Red Line Matters: But Is this a V or a II?

I explained this to you on Tuesday in the article “TRLM: The Red Line Matters” over here.

In that lil gem you will find this bit of advice:

“When the main Index (black line) crosses OVER the RED line, be LONG.  When the BLACK line crosses UNDER  the RED, be SHORT.”

(Continues below)\

Which is what makes Peoplenomics the best damn “keep your money and make some more” publication in existence at the $40 per year price-point.

Because here’s how the red line/black line relationship has changed this week – and as a “freebie” – I got up extra-early this morning and used today’s future’s price to project out through Friday…

The problem (to anyone with a nickel’s worth of brains and a few thousand of skin-in-the-game) is that you can see plain as day that the previous trend channel (those three descending lines) has been broken.

That’s OK – stocks will change directions of course – but the problem is what happens now?

As I see it, we have two cases to sort out.

One is that having completed the corrective move down, we will climb to new highs.  And that could take the S&P 500 up to, oh, say 2,750, or so, in coming months.

On the other hand, in the coming week, or so, we stand the possibility that we will fail to make new highs, and if THAT nightmare plugs in, then reality will sink in quickly.  In Elliott terms, the just exited trend channel will be a Wave 1 down, and what we are in now will be a Wave 2 bounce.

So that is your Thursday morning “gift.”

We told Peoplenomics readers yesterday what previous hurricanes have done, and yeah, verily, we’re going up the same path.

There are two things driving this bump:  First is that the Hurricane (bad as the rains were) has created a huge amount of “pent-up demand.”  This will lead to massive profits in the coming year, or three, in the housing and related stocks.

But the other thing is Trump’s talk about the Tax Cut Plan.

Yeah, sure, I know:  “What plan?”

For now, it’s a wet dream.  A Gloomberg article, we think, has it about right: “Trump’s Tax-Cut Bid Hits New Obstacle: Hurricane Harvey’s Costs.”

In the very short-term, we are wildly bullish up to the 80% retracement level from the all-time highs.  After that?  We may scamper back into cash with no notice or comment.  When you have titanic forces (Hurricanes versus Tax Cuts) it’s like the old “Anything Happens Day” with the Mickey Mouse Club.  Which, if you’re still asleep, was much more functional that what passes today for Congress.

At some point, insurance companies will need to begin to “dig deep” to pay off a bazillion dollars worth of claims.  When that happens, the end of one trend channel (the one we just embarked on going up) will come to an end and a new channel, downward, will begin.

For now, our delirious subscribers will recognized that one in due course:  When the red line is over the black line, it means the insurance checks are about to hit and hit and hit….

That’s when our economic future will be decided – insurance company liquefaction (which used to be liquification) and the primary agents of Dumbocracy played by the Fools on the Hill.

OK, that’s the first economic data point to be pondering and before we get to the Challenger job cut number, let me note that liquefaction/liquification is yet-another one of those “Mandela” words.

Since I’ve been hip-deep in writing my next book (nonfiction: Dimensions Next Door) you will want to spend some time looking at the phenomenon called “false memory” in Wikipedia:

“A false memory is the psychological phenomenon wherein a person recalls something that did not happen. False memory is often considered in legal cases regarding childhood sexual abuse.[1][2][3][4] This phenomenon was initially investigated by psychological pioneers Pierre Janet and Sigmund Freud. Freud wrote The Aetiology of Hysteria, where he discussed repressed memories of childhood sexual trauma in their relation to hysteria.[5] Elizabeth Loftus has, since her debuting research project in 1974,[6] been a lead researcher in memory recovery and false memories. False memory syndrome recognizes false memory as a prevalent part of one’s life in which it affects the person’s mentality and day-to-day life. False memory syndrome differs from false memory in that the syndrome is heavily influential in the orientation of a person’s life, while false memory can occur without this significant effect. The syndrome takes effect because the person believes the influential memory to be true.[7] However, its research is controversial and the syndrome is excluded from identification as a mental disorder and, therefore, is also excluded from the Diagnostic and Statistical Manual of Mental Disorders. False memory is an important part of psychological research because of the ties it has to a large number of mental disorders, such as PTSD.”

This manipulation of “false memory” by electromagnetic spectrum, is one of the later topics in the book which ties together everything from the Plain of Nazca to the Philadelphia Experiment, to UFO’s… 40,000 words and 105 footnoted sources into it, this is one of those books that even the writer can’t put it down.  Which makes taking a break to write a morning column something of an inconvenience, lol. But we need money so we gotta check futures and there’s the matter of coffee….

OK, Job Cuts: 33,825

Press release from Challenger, Gray, and Christmas, please?

