"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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This afternoon, after the markets regular closing, news came out that JP Morgan has suffered a $2 BILLION HIT in their trading division, apparently tied to wrong way bets on credit default swaps (what else of course).
Just last evening I posted a chart detailing the significance of the 1350 level in the S&P 500 index. The Morgan news has sent the index reeling and back down BELOW this level in the reopening. Note that each time the index has fallen below this level, it has managed to recover before the bell rings that marks the end of the day's trading. If we go into Friday and this index closes below 1350 to end the week, particularly if it actually manages to close below both 1350 and the lower red line near 1339, we could see the US equity markets plunge rather sharply the following week. Look at how the rising 100 day moving average has basically been holding this market up the last few days.
Technically a poor close below that average will get the attention of technically oriented chartists.
Stay tuned on this one as this sort of thing has the potential to send equity traders heading to the hills until the dust settles out. Morgan may not be the only one with problems.
