Saturday, July 14, 2012


The broad market averages are now revealing overwhelming evidence that a significant top is upon us. And in the coming weeks, I fully expect the world to witness a dramatic downturn that sends prices into an abyss.

Get ready Folks, as this upcoming event will be a force not to reckon with, and for those who deny such could suffer major losses in their investment portfolio.

You might recall in my last post, "Are we to Blame Nixon," I specifically warned readers to stay away from an imminent short covering rally that would emerge, but not to give credence to its illusion of a renewed uptrend.

Unlike most short covering rallies, this one has been all but convincing. It fell short of fullfilling the reek of euphoria in the marketplace, and barely neutralized the negative senitment that engendered during the previous decline in May.

The market is now on the verge of resuming its bearish downward momentum, and the reacceleration of this current decline will categorically be one of much greater magnitude. Stocks will undergo an aggressive sell-off that generates fear and anxiety among investors of every description. This liquidation process will lead to capitulation, where neither buyers nor sellers desire to participate in the marketplace.

My best guess is that this momentary spark in equities will soon fizzle out and stocks find their breaking point sometime between now and the next 10-12 trading sessions. This scenario should materialize in a crawling-like descent, much like the one last week, followed by a 3-5 day mass exodus.

S&P 500- Daily Chart