Panic in the Streets


Market internals continue to worsen for stocks, which is definitely being accentuated by what is happening in Europe. On a purely technical basis, the markets have not yet reached the degree where a bottom is imminent. Monday's sharp decline is likely part of a Wave 3-down of C-down of large degree Wave 4 down. Wave C's down usually requires 5 waves to complete. Once it bottoms, a multi-month rally should begin its last and final Wave 5-up, hopefully into a new all time high setting the Greatest of all Bull Traps. (Perhaps that is just wishful thinking, but it would sure as hell surprise everyone.)

However, declines below 12,200 in the Industrials and 1,275 in the S&P 500 would suggest Wave 5-up has truncated and is at the April highs. If these lows are taken out, it means a massive decline is just getting started.


Precious metals are close to reaching the bottom of their declining triangles. Looking for some new buy signals in the HUI indicators, it would then suggest new multi-month mega rallies are starting. The gold stocks have never been this undervalued as compared to bullion and the rallies could be spectacular. They might be able to be compared to the last month's explosion in 1979.


Again Let's Look Back to Europe
There is a mad scramble for money going on in Europe by everyone including the whole banking system. When that happens, they sell everything and anything that has a BID; certainly assets that are still profitable. To some extent that is also happening here in the good old USA. This is exactly the wrong thing to do. Everyone knows that you are supposed to sell your losses first, but rarely does anyone do that especially during a PANIC, which is exactly what's going on. Will Greece survive? Will Europe and the Euro survive? How would you be feeling if you had ALL your assets locked up in European Banks and Securities.

If I lived in Europe, I would be mortgaged to the hilt and have all my liquid assets in GOLD COINS and I would not be worried about the current price of those coins. They will, without question, be worth more in purchasing power in the very near future and certainly more than any surviving Euro or any currency that replaces it and that includes the US DOLLAR.


As far as what we now know, the only thing to be concerned with this time around is that the Government and the press will make a mountain out of a mole hill. So they lost 2 or even 4 billion, but they made over $20 billion and their net worth is over $1.5 trillion. The only question is what kind and how much toxic assets do they really carry on their books. And there is no way of me finding that out. The danger has more to do with politics. More Government regulation can only make it worse. The only thing that has worked for some 65 plus years has been Glass Steagle. So get rid of Dodd Frank and bring back G.S. and reduce Government interference and sleep well.


We are in the most trying times in our nation's history. We can either succumb to our Government's and the World's folly and go down with the ship or protect ourselves and personally prosper. Do you really think the time is right for you to be going it alone? As always, the choice is yours.

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Aubie Baltin CFA, CTA, CFP, PhD.
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In the Aztec language the name for gold is teocuitlatl which means "excrement of the gods."

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