The rally that stopped us out after a modest bear side short Monday continued into the market close. And the hell of it is? It’s likely to continue today.
OK – fine. Rallies happen. And we did tell Peoplenomics subscribers on Saturday that:
“Our favored view is higher Monday and Tuesday with Fed errors (raising anyway) the likely outcome for Wednesday.:”
There may be a lot of other factors on the table this morning: Such as no banks tossing in the towel overnight. Or the pending democrat TV commercial shoot of a former president being arrested.
The main worry, though, is that our Trend channel work has suddenly clarified and if you look in the yellow circled area (lower right) of this chart, you’ll understand why.
As we have explained (how many times?) previously: Trend channels when used in concert with Elliott wave analysis can help you make money in the stock market. But it takes an hour or two per day. Frankly, many people prefer – as demonstrated by their actions – not to trade based on channels. Although we always recommend Gilbert Raff’s Trading the Regression Channel – if you can find a copy – as a useful tool in the battle for “someone else’s money.”
Proximate Causes of the Rally: There isn’t a “single” event in play here. The combination of reasons for this morning’s rally might include:
- Trump walk. (We’re now hearing arraignment will be next week sometime. We’re calling it “cuff and fluff.”)
- Xi’s plans with Moscow may be positive. Russia’s war on Ukraine latest: ‘Dear friends’ Putin and Xi meet again.
- No additional banks seem on the verge today.
- And Swing trading indicators could rally more.
Wave 2’s: Overloading Lifeboats
Every “wave” in Elliott analysis has its own “personality.” I like to think of Wave 2 as when “lifeboats get overloaded.” The most recent example is the combo tag-team of the Fed and FDIC who have waived their “magic wand of liquidity” and thus, everyone think the Lifeboats have worked.
Sadly, Wave 3’s have a personality that goes to the idea “Lifeboats be damned, the Ship is likely to sink anyway.”
The comes Wave 4. “See, we were right: We’re going to be rescued!”:
Wave 5 terminates with “No, actually, you’re going to die and your savings with you.”
This is not found in any economics book I’ve read. It’s a sort of composite of moods. But it brings us to a key point in both news as well as economic analysis.
Referential Layer Cakes
Humans self-organize in peculiar ways. Some make it about tribalism. And, on Mug-Day, yes, it may be that there is a tribe of bitter Orange-haters who are anxious to perp-walk someone once “of the Oval.”
But this tribe – the war tribe and the “make up money” tribe – is in a more, or less, constant state of war with the “free the [wage] slaves party. The one that likes minimal government and stands fast to the Organizing Principles enshrined in the Constitution. (Where we haven’t yet found the word “equity.”)
In addition to superficial – media fanned tribalism – there are professional tribes as well. I’ve always ended up in the senior managers, pilot, engineering and software-related tribes upon my disgusted departure from ambulance-chasing breaking news.
Stock Markets are a kind of High Tribal Gathering. Where a multiplicity of tribes battles things out while re-enacting the Titanic. Aided by the presently sitting Manchurian Pass-Through Conduit Operator. Who, in turn, has a high council in the Financial Hogwarts who have magic wands that drip “free money.”
Each of the tribes is referential to one another. Clown Schwab and the Reset Tribe play Dances with Davos, not realizing their history. The reason the Japanese never considered invading the American homeland in WW II is that we are too heavily armed.
Even on this topic (2A) we don’t see universal belief in founding Rules. For example, my buddy the Major is upset that in Washington state there’s another run at passing an (obviously unconstitutional) “assault ban” which ignores on of the hard rules of automatic weapons: Selective fire of a full-auto type. Ignorant people, many liberals having dodged military service, seem unable to comprehend such precision of thought. It’s foreign to their onboard referential logic.
By the way, no slur on avoiding killing. The republican tribe has sliders who did things like fly the domestic front with the National Guard. While the other (political tribe) features, for example, a selfie-taking riverboat vet. Frankly, we wouldn’t trust either.
