Financials

It looks like Financial stocks took the brunt of today's dive. Here are a few I looked at.

 Barclays (BCS) as you can see took the biggest hit since 8/19. This is the change of character that really matters, although this week there have been many more subtle signs.

 Goldman Sachs (GS) took the biggest plunge since early August.


 Despite the problem's Jefferies (JEF) had last week with their exposure, which halted trading several times, this is the biggest decline I can find on this entire chart. Obviously all of the statement and this weekends purge of 50% of their EU exposure wasn't enough to satisfy investors. This is exactly what I was talking about in last night's post, a lack of trust is when all hell breaks loose.

 JP Morgan Chase-the biggest decline since 8/8, the difference is that in August, the drop was a bullish capitulation move, today's plunge was a bearish breakaway move-BG DIFFERENCE moving forward.

 Morgan Stanley (MS) the biggest plunge since early August.

 XLF has been giving us plenty of warning, the length of the divergence is just reflective of how bad the distribution and short selling has been. The bear flag at the white arrow saw a leading negative divergence, this is one of the reasons why I have refused to let go of any short positions.

As for Financials more broadly, XLF shows the worst decline since 8/10-again a capitulation move back then.

Judging by the overnight ES action, I'm fairly confident in saying that this EU plan to rid themselves of the pigs has been inside knowledge that the market has been aware of on some level and the extreme rally was a chance to fill the gap (make back lost money) as well as set up their portfolios for the next leg down which should be substantial based on the 3C readings.

If this move down today was because of an Italian margin hike on bonds, I'd be shocked, I think Wall Street knew that Mer-Kozy were set to let the cat out of the bag as Sarkozy was talking openly at a university about it yesterday.

Here's the overnight ES action aping off what I have called and believed to be a "sucker's rally".

ES shows a clear negative divergence that sent ES lower shortly after it started. I believe the bond margin hike was a cover for what they knew was coming out later today.

Here's the effect of a sucker's rally and how it is more or less a longer version of a head fake or you might all it a bull trap. I have shown over the last several days churning events where strong hands have  turned over long positions to weak hands and yesterday was a rally based on pure news and momentum, as I showed, there was no accumulation for it, so it was convenient for Wall Street.

 Anyone who went long in the white box, which would be a lot of people, are now at a loss as of the close, this is a lot of overhead resistance and the further the market moves down, the greater their loss will be, which will cause them to sell and change the dynamics of supply and demand by creating more supply in an environment that already has little demand, this in turn means (if you have ever watched level 2 or even better TotalView) that there will be a certain amount of bids at one level, when those are exhausted, price moves down to the next level where there are bids. However, the wave of supply will far outstrip demand and we get the snowball effect. That is the reason bear flags exist and a bear flag is what we have seen in the market over the last 6 days.

What Mer-Kozy did today should have them in the Hague, the effect that has not even come close to starting will be of extreme hardship for their "fellow" Europeans and across th globe and without any sense of hyperbole, we will be lucky to get through their intended plan s without a lot of blood being shed. It might just turn out that the Greeks who have been hanging posters of Merkel in a Nazi uniform with the EU armband may have been a lot closer to reality then we can imagine. I hate to throw around words like that and I don't do so lightly, but what they did today was a betrayal to the entire EU and a betrayal of confidence and trust for the entire world.