Wednesday, May 20, 2009
are canaries in the coal mine for this coming leg down in the bear market, which is far from over. These are the banks that are not backstopped by taxpayers, are not part of the fascist kieretsu business model evolving in the United States, and hold lots of commercial and consumer loans on their books that will default. These regional banks will be failing in droves over the next few years and will drag down the "real" economy with them.
To the 6 month daily candlestick chart:
I am out of the office so I can't doodle on the chart, but notice this index of regional banks ($KRX) has now crossed below its 50 day moving average with a vengeance and isn't buying the final bullish gasp of the general stock market averages. All the pieces of the bearish puzzle continue to fit together, although I have to admit that I am shocked at how low the $VIX has managed to push. It is a gift to any bears who play with options and who haven't already committed their capital to buying puts.
Gold and Gold miners are performing well. This is the only sector in the economy in a true bull market right now and will remain the only sector in this position for the next year or two. I remain long physical Gold, long the Gold royalty company Royal Gold (RGLD) and short the base metal miner Freeport McMoran (FCX).