Fishing for a Bottom

Damn, Damn, and double-Damn.

I didn’t catch my fish yesterday.

Oh, yeah, this is still a column about my never-ending efforts to make a buck the “old fashioned” way – by taking money from other traders.  The term “fishing” though is exactly how to make money when markets are in decline and feeling along a possible bottom.

There is a fair chance the short to intermediate term bottom is at hand, too.  We have a couple of indicators pointing that way. 

For one, my brainamp.xls output has been pointing at:

    • Wave V Possibilities:
    • Minimum(1=5)2,009.05
    • Possible (1*1.5)1,985.24
    • Maybe (1* 1.618)1,979.63

    We hit right between the Minimum to complete this down and the possible.  Si fine.

    To put this in context this would be for the wave V or the larger IB which is part of the bloody streets of 2009.

    And what worm of lure?

    Well, I was looking to buy maybe 500 MIDU (triple geared up on the Mid Caps).  I’d been trying to “fish them” around 20.50, but then the phone rang.

    As it turns out, the phone call is much more interesting to followers of long wave economics than my trying to bottom-fish the MIDU’s to scalp enough profits to pay for the airplane annual and a valve problem on cylinder #3, I think the mechanic said.  That and the Lexus is going into the doctor’s office up at Sewell Lexus in Fort Worth for two new tires (and alignment) on the front, check up in general, and new brake pads and rotor turning.  That’s in case we fly instead of drive on vacation.  But there I go; off into the weeds again…

    With the MIDU almost within reach, my consigliere calls to answer a quick question about the Pig Iron Cycle.

    “Huh?”

    Yeah…the Pig Iron Cycle is – in his work – one of the more reliable cycles because it is variable and cyclical and can be traced all the way back to sword makers in Scandinavia long before America was a country with borders.  I’ll skip the far-right turn into a political discussion and continue by explaining that I’m building another tool for Peoplenomics readers which may be done in time for tomorrow’s column.

    I call it “Cyclator.xls.”  You can build one, too, if you’d like, but it’s a non-trivial concept.

    The short version of it is that if we have the lengths of multiple economic cycles,  such as the 53.9 year Kondratieff, or the 4-year Presidential, or the 11.3 year Juglar, then we should be able to pick a date when all these cycles seemed to line up…and then roll out (using a system or weightings) how the cycle would influence events in the future.

    It’s pretty clear that they all lined up at their minima around the beginning of the Great Depression.  But when would they all line up again?  That’s the reason for the spreadsheet.

    And that’s why my consigliere’s input pn repeating, irregular cycles (like the Pig Iron Cycle) was more important than fishing for the bottom of the MJIDUs.

    Like the “big one that got away” I figure there will be another chance to snag the MIDU’s for another run up.  But for now, we are looking at what could be a manic 200-point Dow run today, and that – with any luck fishing at all – should fill a few gaps this week and maybe next, come down, and complete a double-bottom.

    Peoplenomics.com subscribers will be thrilled with the chart tomorrow because at the present track, the US Aggregate Index will have stopped almost precisely at the (red) lower regression channel line from the 2009 low.

    As long as that holds, buying pullbacks will make some sense.  When comes time to retest the tentative bottom of Monday, I will take my phone off the hook.

    I’m not going to let another “big one” get away.

    Self-Referential Gibberish Finals

    These are held monthly and dominated by the US Bureau of Economic Analysis, which we rufer to under our breath as the US Department of If Things are so Good, Why Does It Hurt So Much?

    This morning’s enter:

    Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 1.1 percent in the first quarter of 2016, according to the “third” estimate released by the Bureau of Economic Analysis.

    In the fourth quarter of 2015, real GDP increased 1.4 percent. The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 0.8 percent. With the third estimate for the first quarter, the general picture of economic growth remains the same; exports increased more than previously estimated (see “Revisions” on page 2).

    The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, state and local government spending, and exports that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, and federal government spending.

    Imports, which are a subtraction in the calculation of GDP, decreased. The deceleration in real GDP in the first quarter primarily reflected a deceleration in PCE, a larger decrease in nonresidential fixed investment, and a downturn in federal government spending that were partly offset by upturns in state and local government spending and exports and an acceleration in residential fixed investment.

    Revisions?  Revisions did they say?

    The upward revision to the percent change in real GDP primarily reflected upward revisions to exports and to nonresidential fixed investment that were partly offset by a downward revision to PCE. For more information, see the Technical Note. For information on revisions, see “The Revisions to GDP, GDI, and Their Major Components.”

    Well, sure.  Revise exports up and it looks like imports are slowing in comparison, lol.  Yes, the US Department of If Things are so Good, Why Does It Hurt So Much? has come through once again.

    Not to bust their balls too badly, but Q1 2016 GDP is $16.5146 trillion not seasonally adjusted.  Same period in 2015 was $16.1773.

    2% growth…let’s all hear it for 2% growth!

    (Oh, wait:  M1 money supply was up 8.2%…so that really means 6% made up.  Oh, don’t bitch…just shut up and pretend like a good little droid, please.)

    Futures are still up 225 on the Dow side, so if you thought stock brokers were an exceptionally bright class of humans, they drink the Kool-Aid, too.  Fluoride is so nice, ain’t it?  Pernicious and delicious…right Droid?