Circling back to our long-lost point? The analysis of markets is as much a daily assessment of How Crazy the world is, what tribes are talking and then what tribes are walking. Only then do the dynamics come into sharp focus.
Our first take-out of the day is the market seems destined to bump the upper trend channel of the newly emergent “resumed decline” about the time the Fed announces rates tomorrow. After that, who knows. The Mickey Mouse Club “Anything Can Happen Day” was Wednesday. We think that will still apply.
“Run the News Compactor”
Remember the old TV show “You Asked for It“? Well, kinda like that, I suppose…. This was from a time when moving a 17-inch black and white television up a flight of stairs took two people to handle the weight. But people were happy with the novelty of it. And comparatively, it was not the planet wrecker the present lithium-powered world has become…
We assume you know the “International Criminal Court” is not a court in the usual sense, at all? It’s a U.N. kluge, largely a tool of NGOs and many of these have axes to grind. What’s more, when the UN was working this, seven countries that voted against the treaty were China, Iraq, Israel, Libya, Qatar, the U.S., and Yemen. You need to know all this, because Asian leader warns Putin warrant could spark nuclear war. Although the U.S. had pressed for the ICC’s creation from 1998, it’s a clear usurpation of U.S. law so it was never agreed-to by the US, either. Nor has Russia agreed to it. So, what we have is an NGO-driven pseudo-Court trying to flex muscles on behalf of Europe and small countries. It’s theater.
Which China is working to advantage: Xi’s trip to Russia: A boost for Putin as China pushes back against U.S. power.
War Crimes enforcement is “selective.” Wasn’t in World War II’s aftermath. But here’s an example of how the U.S. has a “logical layer cake” problem. Ethiopia slams US for ‘partisan’ war crime allegations. A little forensic accounting might help understand this one. Just as economics of the Dnieper-Donets petroleum reserve east of Kiev is highly explanatory, as well.
Land Grab Joe: Biden to declare two new national monuments covering more than 500K acres. Now, while we generally like conservation efforts, the problem with the Castner grab is it’s part of a a well-known illegal immigration route north of El Paso. There’s virtually zero value to this, other than a “Hispanic conservation area” which is bandied about. A gimme to a useful voting block ahead of 2024. We’ve been up on the lookout points in the area and have overflown if many times flying transcons in our plane. Only highlight is the Border Patrol Museum in the area. Kind of like locking up a gravel pit for future generations to enjoy. (Without guns for plinking, which is a traditional gravel pit use…)
Buying Biden? We have to wonder what the 2024 quid pro quo will be after Sloppy Joe vetoed a bill which would put ESG investing back in the box. Even democrats are furious: Joe Manchin blasts Biden’s ‘absolutely infuriating’ agenda after ESG veto. This means pension managers – who used to have purely fiduciary responsibilities – can sell something other than hard core investment returns to their stupidest of clients. Way to go, Sloppy Joe!
Tell us the “Safety of Crypto” fairytale, again? Crooks stole +$1.5M worth of Bitcoin from General Bytes ATMs. BTC, nevertheless was over $28,0o0 overnight. Crypto cons may be stupid, but at least they’re not broke. But give it time.
Involuntary Beta Testers take note: Microsoft’s blunders with new Windows 10 update are causing serious headaches | TechRadar
ATR: Lawn Patching, BP Tools
A couple of three agenda items here in the Outback of East Texas.
First up will be editing the first 4,500 words of tomorrow’s Peoplenomics report. Wherein Dream Riders and long-term investment sectors intersect.
Then it will be time to toss out re-seeding materials for the lawn.
Finally, I bought something called a “hand dynamometer” (grip training) because apparently, it’s a non-drug way to reduce blood pressure. You’ll want to read early front-end work on this at Twenty weeks of isometric handgrip home training to lower blood pressure in hypertensive older adults: a study protocol for a randomized controlled trial – PMC (nih.gov).
The second approach is controlled resistive breathing. Study: Consistent ‘Breath Training’ Lowers Blood Pressure (prevention.com).
After that, go watch this video (ZHealth):
OK, breathe out time…
Write when you get rich,