We have previously explained some of our long wave economics perspectives – something we’ve been sharpening for what will be 20-years on this website come September of this year.
While most of our outlooks are held for the subscription-based www.peoplenomics.com site (link on menu) it still seems fair – at least now and then – to spill the beans on what we see coming.
There are two potential areas for the market to notch it’s all-time highs before heading down (in a major way) this fall or perhaps next spring. We are guided in this outlook by the historical data generated by the previous major recessions including 1929, 1987, and more recently the 2008 peak that fell down into the spring of 2009.
The key thing to know is that while it seems like a daunting task, we have two dates circled on the calendar for this summer.
The lighter circle arrives first and it come in the July 17th week’s trading window. Although not nearly as likely as the second circled date the following month, there are a few reasons that this might not be a bad period to consider getting out of most items and get your money somewhere really, really safe.
The second date – and this is the one circled in red – is August 24th.
My consigliere disagrees for reasons that would make a pretty interesting chapter in a textbook on unorthodox economics. It’s enough to say that he looks at August 21st as the much more likely high. So that Monday (and the rest of that week in August) would be a fine day to be “ducking and covering.
And that leads us to where the market is right now because we are (finally!) due to get a bit of a pullback at the open today. When I checked early this morning it was looking like -50, or thereabouts, for the Dow.
Subscribers get the twice weekly chart updates and there can be anywhere from 8 to 15 of them, depending on where our emphasis is for any particular week. Your indulgence is requested if we do crow quite loudly that our trading model has been long this market since…well, you have a look at our model output for yourself:
Which means what for our subscribers?
Well, if you had purchased the S&P when our model went long back in November…and taking a whole week to figure whether you believed the numbers or not, you might have purchased the S&P for 2,132.98.
As of the close of trading yesterday, the S&P had climbed to 2,436.10. That’s a 14,2% gain for our model.
What’s more important, however, is that the model was unlevered. That means if you played the move with a double-levered ETF (and there’s a number to pick from depending if you wanted to roll with the S&P, Dow, or Techs) the theoretical would have been a 28.4% return.
Or, for the seriously inclined the 3X bull ETF’s are up theoretically 42.6% although management fees, marks to market, and sectors and such will change actual results.
That said – and with two caveats (1: This is not trading advice and 2: Left field events are always possible) – our present outlook goes something like this:
In the very short term, it would not surprise us to see a small pullback in here. From an Elliott wave standpoint we are likely in the Wave V blow-off basis the 2009 lows. We did (i) of 5 of V from about April 13 to May 15.
Then we retraced for (ii) of 3 of V on May 17th. Remember those two fun (big) down days?
Since May 17th we have been in what is likely to be (iii) of 3 of V. In a tight zoom-in we might make out a (i) up, then a (ii) down, a (iii) up, and a (iv) down which led to the [possible] (v) of 3 of V. A nice pullback in here would place the required (iv) of 4 of V down where we’d like to see it, and then we ought to finish this summer rally with a (i)-(ii)-(iii)-(iv)-(v) which would be 5 of V somewhere around that late August date.
This doesn’t have to occur exactly as outlined here, but we shall see. It is never a back idea to “take a little money home” and “playing with House money” is the best way we can think of to have fun. Whether it’s in a real casino or in the stock market.
The main difference being that in our personal account. unlike machine and human games in the casinos of the world where House Limits ensure failure of money management systems, in the real world of stock and option investing, there are effectively no House Limits other than how much money you have.
That might seem like a small distinction, but it’s huge. And it’s why playing the stock market is so much more predictably profitable than going to a casino…
So that’s the sense of what’s ahead. All projections are subject to instant change but if you have a retirement account we are coming up to one of those occasional windows where erring on the side of caution (Treasuries and Savings Bonds) might make sense.
“Who takes cash and runs away, lives to play another day.” But let’s see how the August date works out.
And, as always, more tomorrow for our Peoplenomics.com subscribers who for some reason seem to be a pretty giddy lot, lately.
Fed Hype: The YUGE Market Problem
If you’re tracking, there have been a number of stories on the MSM about how the “Fed rate hike for June is ON…” or words to that effect.
And example is the NY Post article about how “Federal Reserve should hike rates despite weak jobs report.”
As you know, I have great respect for John Crudele’s work…and in this case, he is exactly right. The Fed SHOULD raise rates.
But as we told Peoplenomics readers back in April: “Are Federal Reserve Rate Hikes Over?”
The problem is the 10-year Treasury Note. It was trading today around 2.142%.
The fact is that if the Fed gets ahead of the market it will slam the euphoria down and then we get a fair-sized market decline. But will they do it? Doesn’t seem likely, but it’s all a wager until it happens.
Still, easy money is what’s powering the “Trump Miracle.” Janet might want to think 3-4 times over before pulling the plug on it with a rate hike.
GovLeaks: We Have a “Winner?”
A little too pat for our tastes, but our third-place story this morning is about Reality Leigh Winner, age 24, and popped by the Feds for allegedly leaking sensitive Russian computer ops information to several media outlets.
The Washington Post headlines The easy trail that led the feds to Reality Winner, alleged source of NSA leak. But we don’t think she’s the big one. She doesn’t have access to the rest of the Trump leaks.
So in this regard, we expect a lot of the MSM – especially those playing business model wars with the Real Estate Advocate in Chief who wants to save malls from etailers – will seize on the Winner story and hope the rest of the “Feds coming to arrest leakers” will just go away.
It won’t. And if it leads to influences orchestrated from a biggish mansion worth $8-mil?
Oh well, stuff happens.
Our .mil affairs expert, warhammer, puts it in context:
“The *alleged* perp, Ms. Reality Leigh Winner (great name), likely believed she was acting as a populist whistle blower. Unfortunately, whistle blowing laws only protect those who (a) detect or are aware of illegal or inhumane activities in the workplace, and (b) follow formal whistle blowing protocols to bring their accusations forward.
Ms. Winner became a loser when she printed out the classified information and then independently, outside of whistle blowing channels, mailed it all on her own to The Intercept. The Intercept, a news organization of sorts, can be credited for attempting to validate the information with the NSA, which was quickly able to track the document in question directly to Ms. Winner thru definitive ‘hard evidence’ means.
BOTTOM LINE: Ms. Winner signed a legal document explaining the repercussions for willingly or inadvertently disclosing classified information. Her political leanings unfortunately overrode her commitment to security guidelines, not to mention common sense, and will likely result in a felony conviction and jail time, despite her noble (in her mind) intentions. Oh yeah – she was a Bernie Sanders supporter and anti-Trumper to boot.”
Meantime, Ms Winner is looking like the democrat sacrificial pawn from here.
If Trump could just sit on his tweets for a few hours and roll with details rather than run a “breaking news” operation in addition to being POTUS maybe some of this stuff could be avoided.
Meantime, as we’ve been telling you that people are like physics in that for every action there is an equal and opposition reaction? Note the comments of Clay Higgins, a Congressman calls for Christian holy war on Islamic radicals: ‘Kill them all’.
Life on the Dole
Don’t like the term “workfare?” Lots of liberals don’t. The idea of working or having to seriously and in a documented way look for work or if none is found then volunteering at a legit place…well, that’s kind of anti–Marxist, ain’t it.
Yet it seems to root out the scammers. As evidenced in the report about how “13 Alabama counties saw 85 percent drop in food stamp participation after work requirements restarted.”
Tough love and a balanced budget? Or the mean old government?>