The mortgage mess that you are reading about is bad. Very, very bad. But it will not derail this rally just yet. I liken it to when the subprime mess began and you were told that it was “contained”.

The legal mortgage structure/ownership issue will clog up the foreclosure process for a year until legislation will have to be passed to protect the banks and their minions. In the meantime, house prices will stagnate and then plummet because you will not be able to transfer a property. That will be the bottom of the housing market.

This issue has not derailed the markets yet, but they will be the blame for the post-election “correction” and this action will last well into next year. Just get ready for it…

“The most effective stimulus is rising stock prices, not government spending”. Alan Greenspan, September 26, 2010.

When Greeny said this a few Sundays ago, it was obvious that the current “powers that be” were about to take a page from the Maestro who got them into this mess in the first place. He had been in this place before and was able to successfully navigate up, up and away from it each and every time. But when he knew the pyramid was way off balance, he stepped out and away. You must admit, his timing was perfection.

The Jawbonig by the FED and the execution of lowering long-term rates through Treasury buying has served to add more liquidity to the liquidity trap that we are building for ourselves. But that won’t stop the delirium of Wall Streeters who “know” that buying commodities and everything else is the answer.

Forget about the mortgage mess for a minute and think about how this is done. As we already know, the Algo’s are first-line programmed to follow the DXY. When it drops, the Dollar carry trade grows. Add to it that the Japanese are giving away free money and you get more rocket fuel. Bless those Central Bankers and those liquidity-providing computers!

As we have forecast, we will rally to test the yearly highs. The speed in which this is happening is beginning to quicken. We will get close or make a marginal high. Then all those smart folks who sold everything for the safety of bonds will feel the need for greed.

As of right now, considering all the really horrible fundamentals, there is little–short of nuclear war or an oil supply disruption–that can derail the test of the highs. The run in gold and other commodities is semi-parabolic now and the performance anxiety of the remaining market participants is intense.

Our march towards “burning the hedges” is almost complete. Another few weeks and we will be there. Don’t exit just yet, but prepare your sell tickets…

Our last post on copper on these pages was at the tip of a contracting triangle near $2.75. It is up over 35% since then–along with many other commodities.

It looks like now is the time to be careful…

 CREATECOIN IS MORE THAN JUST GREAT MARKET CALLS…

YOU WANT STOCKS? WE GOT STOCKS…

QEII is a beautiful steamship owned by the fabulous Cunard Line, right? Well, whatever it is, here is my SPX forecast for next week:

We are now oversold on the hourly chart, if you can believe that. There is also a pretty negative divergence almost fully formed in the daily chart.

So, we will get through the brick wall of 1150 early next week. It will get the “juices flowing” as we’ll be above Dow 11k and the media will be going crazy talking about green shoots and shit.

But then, after we seem to blow through 1160, we fail and plunge. Not a great plunge, mind you, but rather a pullback to the SPX 1125 area. It will seem scary, but don’t be because that will be the opportunity to buy for option expiration and the pre-election rally.

After that we could have another extended consolidation as we move from the low-to-the-mid-1100’s in the SPX. Then should come a test of the yearly highs, but let’s take one step at a time.