Here we are....

So one of the last charts I posted was this one right here...going all the way back to January 26th.

Since then, it's been mostly sunshine and rainbows.  Except that all of the things discussed back in November through January still held true.  The only thing that really changed was the news out there.  Instead of being doom and gloom, the news really was sunshine and rainbows.  Why?  The gov'ts were able to do a kick save, then just put out all great information like decreasing unemployment, as the markets went up and up and up.  The news was mixed out of Europe.  There was a little issues with Greece possibly not making a payment on their new debt and defaulting, which technically they did and triggered a bunch of credit default swaps, but it was once thought the triggering of CDS' would cascade into a full collapse of all the banks in Europe and start a brand new 2008 style crisis all over again.  It didn't happen.  Probably because of the kick save and the liquidity swap rate being reduced, among other help along the way that isn't really important to discuss.  But, here we are.

You really can't write a better script than this.  America going into the abyss (in Nov).  The gov't comes in saves Europe and the US with a magic reduction in liquidity swap rates.  That goes to the peak and things breakdown.  Then they magically print (or trade) money out of thin air to "boost" the economy past the peak.  It last all of 5 months and we're heading back down.  What will our super hero do now that their save is in danger again?  It looks like we will find out. 

The blogosphere/banks/whoever have all been projecting QE3 (Quantitative Easing) to happen in June/July.  Partly because of the elections coming up, partly because the banks thought they would need the money again by June and mostly because that's when their next meetings are.  But before any QE saves can come through, the FED would need a reason to do more QE, so they (the banks) need another crisis situation.  It's happening.  Anybody see this one?
http://www.washingtonpost.com/business/jpmorgan-ceo-dimon-acknowledges-800-million-in-recent-losses-on-investments/2012/05/10/gIQAhyaPGU_story.html 

So like my title says again, Here we are.  Are we going to be going into "crisis" mode again because it's convenient and the banks now need more money?  It sure looks like it from the charts, and the news coming out lately.  I may go into the JP Morgan trading loss in another post as well as other things, but for now...

The stage is set!  The actors are ready play their parts! And around the corner is the greatest of shows... The Election!

Right now, at critical support.

 As you can see above, the "boost" didn't get us through any of the 2008 highs.  I didn't expect it to.  That tells me there really is no real recovery.  I've been saying that for a long time though.  What's interesting right now is that we sit on that critical support (former resistance) at the 12,300 level in the Dow Futures.  That is right where the "boost" pushed us through to give everybody the 20% gains for the 1st quarter of 2012 which have all been erased now in a matter of weeks.  (This is a fun ride huh?)

So a break down through this support level would signal to me a continuation of the previous trend (which is down).  That should last until all of the gains from the first "boost" back in November have been erased and we sit somewhere around 11,000 on the Dow Futures.  That's just a guess, but who am I, just a nobody with a faint idea of what I'm doing here.

One thing is for certain though...be prepared for anything.  The reason everybody hangs on Ben Bernanke's every word is because his word is the only real game in town any more.  (Next meeting June 19-20)  Whether the FED prints money or doesn't print money.  THIS IS THE NEW WORLD WE LIVE IN.  A world controlled exclusively not by free markets or entrepreneurial spirit, but by manipulated data, manipulated perceptions and manipulated markets.  You better get used to that starting right here, and right now.

Student Loan Bubble

It looks like the next great bubble is about to collapse.  In 2008 it was the Housing Market bubble. 

Take a look at this article which references the article below that.  This is what I would refer to as the equivalent of a Reverse Mortgage.  The Reverse Mortgage was popular for a couple years before the housing bubble burst, and maybe still used today, whereby you would sell your equity in the house for a loan of money right here and now to extinquish all debt.  Then when you sold the house, you would have to pay off the reverse mortgage loan (the upfront equity payment) first, and then get whatever money was left over.

Same idea here, only it's no longer the equity of the house, it's the future equity of a slave (I mean, college student). 

http://www.zerohedge.com/news/modest-proposal-students-refuse-become-debt-slaves-opt-sell-equity-their-future-wealth-instead

http://www.economist.com/blogs/freeexchange/2012/04/education?fsrc=scn/tw/te/bl/sellingapieceofyourfuture

My guess, we have 2-3 years before the student loan bubble pops and the $1+ Trillion in student loans needs to be bailed out so it doesn't "collapse" the entire higher education system (i.e. the gov't education system).

S&P 500 (Updated)

A real quick chart here.  Just wanted to pull something from an article and show you how this could play out.
http://www.oftwominds.com/blogmar12/SPX-Nikkei2-12.html

There's 3 scenarios that I see here labeled.  Most likely would be #2 in my opinion, but #1 and #3 can't be ruled out as infinite money printing ("liquidity") could be provided to force the markets higher, or a complete lack of liquidity could tank the markets.

Scenario #1 would be a breakthrough to the upside in the next couple weeks or so.  This seems unlikely as Greece needs to make a payment March 20th for their bonds and they don't have the money...at least that I know of.  The ECB made a pretty incredible "loan" yesterday to it's member banks to either help keep the market going higher, or as support in case Greece defaults (not likely) or the bond holders take a large hit from a haircut on the bonds (most likely).

Scenario #2 seems more likely as at least until it hits the major downsloping line of the past 10 years.  Then higher or lower.  My bet would be on higher at that point.  The markets are manipulated right now, and I don't see that changing any time soon.

Scenario #3 seems the most unlikely due to the fact that it could have already happened in November and the central banks intervened to make sure it didn't.  I don't know why they would stop now, but this scenario could happen if Greece officially defaults (based on the ISDA's determination...very unlikely) and the central banks decide to not intervene.  In that case, 2008 all over again.

So there you have it...my take on the next things to happen in the marketplace is #2...a drop of about 15-20% to erase the gains of 2012, then a steady climb back up to resistance.  What happens after that depends on what time of the year it is I think.

UPDATE - 10:30PM:

Just when you think things can't get any more bizarre...

http://www.bloomberg.com/news/2012-03-01/israel-to-begin-investing-reserves-in-u-s-equities-today-1-.html

So the Bank of Israel decides that keeping money in bonds and other currencies is not the best option.  It needs to get better returns (and more risk).  Let's prop up the US stock market.

Obviously this will have an effect on the prices above...maybe scenario #1 isn't so unlikely any more.

I also need to point out the fact that a central bank is now out in the open about investing in things other than traditional items like currencies, bonds and gold...we're now up to companies outright and stocks.  

Bye, bye free market!  It was nice knowing you.