Speculators Destroyed

I don't know what's going to happen next week, but we know with 100% certainty that bullish speculators have been categorically destroyed. That's not a matter of speculation.

Pundits are desperately trying to keep the sheeple from bolting out of the Casino as market volatility picks up with each passing day. So they tell the people that the bull trend is still intact - this is still a bull market. At the major index level perhaps, but below the surface breadth has been imploding for weeks. But the real story is what has happened to speculators these past several weeks, they have been systematically destroyed. Suffice to say it is extremely difficult for a bull market in the major indices to continue when the momentum trades have collapsed. Because leverage is coming out of this market and it won't be coming back for a long long time.

Leading the speculative destruction party are Crypto currencies.

Below we see a chart of Bitcoin which is eerily reminiscent of the pattern from 2021. What we notice is that the second big Bitcoin rollover was in November of 2021 which was followed six weeks later by rollover in the S&P Tech stocks. Therefore the timing of the Bitcoin rollover is the same now as it was back then. What should be concerning for stock bulls however, is that the Tech sector is ALREADY rolling over now, as indicated by the index in the top pane and the % bullish indicator in the bottom pane. In 2021, the Tech % bullish didn't collapse until January 2022, whereas it has already collapsed this time around. Which means that the stock bear market is ahead of schedule relative to the 2022 bear market.

Another area of speculator wipeout is in the leveraged ETFs on speculative underlying indices, stocks, and Cryptos.

In particular, single stock levered ETFs which are a recent invention have been systematically decimated because these are generally tracking the most speculative stocks:

Microstrategy, Meta, AMD, Nvidia, Tesla, Coinbase, Palantir and Robinhood

For example the 2x levered Microstrategy single stock ETF saw astronomical volume this week after having been nuked -99%.

Everyone sold their shares at the end to buy Powerball tickets.

Speaking of volume, look at Dow ETF volume which is supposed to be the safest index. It's far higher than it was in April and mostly negative. Everything got liquidated this past week. So if we get continuation this coming week, imagine the volume we will be seeing during a holiday.

Which brings us to the momentum stock market trades.

This week, the S&P semiconductor index ETF - which is at the epicenter of the AI bubble - fell into bear market and then bulled back just slightly above bear market level. What we see on this chart is that the last several times that the sector fell below the 200 dma (red line) it went on average another 15% lower. Keeping in mind that this was the most overbought reading for semiconductors since Y2K, we can assume that the index will go lower than recent average. Far lower.

Metals and mining stocks which got sucked into the ZeroEdge patented anti-dollar inflation trade rally along with Bitcoin, are in a bear market as well. Deja vu of 2022.

Globally, things are not looking better. EM Asia is deja vu of 2021 and 96% correlated to U.S. semiconductors shown above.

In summary, Wall Street remains optimistic because they don't want the sheeple to bolt from the Casino and put their year end bonus at risk. Therefore they will not acknowledge a crash before, during or even after it happens. Therefore, it's up to the individual investor to decide for themselves what to believe about this AI bubble and act accordingly.

Then again, sometimes knowing the truth is still not enough to save someone from their own stupidity:

“The picture is pretty clear, in that we are in that territory of a bubble,” Dalio said. “But we don’t have the pricking of the bubble yet.”

We have Crypto confirmation of bear market.

We have inflation trade confirmation of bear market.

We have momentum stock confirmation of bear market.

And any day now we will get EM/Global confirmation of bear market.

For those who don't heed these warnings, there is no warning.

Just obliteration at the hands of the usual psychopaths.