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The Bears Are Back With a Vengeance

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As the bulls have a victory dance, the PIIGS are getting slaughtered.

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The bears are not only back in town, they're about to lay the market under siege.

In my Minyanville video I talked about the US markets building giant head-and-shoulders (H&S) tops. I went on to predict that after the right shoulders were completed, there would be a sharp accelerated fall. Well, the right shoulders were finished on Tuesday and sure enough, on Thursday markets had a very hard and fast fall. Key pivot points have broken. The H&S top pattern has been completed. And the bull's back is broken. Ironically, the day after the fall, the grand master of the bull parade was ripping the heads off of teddy bears. Just think of it: Teddy bears and the giant market heads were all being decapitated. What a slaughter. It's uglier than violent action videos my teenage son is addicted to. What's more frightening? It's not just the US market. Foreign markets have even more pronounced H&S tops. It looks like the global dominoes are falling, one by one.

The FXI ETF(China) may be one of the biggest H&S tops you will ever see. With a real estate bubble that literally has left whole cities built out and empty, this is the easiest H&S to understand. China's super easy money boom created a giant head which is now being decapitated. The FXI ETF is below both the 50- and the 200-day moving averages and is only days away from the dreaded "black cross" (declining 50 dma crosses below the 200 dma). China was the global markets and commodities leader, and now is leading the free fall. In fact, almost all global markets are facing the prospect of hanging the bulls on black crosses.

The "PIIGS" (Portugal, Ireland, Italy, Greece, and Spain) are getting slaughtered. The biggest in the PIIG pen, Italy, built a big H&S top and is days away from its "Black Cross" event. India (EPI), Sweden (EWD), Switzerland (EWL), Singapore (EWS), Mexico (EWW), Brazil (EWZ), and Russia (RSX) had all giant head-and shoulders tops and their decapitated heads are now being kicked right off a mountain peak. That's a lot of distance and a long way down for the bulls' heads to roll.

Yet again, when China feels the pain, the globe bleeds. Other domino nations are getting knocked all over the place: Canada (EWC), Hong Kong (EWH), Austria (EWO), The UK (EWU), Taiwan (EWT) and even Chile (ECH). Now that China and the US are running around with their heads off , there's a risk of global slaughter. Think that's an ugly picture? Well add on the fact that for the last year, the markets have been jacked up on monetary steroids -- and the juice is about to be cut off. When the rate cuts turn into rate hikes, that's when market junkies will have to go cold turkey.

The market bear isn't dead -- the bear is just been hibernating. Even as the bulls jump up and down in a victory dance, the PIIGS are getting slaughtered and the bulls' heads are rolling. Soon, the remains of the bulls will be hanging on the dreaded black cross. And then you'll know the bears are back. With a vengeance.

For more from Ron Coby and guidance through the coming storm, check out Minyanville's newly launched Grail ETF & Equity Investor newsletter written by Ron Coby and Denny Lamson using their proprietary Lamson Grail Timing Indicator. One recent trade just closed +22% in just one month! Sign up today for a FREE 14-day trial. Learn more.
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No positions in stocks mentioned.
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