With Germany's opposition to the establishment of the Euro Bond to bail out bankrupt Euro-zone member countries, the stage is set for a cascade of sovereign debt defaults, which should further intensify European credit crunch and European bank run, which also set a stage for total market collapse, unless of course Germany change its stance, or unless the ECB is prepared to print as much Euros as needed to bail out banks and countries. If not Euro-zone will disintegrate, and Euro currency will just disappear.
The impact of European sovereign debt default will reverberate to the US, taking down and collapsing the US banking system with it, and likely the US dollar with it as well.
Unless there is a massive reversal in policy in regards to addressing the sovereign debt crisis in the Euro-zone, the market decline should continue to accelerate, and crash.
For Friday, key resistance is 2200.
- Below 2200 the downtrend should continue.
- A clear and sustained break above 2200 implies a bigger ABC pullback before it tanks again.
