In Peoplenomics tomorrow morning, I’ll give a full run-down in our ChartPack section, but for now there is a building case that the Market Top came in on August 4th.
I have mentioned this previously. See the discussion on August 11th where we wondered “Is the Market Top Already In? ”
Now, with a declining trend channel setting up, we would expect the market to rally another 100 points (or less) on the Dow. At this point, we would “kiss the bottom of the ascending trend channel” and from there a decline could resume that might take the Dow down some hundreds of points.
I am not alone in my view.
Using a different set of tools, my friend Robin Landry up in Oklahoma () has been looking at the same kind of possibility. In his work (he only handles managed accounts) there’s a stopping point just above S&P 2,400-2,410, with another logical support zone down in the 2,324 range, and a big support well below the S&P 2,000 level.
In our work – which is presented as information/research only, not financial advice – we can see there has been a new downward trend setting up so tomorrow using our brainamp.xlsx spreadsheet, we will run through the first couple of directional move “landing zones.”
The first one isn’t too bad – and sets up the potential for a rally into the fall, not a collapse. The next larger view, however, goes more into the “make your financial hair stand on end” zone.
For this morning, there’s really very little in the way of financial news, except to note that the 10-year Treasury notes are still hanging around the 2.18% range. If the implied interest rate drops below 2.14% – as now seems possible on the charts – this could result in a serious dominos sequence.
First, if rates drop under 2.14% it opens a chartists case that we could go back to the 2016 interest rate low range around 1.37% (vis the 10Y).
If that happens, not only will my deflationist pal Jas Jain have to borrow my Scrooge McDuck suit to count his winnings from his long-term bond strategy but in addition, bondholders in general will be in a party mood. I have to ask Jas for an update on his outlook which so far has been more accurate than most advice from the Fed, Office of the Budget, or mainstream media reports.
This, in itself may not collapse the stock market: That’s more likely when the long-term rate declines are absolutely finished. But if you’re heading down – and eyeing the real possibility of negative rates in the US in 2018-2019, then the collapse of the stock market would likely be offset from that a year, or so, later.
Amidst all this, we would expect to see the rapid departure of Fed Chair Janet Yellen. The big economic conference up in Jackson Hole this weekend will no doubt pay extremely close attention to her scheduled Friday remarks.
I don’t often talk about our Aggregate Index approach on the “open” side of our operation, but the concept is simple enough: You can build a “Global Index” of any number of stock markets around the world and take a weekly picture of their closing for the week.
Since a lot of “hot money” comes off the table for the weekend, what remains as “placed bets” on the weekend is likely a much more stable indicator of sentiment than intraday operating results.
Once you get the concept of the weekly “Global” picture, it’s then simple enough to see two things: How the US is doing compared with the rest of the world is the first one.
The Global Index has a long-term average and in back-testing, I derived how long an averaging period to use. When applied as an “Oscillator” you get a very simple, no brains required (which helps me a lot!) indicator. When it is above the zero axis on the chart, it’s fine to be bullish and long the global market. When it’s under the zero axis, then look out below.
This indicator has been negative the past two weeks. And running out overnight number, although not as accurate and not really useable until we see how things look after the U.S. markets close Friday, we are still down with only a glimmer of hope that a rally of any consequence will evolve in the short-term.
Oh! The U.S. S&P that had been soaring above the “global pack” has now come down into the vicinity of the global average, although we still have additional downside to go.
So in the very short-term now, I would expect the market to rise today and tomorrow and then begin a give-back period going into the weekend.
We don’t know what “news” will drive things, but I do have a candidate and it’s not a pleasant one to consider…
The Pacific Fleet Stand Down
In case you’ve missed it, there’s a very good discussion to be found in our comments section between a former OOD on the one side, explaining that yes, Naval vessels do have watches posted on the one hand, and Oilman2 who points out that perhaps the two recent ship collisions are the result of head-down-in-phone behavior.
In Monday’s column, our military affairs contributor posited the notion that China may have a game-changing advancement in electronics and, if so, oh-oh – a whole table loaded with Global Assumptions is about to be overturned.
To me, this is an incredibly key story to watch. If there’s nothing to it, then market forces and the Trump Bump have a decent chance of continuing.
