Preparing for the "1929 Can't Happen Again" Crash

Only the Soylent Idiocracy would "believe" that something that's already happening in real time, can't happen. Income inequality was outsourced back to 1929 levels right in front of their fucking eyes and they did nothing about it, so ignoring signs of the resulting market crash should take no more effort than tuning in to ESPN or the Kardashians.

All we're doing now is standing around waiting for the Dow worshippers to realize that they bought into a Ponzi Scheme built upon a hollowed out economy. "The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or a bankrupt idiot after the peak" (a serious dilemma, indeed).

Of course a surprise panic collapse would by no means be possible were it not for a society of self-absorbed zombies who inherently assume that borrowing from Third World factory slaves will continue forever...

HOW TO CREATE A HALO CRASH

First, outsource the economy and drive income inequality to levels last seen in 1929. Check
Next, print money to inflate the stock market to multi-decade overbought and extreme correlation. Check
Next, make hedging impossible, by eliminating volatility. Check
Next, collapse global macro in broad daylight between episodes of the Kardashians. Check
Next, brainwash the zombified masses into believing "1929 can't happen again". Check
(Even while it's happening in real-time. Check)
Next, annihilate late-coming home gamers buying call options in Tesla. Check
Next, hold indices at all time highs while money rotates into a handful of defensive stocks. Check
Next, dump a massive supply of new junk stocks into an already weakened market. Check

In other words, kick 3 out of 4 legs out from under the table and then pile a ton of bricks on top of the last leg, just to see what will happen.

Growth stocks got shellacked again this week, with the IBD 50 growth index down 5.8% on the week. IBD switched to "market in correction" on Wednesday - which means all momentum speculators must get out of the pool. The Nasdaq closed below its 50 DMA, the leading sector was Utilities and the leading global market was Italy, you just can't make this shit up.

The major theme this week was marking up the end of the first quarter which ends Monday, by every means possible, to maximize bonus accruals. The other major theme was the continuing rotation out of momentum stocks into more defensive stocks, As indicated, Utilities outperformed while the Nasdaq, Russell 2000 small cap and Biotech got hammered.

Retail brokers rolled over, but Johnson & Johnson went parabolic, very much in keeping with its stellar record for being the last major stock to roll over...

Where the Bodies Will Be Buried
Consumer Non-Cyclicals
(Walmart, Coke, Philip Morris, Colgate etc.)
Institutions are liquidating their Priceline and Google to buy recession stocks, however, due to extreme sector correlation, these are already massively overbought as we see from the Volume by Price (blue) indicator left side

The last leg of the stool is already a crowded trade (three peaks and a domed house?)

Long-term Treasuries

On Wednesday (3/26 EW Short-term update), EWI admitted that (to paraphrase): "bond yields have been correlated with share prices since July 2012, so if this correlation continues, then the move down in stock prices should bring lower yields (higher bond prices), at least initially". No shit Sherlock. Treasury bond yields have been correlated with stock prices for the last hundred years. It didn't just start in 2012, 2008 saw the biggest plunge in bond yields in 30 years. It was only a matter of time before they changed their dumbfuck position on bonds. They had to tack on the "at least initially" bullshit so they could leave the door open to yet another flip flop. $59/month for advice on how to flip a coin with zero conviction each time. Apparently I'm the real dumbfuck in this equation.

The smart money is already leaving the station (and to think the real fun hasn't even begun). In extreme deflation, anyone who doesn't roll out into longer maturities will be paying the government to borrow their money (aka. negative interest rates) - with a trade-off of higher volatility in the longer dated maturies.

Utilities

Not necessarily the sector one would want to see leading the market
Well owned as well at these levels

Biotech: through the 50DMA on the way to the 200DMA

Stealth Bear Market
68% of Stocks Above 50 DMA
The S&P is close to all time highs, but the percentage of stocks above their 50 DMA continues to decline

WTF?

Italian stock market, (and Bombay Sensex), the only two global stock markets at new highs this week