Fellow Readers, for the first time ever I am way more focused on the traditional stock markets than on Crypto and so should everyone, for several reasons, but foremost: This time is different.
“There is no cause to worry. The high tide of prosperity will continue.”
- Andrew W. Mellon, Secretary of the Treasury - Sept. 1929
Ever since I bothered to get down the rabbit hole of how our world really works I knew that we are living in the Biggest Bubble of All Times that will inevitably burst in due time. The question never really was whether it bursts, but rather when the crash will occur and what implications such scenario will have on our daily lives. Although latter is somewhat speculative, the former is actually not far away.
For the first time ever humans artifically created the “Everything-Bubble” based on a toxic economic system that generates more debt than money to repay, and which demands constant parabolic growth on a global scale. It does not take a genius to figure out that this is not a sustainable way of living and that it will come crumbling down if certain catalysts trigger fear and panic among traditional investors spreading globally.
If you think about it in an objective way, we humans are like cancer for the planet.
I think Agent Smith was pretty clear about it in the movie Matrix, he actually nailed it:
Agent Smith: “I’d like to share a revelation I had during my time here. It came to me when I tried to classify your species. I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply until every natural resource is consumed. The only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet. You are a plague, and we are the cure.”
Is it not like that? When we compare our way of living to that of every other species on the planet, we must inevitably come to the conclusion that we are one amongst millions of species that are not living in tune with Nature. We completely lost the connection to what we really are, and the pain and suffering in the world is the natural result of that fallacy. We exploited the planet and its natural, precious resources for centuries, especially more in the recent decades, to a degree that we now face our own destruction in the next years if we do not manage to make a 180 degree turn, which is however only a limited option as those in control have no interest in making a turn whatsoever and will resist such change with all tools at their disposal.
When we maintain a system that demands constant growth, while resources needed to fuel that growth are limited, we pretty much have set ourselves checkmate. You cannot sequeeze more juice out out of a lemon than what it naturally contains, and we will soon figure that out. And in a way it is a justified reckoning. All these years we all looked away, being ignorant about what is happening, indirectly supporting this system by contributing our time and energy into that, or simply ignoring the warning signs that are here for decades already, very obvious in plain sight, all of this will hit us in the face rather sooner than later. Yet we stand there unprepared and mostly unknowing. If you as a baby boomer thought you will make it to your death bed before that actually happens, you may be in for a surprise.
We have allowed this to happen - even if unknowingly - thus we will eventually suffer from the consequences, even if we have not established this toxic system ourselves.
We passively agreed to the system, but we actively suffer from the consequences eventually. I am talking about everyone, no matter where they live and what they do, what they think and what they are capable of, to be affected significantly in their daily lives which is so dependent on the state and the system we fuel by our compliance when it finally comes crumbling down.
This is a warning.
There is one specific characteristic in man that has been completely mastered, and that is Ignorance. We are able to live for decades pretending nothing is wrong, although every day things get worse. We however decide to look away because we don’t feel an immediate effect on our own personal lives. We are so consumed by technology, social media, News, Netflix and Crypto and everyday worries that we forget everything else completely. Most of us know that the system we run today cannot be sustained in the future, but rarely anyone is able or willing to look beyond that. I have tried several times to make aware of these circumstances, however ignorance and trust in the old system is high among daily life relationships.
It seems that nobody is willing to talk about a potential collapse of the society as we know it, even if the risks are very evident for such scenario. If you are afraid of talking about it in the first place, what do you think how you will deal with the actual event!?
In a state where humanity is mostly sleeping, absolutely unconscious and blind to what is happening at a larger scale, we will be beyond helpless as a species when things get turbulent. The only thing to avoid such a paralysis is to actually prepare by the means of information and actual physical preparation. No one becomes a prepper because they overly enjoy it, but because it is necessary and the logical consequence of the information they have accumulated. Being prepared by any means is not something that is weird, it is acting responsibly, while everybody else continues to be busy looking away.
Sure we can pretend everything will go on just as in the past, because its comfortable. But as comfortable it is, it is just as unlikely. This is not meant as an offence, most of us have been spawned into this system and not actively developed it. In fact, nobody really understands the system which is so important to our daily lives.
Yet looking away is not the solution, truth is. We already KNOW that those in control have no interest in change, even if it ultimatively means their own destruction. It is up to us people to accept the responsibility to make such a change. But this is no news. It feels like mankind has been going in circles for centuries, never learning from their mistakes whatsoever, while we declare ourselves as a developed civilization.
