I don’t make many claims of “wisdom” but more than 25 years ago, when I was finishing degree work (academic, not Masonic, lol) it vexed me no end that there was so much “painting of the tape” going on. One index would veer higher (or lower) while not much else changed.
In other words, there are so many indexes that if you only pick one (like the Dow Jones Industrials), you can be terribly misled. This morning, for example McDonalds is weighing down the Dow.
There are lots of reasons for this divergence issue: The S&P 500 index, for example, is broader. Including more companies makes for a statistically more defensible “n”.
But it goes deeper than that. The NASDAQ Composite is full of absolute gems of coming tech. Yet, because they have been so busy growing and may not meet the more-stringent NYSE listing requirements, what happens? They don’t get measured except in a tech index.
The failure to have this “wider view” of the markets became most apparent in the “tech wreck” following the spring 2000 market peak. You see, in the Dow, and even the S&P, the response was muted. But in the tech indices? Well, somewhere between $5 and $8-trillion dollars is hard to sweep under the accounting rug.
That’s what our work on the Peoplenomics website is based on: This simple notion that I had suggesting a more honest view of markets – long and short-term – could be constructed by picking a starting date (like 1/1/2000 which was mine) and then equally invest in each of several indices.
It didn’t matter what level a specific index was; just on your Day One you put a third of your assets into each of three. A quarter of your assets into four, or whatever you think is reasonable.
Then, you can take it a step further: I also built a “Global Index” based on more than half a dozen countries. Some were large – but some, like Australia – were included not so much because of size, but because of their resilience. Being a bit insulated from the madness (see Europe) or the runaway hype (see the US lately) and separate from Asia…
The result is a view that is more binary, and I believe more reliable if you play the US ADR’s, than trying to psych-out France, or Canada, for example. If gives you a sense, also, of which direction underlying money flows are moving. If the US market is up, while the rest of world is sagging, presumptively, money is “coming hither.” Flipped around, it’s going yon.
Longish discussion, but it’s what leads into the next two days of trading as being terribly critical to the fight between bulls and bears from market supremacy. That’s because in one Elliott Wave count, we could see a wave 1 up, a 2 down, and be ready to bust skyward. Yet, in an equally convincing alternate Elliott Universe, there’s a case that a 1 Down has happened, a 2 Up, a 3 (i) down, and today we resolve an end to the 3 (ii) up.
We also like trend channels – a lot. Go buy Gilbert Raff’s hardcover (*wish is was Kindlized!) “Trading the Regression Channel: Defining and Predicting Stock Price Trends.”
Without further delay, here’s how this morning starts:
Which Way Will It Break?
Oh, boy, that’s the billion dollar problem, ain’t it?
I wish I could tell you. But, no one can.
I can report that the Dow was showing +22 at 7:30 AM EDT today on my screen. But, when the market gets into this kind of position, there’s often – but not always – a “fake-out” move one way, or the other. Sure ‘nuf, then came the MacDonalds miss and Dow futures went negative.
I guess, if I was playing it like a casino (and it is a good analogy in many, many ways…) I’d say a minor rally at the open, maybe the day’s high coming about 25-minutes into the session. Then, for the next 45-minutes, the “big guns” would be picking out positions. After that, say around 10:45 AM, the market would begin to tip their hand. But the truth will likely be the close.
Again, though, as that little “peekaboo” move above the trend channel suggests, was that a “test of going higher?” Or, was it the Fed trying to dump money into markets knowing that there are models that – failing here – would have us getting into a serious 3 (iii) down and that wouldn’t complete (in some Elliott views) until a good bit lower than the Christmas Eve “slaughter of the elves” last year.
Sure makes getting up in the morning of interest, though. If the peekaboo high is broken for two days, then yeah, new all-time highs could be ahead. But, failing here, it’s the downside case, but even then there are alternate (“save the day”) cases, like the Fed pumping like mad – again.
So we shall see. For now, no more coffee is needed. A 100- point Dow rise going into the close argues much higher, while a 100 point Dow loss could be pointing much lower.
It’s so much like putting $100-bucks on a progressive slot spin at the Twin Arrow’s Casino up on I-40 outside Flagstaff, Arizona, that I can’t stand it.
Blame the News Flow
There’s one school of thought that argues the market is like a slow-learner when comes to reading the news. Sure, a major bombing, shooting, or overthrow somewhere and there’s an instant reaction. But, slow-motion, go nowhere stories (like the ongoing crooked sage of Pencil Neck’s “secret hearings” the dems inquisitors are holding) are hard to call. Essentially, the dems are trying to re-run the 2016 election – in secret – while republicans are too damn stupid, cowardly, or both to stand up for “Daylight Government.” RINO’s and fools, the whole lot of ’em.