“U.S.-based employers announced plans to cut payrolls by 33,825 in August, a 19.4 percent increase from the 28,307 recorded cuts announced in July, according to a report released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The August job-cut total is 5 percent higher than the same month last year, when 32,188 cuts were recorded. This month’s total marks the first increase in job cuts in the past five months of this year. Job cuts have declined each month of this year following the announcement of 43,310 payroll cuts in March.
So far this year, employers announced 289,132 planned job cuts, down 26.1 percent from the 391,288 cuts announced through the first eight months of 2016.”

Next, a fairytale:

“Personal income increased $65.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $44.7 billion (0.3 percent).”

Ure an Idiot!  That’s Great News!!!!”

Is it?

Americans spend more on Taxes than food and clothing combined.

And try this one as a capper, again from this morning’s BEA presser:

“Personal saving was $510.2 billion in July and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.5 percent…:”

Apparently, there’s enough Kool-Aid being passed around Wall Street: Dow Futures were up almost 60 when we looked.  And since we’re on the long side thanks to our trading model, here, you want grape or cherry flavor?

Journalistic Excellence

Not only does the Houston Chronicle do a damn fine job of covering the explosion at a chemical plant in NE Houston earlier this morning, but they have something else the NE-centric MSM haven’t figured:

Click over here and look at their graphics work: A series of slides that will give you an idea of how big the impact from Harvey would be if it were to have occurred in other places.

We expect this will be ripped by the MSM, but damn-fine enterprising on the part of the Houston Chronicle that deserves recognition.

What Happened to Time?

When I was a kid (over half a century ago) I would read Time Magazine cover to cover to figure out what was going on in the world and what it meant.

Today?  Not so much.  I’m still interested, but here’s the kind of stuff they’re putting out: The Internet Is Not Impressed With the All-Girl ‘Lord of the Flies’ Remake.

Still, they have some good stories like Democrats Say Citizens United Should Die. Here’s Why That Won’t Happen but it takes a lot of discernment in a high-noise world to figure out what matters and what Time it is you’re reading.

Dividing and Conquering the Former US

We had to go look up who the judge was when we read the Fox report ENFORCEMENT ON HOLD Federal judge blocks Texas’ new sanctuary city law.

Yep, a Bill Clinton appointee.

There may be some hope, though.  Maybe a few democrats are figuring out that internal collapse being pandered by the lefties in socialist media might not be such a joy-ride after all.

LOCK THEM UP Pelosi wants violent Antifa members in handcuffs.  Take a number, Nancy.

Gosh, I hate to cut it short, but there’s too much on the docket to sit around yabbing.

“Mor’on the morrow… “


Comments

Red Line Matters: But Is this a V or a II? — 17 Comments

  1. I don’t know you do realize that the Mickey mouse clubhouse teaches kids to work together, problem solving and getting the job done… The loons on the hill can’t decide sharmin or angel soft with a few Scott tissues in there..
    “Atsome point, insurance companies will need to begin to “dig deep” to pay off a bazillion dollars worth of claims”

    I don’t know.. there was a lot of contoversey at Katrina they were paying pennies on the dollar in Florida they just went bankrupt on the claims.. insurance companies hate to pay out.. disability policies should be written on four inch rolls of quilted soft paper.. I have as much faith in them as I do about the loons.. and donate to. Relief to help those in need.. except for the salvation army the rest are pretty much fake or only a very small portion goes to those needing the help..
    My niece thought FEMA only to discover here’s twenty good luck..

  2. Greetings George & the Urban Survival Fellowship,

    Having read Dream Over in 2015 (entertaining read, thanks) I am looking forward to to the new novel, sounds exciting!

    On to the more mundane: there is a report making it’s way around the web-o-sphere
    quoting Lord Rothschild of RIT Capital Partners:
    “..the period of monetary accomodation may well be coming to an end.”
    Various outlets are taking it to mean end of US QE’ing (izzat a word?),
    are they taking it out of context or is this a canary in the coal mine sorta thing?

    Thought you may want to see how *big* money plays – here’s the link to
    Half Yearly Financial Reoprt – June, 30 2017:
    http://www.ritcap.com/sites/default/files/245291%20RIT%20R%26A%20Interim%20WEB.PDF

    (Pg. 4) ..”We do not believe this is an appropriate time to add to risk. Share prices have in many cases risen to
    unprecedented levels at a time when economic growth is by no means assured. The S&P is selling at 25 times trailing 12 months’ earnings, compared to a long-term
    average of 15, while the adjusted Shiller price earnings ratio, which averages profits over 10 years, is approximately 30 times. The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving
    increasingly difficult to resolve.”..

    Thank you for all you do George, all the best to you & Ures’.

  3. Thank you for that chart today. I have only been charting up trend channels. I keep forgetting about the down channels. Markets go both ways & I have only been focusing on the up. Good thing we are in a bull market.

