We Had Sharp Rallies in 2008 Too… How’d Those Work Out?

Submitted by Phoenix Capital Research
09/27/2011 16:07 -0400

The markets are snapping back sharply on short covering and end of the month performance gaming. Hedge funds have been getting destroyed over the last few months. So now, more than usual, there is incentive to push the market higher, mark up their positions, and end the quarter on a positive.

We’ve now filled the gap from last Thursday and our moving to challenge resistance at 1,200.



Do not let these sharp rallies fool you into thinking that the ongoing Crisis in the markets is over. We had very similar sharp rallies in 2008. In fact, during the Crash itself we had three sharp rallies of 11%, 17%, and 20% respectively. Every time the market rolled over hard soon afterwards.



Our primary point is that just because stocks rally doesn’t mean things are better. The markets were sharply oversold and short interest was rising dramatically. In this environment it’s quite easy to kick off a sharp short-covering rally due to rumors and the usual end of month performance gaming.

About the rumors.

Steve Liesman of CNBC claims a source informs him that we’re going to see a leveraged European Financial Stability Facility announced soon. Liesman’s source obviously doesn’t know what he or she is talking about OR the story was a plant (or both).

The reason I can say this with certainty is that German is fed up with bailouts as the below quotes from Finance Minister Wolfgang Schaeuble attest:

*SCHAEUBLE SAYS `WILL NOT SPEND OUR WAY' OUT OF CRISIS

*SCHAEUBLE SAYS `SOLIDARITY HAS LIMITS,' REQUIRES RETURN EFFORTS

*SCHAEUBLE SAYS `IMMEDIATE FISCAL REFORMS ARE OF THE ESSENCE'

The reality is that Europe in its current form is over. No German backstop means no success for the EFSF no matter who big it becomes. Germany IS the backstop for the EU. Take it out of the equation and the EU in its current form is finished.

So those who are buying into Liesman’s BS are going to be in for a truly RUDE surprise in the coming days. We’ve seen how heavily manipulated rallies end several times in the last six weeks: BADLY.

Indeed, last week we got a confirmed SELL on my proprietary Crash indicator. This is the SAME indicator that registered before the 1987 Crash, the Tech Crash, and the 2008 collapse.

It's just triggered again... which means that last week’s sell off is JUST the beginning of what's coming.

Yes, the GREAT COLLAPSE has begun. The markets will be going to new lows (below the March 2009 lows) in the coming months.

We're also going to be seeing major banks go under, market crashes, food shortages, government shutdowns, and SYSTEMIC FAILURE.

Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What's coming is going to make 2008 look like a joke.

If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

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Good Investing!

Graham Summers

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