But suppose for a moment that both the Russians and the Chinese have evolved a system of electronics that will locally warp electromagnetic conditions and that a warp could be projected. If you read the Coping section this morning, you’ll see that’s the kind of thing outlined in my forthcoming book Dimensions Next Door, but back to point:
If there is a way to project electronic malfunctions or misfires, then the market would likely collapse. That’s because it’s an Article of Faith in the Church of the Almighty Dollar that America is the Chosen Land where the sons and daughter of Cash shall dwell with their printers, forever. (Amen.)
What do you think will happen if this assumption proves untrue?
Notice how the East China Sea island-builders are playing this: China: USS McCain Collision Shows US Naval Patrols Are Threat to Safety.
Logic would suggest (although that’s not proof) that if the problems of the McCain and the earlier ship collision were purely personnel issues, there would be no “standing down” of a whole ocean of naval vessels. But indeed what we read is US Navy to halt operations after USS McCain crash.
A simple, logical question: Do you stand down the entire Pacific Fleet over two collisions if it’s a personnel and training issue? My guess is no…
So while we read the ugly part of the aftermath – GRIM DISCOVERY Remains of Navy sailors found on USS McCain – we can see a definite pattern in the headlines that there is a NEW WEAPON in play.
Let’s roll some headlines, shall we?
Please note that both of these reports preceded the Japan collision by more than a month which you may recall as: Seven missing after US destroyer in collision with container ship.
What came almost a week before the April 19 “Shock” report was a series of Russian fighter jet passes over the U.S.S. Donald Cook. We were told there was a simple reason why the Cook didn’t respond: This is why the Navy didn’t shoot down Russian jets – Navy Times.
A little more digging reveals a Voltaire.net article from 2014 ( What spooked the USS Donald Cook so much in the Black Sea? ) that includes this pertinent detail:
“As the Russian jet approached the US vessel, the electronic device disabled all radars, control circuits, systems, information transmission, etc. on board the US destroyer. In other words, the all-powerful Aegis system, now hooked up – or about to be – with the defense systems installed on NATO’s most modern ships was shut down, as turning off the TV set with the remote control.”
What’s more, an article inincludes this claim:
“After the incident, the foreign media reported that “Donald Cook” was rushed into a port in Romania. There all the 27 members of the crew filed a letter of resignation. It seems that all 27 people have written that they are not going to risk their lives. This is indirectly confirmed by the Pentagon statement according to which the action demoralized the crew of the American ship.”
Behind all this is something indeed remarkable: A story of Magrav (magnetic gravitation) technology, supposedly invented by a “modern-day Tesla,” one Mehran Keshe, who you can read up on over here.
We note, at the meta level, that Keshe is of Iranian descent. Could this explain some oddities of U.S. relations with Iran? More Keshe background over here.
But is Keshe “real” or is he a foil for something else?
And a follow-up note from Warhammer:
Hacking into a radar system, while tricky, is definitely within the realm of the possible. Radar systems send out EM energy and then process the bounce-back waves to view returns on a screen or cathode ray tube. The EM returns bouncing back to the ‘dish,’ or radar antenna, are visualized thru the use of programmed computer processors, which have a type of code known as “firmware” embedded within them. These processors tie into targeting computers and perhaps even certain elements of a ship’s navigation/steering systems.
What if (BIG if) the Chinese developed a way to infiltrate or compromise the radar return data and ‘hack’ into the Fitzgerald or McCain radar system processors, thus corrupting/hijacking the processor firmware. From there, intruders might then be positioned to intelligently migrate over to the mission and navigation systems? Or, more plausibly, a successful hack may have simply generated erroneous return data, which resulted in radar returns falsely displaying nearby ship locations.
Still, visually spotting from the bridge and deck should have alerted the command crew of the two U.S. Ships that something was awry. Perhaps the commercial ships’ systems were similarly compromised, seriously compounding the safe separation at sea problem set.
As Mr. Spock might say – “fascinating!”
To be sure, there is a report that “Belgian court convicts Mehran Keshe and wife for fraud.” But even this becomes a bit contorted: Why would this story break in Ghana?
The question continue…but for now, we go back to watching an otherwise insignificant news day.
Meanwhile, the futures are point to Dow up 62 at the open.