Its Over, page-328

You probably the first US market jitters last night as the Dow reacted to higher bond yields and Nasdaq tanked close to 2%.

October is traditionally a challenging month for US market (see seasonality chart below), which is why I had cautioned to downsize holdings ahead of an impending short pullback before a possible year end rally, but 2019 could be the start of a correction.

October 04, 2018 Phoenix CapitalResearch

MAJOR Warning: The Bond Market Just Crossed "the Line inthe Sand."

Aswe have been warning repeatedly over the last few months, the Powell Fed istotally unlike the Bernanke or Yellen Feds.

FormerFed Chairs Ben Bernanke and Janet Yellen were “married” to the bull market instocks. Indeed, from 2009 to 2016 it became a running joke that the moment thestock market began to break down, Bernanke or Yellen would issue a statementthat the Fed was “ready to act” or some other accommodative phrase.

Stockswould erupt higher. And the bull market remained intact.

Notcurrent Fed Chair Jerome Powell. Powell has made it clear he is going to hikerates until “something breaks.” And he doesn’t meant a minor stock market correction;he explicitly stated that stocks would have to enter a prolonged collapsesimilar to that of 2008 for him to change the Fed’s monetary policy.

Well,he’s going to get what he asked for.

TheUS Bond Bubble, which I call “the Everything Bubble” is beginning to blow up.

As we noted previously, the yield on the all-important10-Year US Treasury has broken its multi-decade downtrend (red line). That wasbad enough… but now yields have risen above CRITICAL resistance (blue line).

THIS was the proverbial “line in the sand”… the line whichyields needed to NOT break. And they just did

Thismove is not exclusive to the 10-Year Treasury either. The 30-Year Treasury hasALSO broken its restively downtrend (red line) and CRITICAL resistance (blueline).

Thisis a MASSIVE warning to everyone. If you wanted a comparable situation… this isthe equivalent of when subprime mortgages started blowing up before the lastcrisis.

The only difference is that bubble in mortgages/ realestate was a bubble in a relatively senior asset class. The bubble in sovereignbonds is a bubble in THE MOST senior asset class… the bedrock of the entireglobal financial system.

Below Excerpt fromStock Market on the Cusp by Andre Gratian

MarketOverview 

Since early this month, I have mentioned that we were entering the weakest season of the year -- one which is often characterized by a correction, sometimes severe.  Below is a chart of the DJIA seasonality. 

The graph is an average of many years, and it is likely that each year will vary from this chart to some degree.  In fact, this year the market chose to make an all-time high a week ago Friday before starting what could be one of its deepest corrections since the January retracement concluded.  As you will see, SPX closed on an important trend line, and it could easily break through it next week. 

Besides seasonality, one of the reasons I felt we were on the edge of a correction was because of the recent action of IWM which tends to be a reliable early bird for important market corrections.  It peaked at an all-time high of 173 on 8/31, and has been caught in a mild decline ever since, appearing to be waiting for the DJIA and SPX to join it in a downtrend.  On Friday, it closed at a four-week low.