With that bit of bile spilt, onto headlines, any of which the market could seize on and go somewhere.
Upside Stories First
Any of these sound like “movers” and “shakers”?
Trump calls for solidarity from GOP ahead of potentially damaging testimony. Whether he’ll get any is doubtful. DC is full of ass-covering cowards.
Harley-Davidson tops forecasts as international sales improve. But they always made a great ride and sometimes quality wins.
Samsung Joins Google and Amazon in Backing ‘Trapped Ion’ Quantum Computer Startup. But, if faster computers are just going to me more and faster clickbait and spam, tell me what’s the point? I still only compose at 100 WPM and DragoonSpeak still can’t follow much of what I say. (Neither can readers, thought…)
Procter & Gamble earnings, sales top estimates, shares jump. Is a cleaner and fuller America ahead?
And Oil rises on optimism about prospects for a U.S.-China deal. Remember, though, all that last go-round trade hype that turned into a nothing-burger?
Downside Stories Follow
The market. is no doubt talking the upside early, but let’s look at “downers in the wings.”
Let’s begin with the CNBC story “Long-term negative rates have ‘adverse consequences’ we don’t fully understand, says Jamie Dimon.” But, with all due respect to Dimon, we do know what global financial collapse will look like. 1933. Been thinking about it after another skim of Robert Kaplan’s book The Coming Anarchy: Shattering the Dreams of the Post Cold War. Peoplenomics.com subscribers will want to review it in advance of tomorrow’s report…
“This Holiday Season, Cyber Monday’s Popularity Could Turn Black Friday Blue, Survey Says.” Echo of slaughtered elves, is it?
Made hamburger: McDonalds missed expected earnings by a dime. Say, they wouldn’t be in the market for a hamburger-helper, would they? We’ll ketchup with them later, see if they’re still in a pickle…(OK, stop…enough already…)
Along the same lines, Fortune also says “As Recession Looms, Investors Look for Cash to Cushion the Fall.”
Turkish president meets Putin after threatening to “crush” Kurds in Syria. And here’s some optics for you: Russian Helicopters Land in Abandoned U.S. Base in Syria.
And Canada is now effectively leaderless (adding to rudderless) and Kid Trudolt is back, but without a majority. Canada wisens slowly, it seems. (Unlike our tossing-out of present participles for self-amusement.)
Somewhere in the Middle
Radian Announces New Home Price Index; Shows 7.9% Year-Over-Year Increase in Median Prices. If you own a home, great. If you don’t, it just got more out of reach.
And while Americans’ Financial Satisfaction: Index to be Released this Thursday, October 24, I already know the answer. We all want more – for less. Some parts of the news flow are semi-predictable.
And we still have the “best government money can buy” as Facebook and Amazon Set Lobbying Records as Washington Eyes Big Tech’s Business Practices.
Around the Ranch
Zeus the Cat is beside himself: There are two interlopers that are settling in to his home territory and he’s not sure how to handle it. The cat (formerly “Culvert Kitty”) has moved into the stairwell where there’s a hidey-hole he’s adopted. And an oldly marked female (who has a Joker-like face job) has moved to the 180-room deck.
Elaine’s trying to get them away from the house (the pea gravel unders the screen porch has become their waste disposal site…). I suggested she feed them south a ways. Houston was mentioned.
I’m trying to get Elaine to buy-in to myt naming idea: 3-Z’s: Zeus, Zork, and Zimba…(She shurgs and wanders off, shaking her head.)
I’m looking for a “hell of a deal” on a spectrum analyzer. Something like an HP-Agilent 3685A would be nice. But at half the typical $600 going price on eBay. Not necessarily for the time-bending experiments planned this fall, but it would be nice to have something that would do both audio and RF measurements. If you know of one on the cheap, you know who to write…
Leaves are starting to come down in significant number. Although we’ve got another day of early fall weather today (read: high around 75 which is perfect for toddies on the screen porch) reality comes later in the week with a high of 60, lower 40’s on the other end, and upwards of an inch of rain.
According to TylerTexasWeather.com, we’ve had 41.75 inches of rain so far this year. That compares with 20.82 inches in Seattle, if the calculator isn’t lying. (And its operator didn’t screw up.) We;ve already had more rain this year than an Average Seattle year (41″) and we have 2-1/3 wet month’s ahead.
Well, the Mickey D earnings have pressed futures down, so off to carby-load for another exciting day in the 70’s…age-wise.
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