The Jonah Lomu was considered the most dangerous player on the rugby union field, if he was not stopped early you could be sure your defensive line would be ripped apart. In international rugby or any sport for that matter it is rare the opposing side actual feared an individual player. Jonah Lomu is now retired, but when he played he was a true rugby giant that sent the villages running for cover. This is the correlation the debt crisis is about to have on the world, it is gonna run at us like Jonah!
Many American's wont have a clue want it means to stand in the way Jonah Lomu. Think of Jonah as the the debt crisis and consider yourself as the defensive line central banker. Watch the video to understand more: Jonah Lomu is the 6ft 5 in (1.95cm), 19 st (126 kg) number 11, 100 meters in 10.8 sec!
Let's swing back to what could rock the financial world, in this blog post Felix Zulauf stated that if one country leaves the euro zone, then all hell will break loose. Meaning the tentacles of Greek CDS and other crazy derivatives could cause massive financial loss. Even Merkel thinks Greece will default, and when the do, they wont stay in the Eurozone, you can bet on that! And then there is Portugal, the LTRO (ie the ECB doing a FED balance sheet trick, of accepting all junk paper for real cash) wont save them.
The current health if the NYSE index is a concern to us, we watch the behavior of the 52 week highs and lows for clues for what happens next. Consider the story of this chart.
Contents of the chart:
- Blue bars is the count of stocks making 52 week highs each day
- Red bars is the count of stocks making 52 week lows each day
- Brown line is the NYSE index daily close price
- Black line is the NYSE 52 week high low index*
- Gray line is the VXO OEX Volatility Index.
*52 week highs less 52 weeks lows difference added on to previous days difference)
This is the charts story:
- (A) and (B) are NYSE corrections of about 18% each, and based on the count of new 52 week lows not a serious correction and was likely to see prices continue on to higher levels. As the NYSE did.
- (C) and (D) are NYSE corrections once again of about 18%, but this time based on the count of new 52 week lows is considered to be very serious.
At (C) new 52 week lows exploded to -1200, and the following year saw a continuation of this pattern. We cant say that 2012 will be the same as 2008, what we can say is that it is very unlikely that the pattern of exploding new 52 weeks lows will be limited to a single correct at (D), simple we expect more correct like (D) in 2012. The news from the debt crisis and recession talk will guarantee this to be so!
Also, consider (E), after the serious correction at (C) the NYSE 52 Week high low index managed to creep a little higher before reality set in and the index plunged south. We think (F) is repeating history seen at (E), we do not think that (F) is repeating either (A) or (B) as the panic seen in Aug/Sept 2011 was no accident, the new 52 week lows shout the message loud and clear, the debt crisis story is NOT over.
Both (E) and (F) allowed the VXO to fall back to complacent levels [(i) and (ii)], if history repeats the VXO will not be under 20 in the months to come.
We get the feeling that the debt crisis will come charging down at us standing 6ft 5 in (1.95cm), 19 st (126 kg) at a speed that wont be stopped by the weak and feeble (central bankers), yes the debt crisis is about to score magnificently, one that will be remembered for years to come. Watch this space.
You guess it we are rugby nuts, Americans can learn more at: www.usarugby.org
