Financial topics

[Higgenbotham]

ISBN-10: 9781591845560

New one by the same author

The Death of Money: The Coming Collapse of the International Monetary System
Publisher: Portfolio Hardcover (April 8, 2014)

“The next financial collapse will resemble nothing in history. . ."

http://www.amazon.com/The-Death-Money-C ... =pd_cp_b_1

[Higgenbotham]

The implications of the type of thing we are discussing aren't good at all. Despite the wide coverage of topics here, we haven't discussed this much or maybe at all. It seems apparent to me that when money and transactions are no longer private and can no longer be based on first principles, and when the temptation is too great to not make that so, then the financial system has nowhere to go but to implosion. The flow of capital is to those who know where the money is and how to grab it and they know little else and need to know little else until they run out of other people's money and the interest rate spikes out of control.

We did cover this topic, sort of. Thanks, a, for reminding me.

That at some time they would perish, together with the common weal which they had looted as much as they could, didn't occur to even the most clever bankers - then as today.

Regarding the history of 14th Century Europe before the implosion.

http://intellibriefs.blogspot.com/2008/ ... risis.html

A common weal, which is not able to seal the dykes of New Orleans but, in the twinkling of an eye, burdens one million times one million dollars on the general public, has to be regarded as hostage of a manic financial sector, hell-bent on anything.

This was published in September 2008, consistent with the "loss of faith" cycle. Connecting Katrina to Lehman, as Fukushima may connect to a coming meltdown in Japan.

[aedens]

Legacy stocks are internal swaps to the private corps. Warm reboot for the political economy of parasites in the kill switch swamp and now the epa to attack CH4 from CNG and LPN.
Anyways, how else do you unload worthless SCDO to orphan SIVs and CDOs designed to deal with financial distress and various quandaries. Rinse and repeat to stick it to Vanilla on
all levels. Business never pays taxes since consumer eat it all. This fire storm is just growing. Ask Amos and Joel whats coming.

http://gdxforum.com/forum/search.php?st ... 1&start=10

The revolution is between humanity's ears... and they don't want the responsibility.

http://www.youtube.com/watch?v=An32jKTHM88

"In making tactical dispositions, the highest pitch you can attain is to conceal them.” dead Chinese genius Tzu who got his
ass kicked when they regrouped.

red crayons new roll over anthem https://www.youtube.com/watch?v=gY7RIn4byK0

[aedens]

https://campaign.ronpaulchannel.com/sno ... thank-you/

http://www.youtube.com/watch?v=VsZFiMo8TIc

[Higgenbotham]

I think the stock market is now in the high probability zone. This zone appears to be wider than most topping zones and therefore more difficult to pinpoint. I'm still 25% short but will probably work my way to 100% quickly in the next few days. Many aspects of this movie have been seen before. Below is one which shows a nearly identical "beehive smash" from 2011. This one was extreme and, while I was aware of it, didn't expect it yesterday.

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[John]

Higgie, I don't know how you can stand this. I practically have an ulcer
from simply watching you do it every day.

[Higgenbotham]

One question might be, OK, many things are about the same as in 2010 and 2011, but what is different? Well, I think the "big picture" idea to keep in mind is, "Where was the bubble in 2000, really?" and in the day to day we all forget that it was in Internet stocks that in many cases had no earnings. The fact that this bubble is being resurrected in 2014 to a much greater extent than it was in 2010, 2011, or 2012 is something to watch closely, in my opinion. The Dow in 1929 was comprised of fairly new companies, similar to the Nasdaq 100 index of high tech stocks in the year 2000. Here is a chart of the NDX going all the way back from the top of the 2000 bubble to yesterday. The Nasdaq 100 hit a 14 year high yesterday, so we know the excitement and extreme of the 2000 bubble is back and has reached fever pitch.

NDXALL.gif (42 KiB) Viewed 3216 times

[Higgenbotham]

This isn't the first time the attempted resurrection of the dead Nasdaq bubble has reached fever pitch. While many market observers have been comparing the current bubble to that of 1929, a more subtle and I believe more important event has been taking place. And that is the Nasdaq 100 is behaving nearly identically to how it behaved at the 2007 top in stocks. That is best illustrated by these 4 charts. Since I can only put 3 charts in a post, I will split it to 2 here, which will show the ratios of the Nasdaq 100 to the S&P 500, then the actual charts of the Nasdaq 100 below this post.

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RATIO3.png (36.6 KiB) Viewed 3213 times

[Higgenbotham]

In both cases above the ratio moved higher quickly and reached an extreme after the S&P 500 had topped.

In the first case, the S&P 500 reached an all time high on October 11, 2007. After that, the S&P 500 fell for about 8 days, then rallied to within about 20 points of its all time high on October 31, 2007 and failed. Meanwhile, the Nasdaq 100 rallied to a new high, the same day, October 31, 2007, and that was the high that held for several years.

Similarly, the S&P 500 reached an all time high on January 15, fell for about 13 days, and has rallied back to near its all time high, while the Nasdaq 100 has in the meantime rallied to a new multi year high.

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NDX2014.png (22.56 KiB) Viewed 3210 times

[Higgenbotham]

Having said all that, there are a couple possibilities I see.

This bubble is far more extreme than the one in 2007, in my opinion, so that pattern may not be followed exactly. But if it is, I would say the top of this market was Friday. I'd go out on a limb here and say I'm 25% short the Nasdaq 100 because I think there's a 25% chance the Nasdaq 100 topped on Friday (I'm short the Nasdaq 100 for the first time ever).

But let's say the bubble gets even more extreme, more like it did in the year 2000, or even worse. What happens then?

We have some markers for that. In that case, the Dow topped on January 14, 2000, while the fever in the Nasdaq continued to build, and the Nasdaq topped on March 24, 2000. Similarly, this year, the Dow topped on January 15 and is nowhere near its high. So in the extreme we might expect the Nasdaq 100 to top on March 24, 2014 if it follows the same extreme as in 2000 and goes no further than that extreme.