of mine, "Never diddle in the middle. Wait for the big move to make the big gelt." We'll get out of the "middle" when the July lows are busted. When that happens, move into a bomb shelter - permanently.
        Ultra near term, honor the current upleg because it exists. However, be prepared for an intermediate breakdown. At this point, a higher breakdown level is beginning to evolve but cannot be defined as of this writing, so the July lows must be used for lack of anything better.

Implosion Watch: The New Rules?

        The following remarks are an effort to adapt to the "new normal" of deflation. They could be dead right: they could be dead wrong. This is akin to Gary Cooper walking down the street against the bad guys in that Western classic High Noon. Here goes.
        The bonds peak and start a downleg, having a target level below par. The Rasbucknic rally ends and starts its next downleg to 50ish. Gold complex completes the II wave after scaring out the weak hands and goes "bananas."
        Meanwhile, the states go virtually belly-up, and Benny and Co. try to bail out the states by monetizing more debt to blow down the rat hole.
        The stock market? Forget it. The July lows get busted and hello bear cycle. Bye bye pension funds, free lunch, the whole shebang.
        Understand that these are musings, but given that all the old Keynesian myths are probably imploding, like Gary Cooper, we're in a shootout.
        It was Amschel Rothschild who said that if he could control the money, he didn't care what other laws were passed. International bankers gained control when the Fed was established, and now the asset plunder is just about complete.
        Every Marxist, Liberal, Socialist, Progressive, ad nauseam, society needs an exterior source of sustenance to survive, simply because they are, by their very intrinsic nature, totalitarian and unproductive. They can't sustain themselves.
        In the 20th Century, that source of sustenance was the U.S., as the assets were plundered as the Bilder Bankerboyz cleaned up. However, the U.S. is tapped out and cannot provide sustenance for the one-world order as in the 20th Century.
        The Bilder Bankerboyz have won control, but now they're sitting in board rooms staring at a pile of paper labeled past due mortgage debt, sovereign debt, business debt, derivatives, etc. They've foisted off a lot of the paper onto the sheeple in the form of bailouts voted by bought-and-paid-for bozo politicians of all stripes. But the toxic paper still exists. What does not exist are factories, industry and, lastly, productive people, because the zombies who are debt junkies are all walking down the street babbling into cell phones about the latest brain-numbing toy. In short, there are few assets to provide a productive effort to make the paper worth something. The bankers who took over in 1913 have shot their wad, and the one-world-order is finished because the bankers are finished. The new rules are evolving.
        The savvy player should not care what the new rules are, only to know what they are and to exploit them for profit. Forget changing them. That's a fool's errand. The real problem is that the checks will probably bounce.
       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.