One step forward, two steps back.
Although I could go on forever diving deeper into the wrongdoings of our species, it is not the time and place, and certainly not the aim of this article. The actual objective of this piece is to make aware of the Global Everything Bubble and to indicate that the point of no return (The Crash) is by no means very far away. The mood of the market has already changed and seems to be getting worse day by day. Generally I would say that this indicates a possibility of accumulation, however this is clearly not the case in such altitude, while real economic data are going down. Since Fiat is not backed by Gold anymore, it is actually backed by economic data. When these economic data keep tumbling down, but stocks are still rising parabolically, that’s a warning sign that should be taken seriously. The market has been propelled by margin, debt and inflation for decades and are artificially supported by the Money-Creators themselves, buying up their own stuff. When they will stop doing so, which is already indicated and widely discussed, there will be no buyers left: Markets will collide. This is not the only weapon of choice, they have another one: raising interest rate. At this stage, after borrowing insane sums of money on an unseen scale, the whole world is running on debt which cannot be repayed. Almost every institution, bank and business have active loans that they are already struggling to repay. When the FED further increases interest rates, those business will collapse as they have to pay back even more than previously. And what happens when large institutions and banks collapse? They drag all others down with it, thus due to the interconnectivity of global commerce basically everything. This will in turn trigger more liquidations while nobody is there to buy the falling knife. Oh no, I believe at this stage of madness we will not be able to hinder such a meltdown by any means. The banks tried it in 2009, and they managed to support falling prices with inflationary injections. I am talking about firing up the printing press and support the economy with that fresh money to avoid a total collapse. It worked, but since they have printed parabolic amounts of new fiat in recent years follwing that 09 crash, this option is no longer really available. Besides, we have not learned anything from the 08/09 crisis and things look significantly worse today than a decade ago. Once panic kicks in, there will be no buyers whatsoever, and prices will melt down globally. We do not know where it will end, and whether it will recover, but there is multiple scenarios that i deem as relatively realistic in this regard, although i will cover only the following in this article, others in due time.
1) Global Markets will melt down
In the case of a severe collapse that does not quickly recover, the system will quickly become unfunctional for a long long time. If you think it further, banks and businesses collapsing means not getting fiat at your bank, nor buying stuff you need. No proper transportation, what about supply of water and electricity? Uncertain. What is sure is that if 90% of businesses are forced out of the economy because they cannot pay back the loans they took, no one is going to work as nobody can afford workers anymore. When they feel the impact on their personal life due to shortage in water, food or electricty, they will be at their families trying to provide instead of going to work when they are not getting paid. Just look at what happened in Venezuela. If you think that is the other side of the world and has nothing to do with us, think again. We have witnessed the same stuff in Weimar and many other occasions. Collapsing fiat is nothing out of the ordinary, in fact it is rather normal. Every single fiat currency that has been used has finally collapsed to its real value, which is the value of the paper it is printed on. To say it in Voltaire’s words:
Yet while we have 100% proof that every single existing fiat currency has gone to zero, we are not ready to accept that those we maintain in our world today will share the same fate eventually. Are you prepared?
If you have no idea what is happening in an economic meltdown, I encourage you to study the Venezuela case. If you are in crypto, chances are you waste a lot of time scanning charts that don’t move and scrolling through Twitter. Spend your time more wisely, acquire information that are crucial for what is inevitably coming. Trusting on Crypto is nice, but a gamble in a world so unstable politically and economically. If the electricity grid goes offline as a consequence of everything colliding, there is no crypto no more. Albeit unpleasant, I encourage you to think about it and take appropiate measures so you have a solid foundation of knowledge for the new Age following that turbulent time. Because the old system needs to go so we have the opportunity to create a better one.
Well, lets get to work and have a look at the crashes of 1929, 1987 and 1990 in both Dow Jones and the Nikkei.
Surging prices, parabolic top, retest of major trendline & failure to hold above, break of key support, collapse.
Again surging prices, parabolic top, retest of major trendline & failure to hold above, break of key support, then collapse.
Same thing, different disguise.