  4. In the TX disaster I think that there is a lesson for all preppers. Sometimes you’re lucky to leave with one bag of stuff. What happens to the years worth of TP and food or your firearms and ammo?

    What happens to all of your stocks?

    Start storing part of your preps at your bug out location maybe?

    As George has pointed out make sure you have all your important documents scanned onto a secure jump drive.

    Cash is always king. I bet some folks wish they had more cash on hand than TP and food.

    Always have enough cash so you can flee and spend some time in a motel or campground rather than a shelter.

    Make sure you have what you need to grab close at hand. I use lists and lists of lists.

  5. November 6th it goes down it really crashes but between now and November it’ll go down but no big crashes November 6th at crashes after that it’ll take 17 days before it’ll come back up which would be about 23rd then 8 days after that it’s going to have a hit-and-run it’s going to go way up and then come back down and you know usually have what 12 Days of Christmas it’s going to be 13 days of Christmas it’ll be going sideways then on the 10th of January it’ll become fresh that’s when you can breathe and things will start looking good
    So we’re looking for strigil days ahead

    • I know I’m no good at the stock market but back in about the year 2000. I was going to rent a building put 10 computers in there and hire 10 people to watch the news and punch in thousand-dollar bets and for those who use their own intuition which I found there are people who can do that then let them go at it and then go give them the $10,000 range but needless to say that never came about. Because if I had and been successful at it I probably would have broken all kinds of rules that the trading establishment would say no you can’t do that
      Anyway keep dreaming have a nice day and may all beings be lovingly fulfill so be it thoughts have wings

  6. Sadly – From what I have read – only one in six and or 2 in 10 which pencils to 16% to 20% have FLOOD Insurance and from where I’m standing which is a semi affluent area to very affluent areas to the east is very expensive real estate much of which is highly levered and owned largely by 40ish folks to retired – do not 1.) have the cashola or credit to rebuild and those that do will guess what? be selling stock if they wish to maintain their lifestyles. Those that don’t will do make shift repairs and continue on. The bigger issue down here is people appreciate a helping hand from .GOV but then the attitude is “Get the FU_k outta my state…. It’s hard for me to imagine the great rebuild I see more familys than ever permanently destroyed financially…….

  7. George, not get why Houston chemical plants don’t put their backup generators on 50′ platforms. Maybe say 120′ for nuke reactors. Especially after Fukushima. Especially since these 500 year floods are so common now. Don’t their fire departments step in? Mike.

    • Surely you can’t be that stupid Mike? Best Mike, derogatory Mike, troll and rude Mike, which is it today, stupid Mike? Why doesn’t Mike call them, why doesn’t Mike email them, oh, why doesn’t Mike go on down there and ask them himself? Mike? Mike? Mike???

    • The real problem is processes that require power over time to remain safe. Ideal reactors(chem or nuke) would be fail-safe without power. Nukes can be designed this way, but it’s expensive.

      Organic peroxides such as are becoming unstable at the plant near Houston are essential for modern life, and are known to become unstable at ambient temperatures. The process has to happen somewhere, and Houston is ground zero for chemical process/refinery operations in the USA. Putting generators high is a good idea, but they have to withstand 200+mph winds too, and the higher they go, the faster the winds are. Some things are inherently dangerous.

      On the other hand, the peroxides will burn or explode, and that will be the end of it, unlike the nuke plants, who’s reactors will keep on giving far beyond the life expectancy of the human race.

      • Peroxides are pyrophoric, they burn when they hit air. The tanks are refrigerated to keep them cool, like LNG. They expand in the heat, then ‘pop off’ the pressure relief valve, which vents up above the tank, then the peroxide vapors flare off.
        It sounds dangerous but has probably been designed to do this. I notice there were nine tanks, the news was excited about one of them flaring off, and surprise, no more news about them,
        No news IS good news.
        Big Al Brown, PE Chem Eng.

      • Oh and one other Data Point:
        One of the main coal fired Alabama Power Plants is on the banks of the Alabama River about 100 Ft above the water level.
        After Fukushima they had a rocket project where they moved their emergency generators (railroad diesel sized) AND their fuel tanks up the hill side to a seismically check out rocky spot about 200 ft higher.
        The Nuclear Plant in Decatur is the same make and model as the Fukushima reactors and is right on the bank of the Tennessee River. I do not know what prep the TVA has taken for that but hope they were watching.

    • There is a word which cannot be said in the same sentence as Fukushima. There is a word which cannot be said in the same sentence as Stuxnet.

  8. You play it safe and ignore the fact that the Deep State

    has installed machines on land, sea and air to

    manufacture, direct, and control storms.

    They even get patents on their

    terrorist equipment.

    Be safe, sleep.

  9. Tax cuts why not not break up monopolies of pharma and medical. Seems that would save more than tax cuts Irrespond government

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