    NY Times on Tea Leaves $  BREXIT

    Although I will often refer somewhat snidely to the gray lady, the New York Times, U gave to admit a certain admiration is developing over their coverage of BREXIT which has been very good, as I read it. 

    That’s the case again this morning in the guide to BREXIT and reading the tea leaves.

    They only miss ONE HUGE GLARING FACT and that will be explained in Saturday’s Peoplenomics after I get the spreadsheet off the desk.

    One Bad Idea Begets Another

    Has it dawned on President Useless and his counters in Mexico and Canada that THE EU IS FALLING APART?  Why no, now that you ask.  Seems they are not able to follow the headlines and make any correlations, what so ever.

    Thus, we fearlessly predict calls for the SON OF NAFTA – the emergent North American Union – will predictably be force-fed again to the formerly more free residents of Canada, Mexico and the USA.

    Yes, the illiteratti, power-grabbers that these Three Stooges (with apologies to Larry, Mo, and Curly for the slight)  will no doubt conclude is that if Europe can be a bad idea, we can do even worse in North America.  Watch and weep.

    I can her4e the hit-zo in Chief already:  “We need to open our borders to increase trade and commerce with our neighbors…”

    Code for “If the SupCo says we can’t make up immigration stuff, we’ll just Agree our way to open border and screw ya’ll.”  Bad ideas never go out of style, you see.  Which is why some of us here in The Republic are muttering TEXIT.

    When the leaders of all three countries get together, the smart move is to hold on to your Second (and remaining) Amendment rights and sit firmly on your wallet.  Another assault on American independence is in the works.  As if the crooked trade deals weren’t bad enough, already…

    Don’t get me started.

    Political Tuesday

    Hip boots on?

    The republicrats wi8ll be releasing a Benghazi report today that will be predictably critical of then SecState Hil.  But that’s to be expected.    The so-called moderate republicans (we call them traitors to Constitutional values) have ensured this will be a non even on the way to the Hill-slide to come.

    Paul Ryan is the first politician I’ve seen do a double endorsement:  For Trump verbally, for Obama’s heir Clinton by his ACTIONS.

    Comments

    Fishing for a Bottom — 14 Comments

    1. George, it surely seems as if you grew up with far different values than my own. According to my Daddy, the “old-fashioned” way to make a buck was to EARN IT with as much hard work and sweat as needed and not to do so by outwitting others through clever business dealings. In fact, that type of behavior was considered shameful and con artists who practiced it were generally denigrated by society. Such a life carried no pride then and still doesn’t today… in spite of the much celebrated, “Art of the Deal.”

    2. Although I don’t remember the site, it appears that about 54% of GDP growth was due to increases in Obamacare.

      Ya, save $2,500 a year.

    3. ” I can her4e the hit-zo in Chief already: “We need to open our borders to increase trade and commerce with our neighbors…” ”

      Did you catch China changing their 1-child policy to 2-children? That was a huge horn that says “our economy needs to be greased and more people is the way to do it. Horrible for sustainability and has been a marker in the overall world economy. It went into effect 1/1/2016 and on that date, the markets started tanking all the way to Feb 11, 2016. Basically, I feel that China was announcing that “we need more people to feed off of a larger economy so we don’t have a downturn any time soon.” But maintaining 5% or higher growth forever is not sustainable.

      My motto:
      “Any economy that requires constant growth in order to survive will eventually do neither.”

    4. Like I said before, “Im here for the comedy!

      QUOTE:
      “Things are so Good, Why Does It Hurt So Much?”

      BAHAHAHAHAHAHAHAA!

    5. Just my view based on extensive reading…… the money coming into the US from Europe to hid from NIRP is generally said to go into the largest cap equities because that is where the greatest stability is perceived. I’m waiting to play the same wave in the 500. I do follow Mary Armstrong on cycles as well. I’m sure the details are different but the outcome seems to be confirmingly similar.

      • I sold some OTM puts yesterday during the dip. That’s about as close to fishing that I’ve done. Almost all have made me money over the last year or so. The danger is when dealing with more volatile companies who have risks of crashing, so doing it with stable ones like PSX (a refiner – we all need gasoline) or similar equities that guys like Warren Buffet keep propped up are good.

      • Bank issued cashiers checks become stale dated after 90 days and cannot be cashed. They would have to be reissued and that usually comes with a fee.

    6. The DC Crats are trying to hold the coming eruption until after Hellory gets elected. In 17 is when the economy will get interesting that is if we do not get involved in a war

    7. George,
      How about notifying us about your trades either ahead-of-time or close to real-time? Yes I know you don’t offer “advice”.

      • Don’t want to answer for George, but I’d think that may not be the best idea. If some lurker here tries to match his trades and goes a bit overboard as well as doesn’t keep allocation of proportions the same, they could lose their shirt, and in the process decide to sue. As good as George is at this, he’s not perfect, so why open himself to litigation unnecessarily. The old adage that “no good deed goes unpunished” seems to fit with that idea. Sorry.

      • You don’t need to know what he is trading exactly – he is playing trends rather than chasing a particular industry or companies. If you haven’t subscribed, you ought to – more details there, and easily worth it.