Stock Market Panic In Progress: S&P Is Now Right On Its 200-DMA, Largest Tax Hikes In The History Of America Imminent, Rail Traffic Turned Down Sharply This Week, Global Credit Cycle Lurches Down, People In Spain Are Experiencing Inhuman Situations, And Greece Unlikely To Get Bailout Next Week
Stock Market Crash Next Week?
The Stock Market Is Tumbling Again, And It’s Right On The Infamous 200-Day Moving Average
Alert! The stock market is falling.
And the S&P is now right on its 200-day moving average (the red line in this chart) which some people see as an important “support” level.
If we break through it, some people might freak out.
Cycle work suggests that bulls should come back very soon and push stocks back toward at least the October highs. If they don’t, well, then, brace yourself. Because if you feel like being worried about something, here is a concept making the rounds: Credible people, by which I mean non-lawmakers, are noticing that the chart of the past year looks eerily similar to the one prior to the 1987 crash. I have provided the two charts at this link —http://tinyw.in/MJVH — so you can eyeball them yourself.
In both years, there was a run to an April high, then a June low, and then an August-September top. The decline to the 200-day average (red line) occurred on a Thursday in the 1987 chart, and then the steep decline on Friday preceded the gap-down crash on Black Monday.
Sunday will mark the start of the
100, 50 – day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010). The following tax hikes will occur on January 1, 2013:
Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
-The 10% bracket rises to a new and expanded 15%
-The 25% bracket rises to 28%
-The 28% bracket rises to 31%
-The 33% bracket rises to 36%
-The 35% bracket rises to 39.6%
Higher taxes on marriage and family coming on January 1, 2013. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.
Rail traffic turned down sharply this week as intermodal traffic dipped -6.2%. That brings the 3 month moving average to 2.7%, down sharply from last week’s reading of 3.5%. One week doesn’t make a trend, but rail trends haven’t been negative since 2009 so this is one to keep a close eye on if things continue to deteriorate.
The Big Picture:
After a brief period of stabilization, our measure of global credit impulse has plummeted. This does not bode well for European equities.
The credit impulses in all three major economies – the euro area, the U.S. and China – are now negative…
With Spanish unemployment at record levels over 26% (and youth unemployment over 50%), even the bailout-avoiding prime minister is now recognizing the “terrible things and inhumane situations” that many real people are dealing with. To wit, a 53-year-old woman died after she threw herself from a window of her apartment when representatives of Spanish bank La Caixa arrived with locksmiths to evict her yesterday morning. The suicide (following another last month in Granada) has prompted Rajoy to temporarily halt evictions of the most vulnerable families as the government devises measures to help people stay in their homes. And yet, we are told again and again by Juncker, Barroso, van Rompuy et. al that the corner has been turned… we suspect not!
Spanish Prime Minister Mariano Rajoy will temporarily halt evictions of the most vulnerable families as the government devises measures to help people stay in their homes after a woman killed herself in Baracaldo.
The Spanish people are experiencing “terrible things and inhumane situations,” the premier said at an election rally in Lerida, Catalonia last night. The government “will defend the most vulnerable families affected by the evictions and act with seriousness, sensitivity and great humanity,” he said.
Amaya Egana Chopitea, 53, threw herself from the window of her apartment when representatives of Spanish bank La Caixa arrived with locksmiths to evict her yesterday morning, El Mundo reported. Egana and her husband’s mortgage debt of 164,000 euros ($208,640) rose to 213,000 euros because of charges and interest payments, while their home had been auctioned for 190,000 euros, the newspaper said.
Rajoy is searching for a formula that can help families that have fallen behind on mortgage payments without increasing the strain on lenders trying to clean up about 180 billion euros of bad real estate assets, the legacy of a 10-year building boom. Banco Popular Espanol SA (POP) today offered shareholders the chance to buy new stock at a 32 percent discount as it tries to plug a 3.2 billion-euro capital deficit.
The banking sector’s problems are already complicating Rajoy’s efforts to narrow Spain’s budget deficit and get the economy moving again. Unemployment reached a record 26 percent in September and the European Commission last week said Rajoy is set to miss his budget goals for the next three years.
It has now been reported that for logistical reasons it is very unlikely Greece will be able to draw down on further bailout funds before the week of November 19 at the earliest, notwithstanding the approval of the Greek Parliament on Wednesday of the austerity measures proposed last Monday. This is said to result from:
- Germany insisting that the Greek Parliament first pass its 2013 budget, where the vote by the Greek Parliament is scheduled for Sunday, November 11; and,
- a subsequent requirement of some of the Eurozone country contributors (including Germany) that the Parliaments of those countries must vote to approve the advance of further bailout funding.
- Other comments:
Ron Paul & Jim Powell: It’s Now Officially Too Late To Avert Disaster. We Cannot Get Enough People In Congress In The Next Five-10 Years Who Will Do Wise Things. President Barack Obama Getting Re-elected Sets The Stage For Another Great Depression
MARC FABER & JIM ROGERS: ‘Obama Is A Disaster, The Stock Market Should Have Fallen 50%, And You Should Buy Yourself A Machine Gun. I Need To Buy A Tank…’ ‘It’s Going To Be More Inflation, More Money Printing, More Debt, More Spending…’