One thing that stands out is that the pattern is largely the same. It has something to do with the parabolic price advance prior and the key trendline broken, at which point the market is so heavy that it cannot sustain further growth. The collapse is a natural consequence of the prior price action, and by no means unusual in markets. We have used the following chart in crypto extensively, and there is no fundamental difference here:
Zerohedge managed to put it in a nutshell fairly well:
“The similarities are astonishing: prices rise along the trendline, then the advance accelerates and peaks, the trendline survives an initial test and a rebound commences. A second test of the trendline fails, and after the indexes break through, a water-fall decline begins.”
After looking at these charts, lets have a look at nowadays S&P 500 to see if there are similarities:
Ouch. We have already broken the longterm trendline, while markets struggle to maintain valuation above it. We therefore must conclude from previous examples that right now the markets are too heavy to continuing it’s rise and will likely collapse soonish. When taking the bubble chart and trying to pinpoint where traditional markets are right now, there must be at least the realization that we are in a very fragile state when it comes to global markets. The difference this time however is that this will result in a major global crisis, way stronger than in previous crashes outlined above, due to the nature of an ever-increasing globalized, interconnected economy fueled by margin and debt.
The key level to watch is the 2580 mark, the last major low in the S&P 500 chart. If that one fails, we get a Lower Low after a Lower High, which means downtrend, and we will see a blood bath in proportions we might have not witnessed before. Historically it is safe to say that those turbulent times generate many tense & emotional events and attempts of the government to gain more control over the people.
In this regard it should be noted that China has managed to trade Oil for Yuan. Given the fact that the U.S. invaded every single country attempting to bypass the PetroDollar in this regard, and the fact that the U.S. needs war in order for their economy to grow, we might see turbulent moves at the time the markets collide. The fact that both Russia and China are on the way of establishing new ways of trade and collaboration, which is clearly not in the interest of the U.S. is leading to a very tense political situation. Be very aware of what is happening. Just like the state likes to introduce tricky laws in the past when everybody is distracted watching The Soccer World Cup, or similar, they will enforce even heftier laws when everybody is distracted by the world wide crash of traditional markets, likely having to do with more surveillance and limiting rights of citizens further.
One thing that indicates that we have some pretty turbulent and violent times ahead is the $VIX, which measures the volatility in the S&P 500. We can see that it spiked when the S&P had its first strong leg down which triggered the trendline in early February, which implies that volatility increased significantly when the panic first kicked in. From the chart below, which is pretty bullish, we must conclude that the next legs down in the S&P will propel the volatility even further. When looking at the VIX chart, EMAs are aligning upwards, Higher Lows are already established. All it needs is a strong push though that resistance of previous Highs to trigger a volatility avalanche.
We live in dangerous times, and many are waking up to the fact about now. There is much at stake when it comes to the future of mankind, and we must learn to live up the responsibility to shape this world. There must be better solutions than those we currently entertain.
However not all things are that bad, although the emphasis of this particular article suggests so. Having a look at the Crypto Markets, things look somewhat brighter, although we are not completely through yet.
As outlined in the chart above, we currently are at support of a major trendline connecting two previous highs. After a volume peak at top we had declining volume on the move down, which will likely be ended with a volume spike up, as soon as sellers are exhausted, which might be here or somewhat lower in buy range of the chart above. The latter would mean we are potentially in for another weaker leg down before things get better, although it must not be. Another chart that is very interesting is the Turtle BTC Buy Market Percentage Chart, which shows the upside reversal is already under construction.
The $BTC 3D chart tells us we are in undecided territory, however clear trigger points will decide the further fate of BTC in the neartime future.
$7240 was the last low, which was also a bull reversal bar at EMA 200 and a potential second long signal. Any trigger below that candle would lead to those bulls getting stopped out, which might trigger another stop level below $6000, however somewhat more unlikely as both EMA 100 and 200 act as support below.
$9177 was the last local high. If triggered, we would be looking at three Higher Lows and a Higher High which would lead buyers back into the market for a retest attempt of the $11788 double top structure, which in turn may lead to fomo by those who sold their stack in the hope of accumulating way cheaper. As all EMAs are in right order as of now, any strong move up will likely lead to continuation of the rally that peaked in December. From that higher-timeframe perspective we would indeed be at the first bear trap here before the actual global rally takes place, which we are all waiting for more or less patiently.
Either way, things will get interesting in the coming days and weeks. While I maintain my bullish perspective on the crypto markets, the traditional market crisis will certainly lead to a hefty increase in volume and volatility, so brace yourselves and expect the unexpected.
Stay safe out there,