A lot of so-called futurists are out on statistical limbs once again, prediction five-digit highs for BTCs and much more. We also have the usual herd of newsletter writers (some claiming past work with government agencies) making lots of other projections about where markets will head next.
Around here, we tend to sit back and use a computational future approach to such problems. Not that a computational approach always works, but “rules of thumb” don’t show up in colloquial speech because they are wrong. There’s usually some truth to them.
So here we have two to consider: What’s ahead for the market this fall and what’s ahead for Bitcoins.
With regard to the market, we should be about to resume a large upward move that should last until August 21-24. This would put us in an ideal position to replay the 1929 market debacle suffered by Herbert Hoover, who we know in present day to have Donald Trump reprising the role in the Great Rhyme of History.
One of the problems with seeing a change of topology – because what we’re talking about here is a computational future – is that the really important data is hard to aggregate.
It’s not unlike the problem of trying to map brain function, over time, in order to fully comprehend the psychological topology of individual thought.
In the case of the brain, we know that at a given age, a person may have an IQ of 100. But despite this being the dead-center of the Gaussian distribution/Bell Curve of the IQ distribution of the general population (genpop) the problem is that there is much to be learned by digging deeper into how the person’s brain works.
One subject (score: 100) may have done exceptionally well in math and physics, logic, and chemistry, for example. At the same time, however, they may have sucked at English.
What I observed as a vocational college president, was that despite norming at average, people with “average” numbers in an overall sense were usually quite gifted in another.
A second subject (also score: 100) might have done miserably at math, no idea that f=ma, but may have aced the portions of the test dealing with language, art, English, and they might even remember what iambic pentameter is. Pity those who think metrical lines are made of blow…but I digress.
The point is we have two exceptional people and yet they come out rather average when measured by the currently inadequate sampling tools.
The stock market is much the same way. When you know where to look – and do so over time – certain well-formed inferences made be made.
The problem (and we get into this kind of realm on our Peoplenomics.com site now and then) is that it’s damn difficult to find repositories where you can actually download option prices over time.
Oh, sure, you can log into your trading platform and see what a September 2017 2400 put option cost as of the close Monday.
But how does that cost per contract compare with a week ago? Then last month? And so forth.
What many of us small-time players end up doing is keeping a spreadsheet that might look like this:
You can see what we’ve got here: When we keep an eye on the December 2400 S&P put options (*strikes) we see that they hit a low price on June 8th. They have been rising since. $7,010 to $7,788
This is not trivial: And 11 percent price change in less than a week always gets our attention while we’re laboriously spending afternoons punching quotes after the close into our various financial grimoires. (Open sesame! And the .xls open!)
There are likely to be concurrent indicators of a passing peak. And this gets us to the BTC pricing. Using another one of our computational tools from the Peoplenomics side, and eyeballing a first wave up (in Elliott terms) to the current process, we have a possible ending range to consider that looks like this:
This is why I am not in a big hurry to run out and throw money willy-nilly at Bitcoins or any other Crypto.
They should come down and as they do, another wave will become measurable (once a bottom is in) and we will then be able to predict a more accurate long-term high.
Which has what to do with today?
Well, I trust you saw my note Monday that I blew out of my short-side play in the market. When the Fed makes the rate announcement tomorrow, we will likely use the reaction.
I have to credit long time colleague Rick Ackerman ( http://www.rickackerman.com/lp/RicksPicks/ ) with observing that when the Fed FOMC makes it announcement, the market usually reacts in three stages.
Immediately, there is a small to medium move in the direction things will really go longer-term.
Then, there will be a pullback as the risk-averse rich – having seen the directional signal – will beat down prices and will make their entry some minutes after the FOMC statement.
Finally, the market gets going in the direction it will really go.
Armed with these simple tools, we could go on all morning about how the market could go down if the Fed fails to raise. Reason? That would admit that the economic data is not so strong, after all. On the other side, a raise means all it well, let’s all go pile in and run it up to my target levels in mid to late August.
That will set the stage for the collapse in the fall and that’s likely to come with a fall crisis in confidence that the Special Prosecutor of Donald Trump is likely to deliver.
The bigger rhyme of history, you see, if for Trump to reprise the role of Hoover for the rest of his term. Instead of the Bonus March Hoover suffered through, we will have the massive (left/democrat gov’t in exile orchestrated) benefits demonstrations this fall in DC.
And then the market will crash, realizing that with zero real growth, the economy will have arrived at the tail-end of the Roaring Twenties replay.
I’m not the only one saying this…and no, it doesn’t take oodles of computational horsepower to figure it out. Just a little hard work.
And example may be found in what Morningside-Hill capital released earlier this month: They revealed that 93% of all job “growth” since 2008 has been “made up” by the Labor Department’s CES Birth-Death Model, something we diligently cover when it comes out for precisely this reason.
SpottMoney has a dandy summary of how it lays out over here…and yes, SprottMoney is worth bookmarking which is more than I can say for the political media in this country.
On the other hand, “US recession remote in next 12 months: Deutsche Bank.” Will this turn into the analog of this famous gaffe:
“There may be a recession in stock prices, but not anything in the nature of a crash.” – Irving Fisher, Leading U.S. Economist, New York Times (Sept. 5, 1929)
So we shall watch, run the numbers and have more for Peoplenomics subscribers tomorrow.
Let me see: Hiring a bunch of democrat contributors and Hillary/Obama supporters…yeah, that’d be a reason.
We see that a Trump friend floats possibility of firing special counsel in Russian probe…but can he?
And then we have Jeff Sessions today on Russia and Comey – live stream may be here.
I don’t know about you, but seems to me we’re on the verge of renaming Washington D.C. something more appropriate:
Democrat Loaded 9th Circuit Bans Ban
I don’t know if you realize this, but 27 of the 43 judges of the 9th Circuit Court of Appeals were appointed by democrat presidents.
So it is less than surprising that the Trump Travel ban was turned down and will now head for the US Supreme Court.
In response, His Twitterness offered “Well, as predicted, the 9th Circuit did it again – Ruled against the TRAVEL BAN at such a dangerous time in the history of our country. S.C..”
Meantime, if (God forbid) we get an airliner blown out of the sky by terrorist elements that would be stopped by the proposed ban, will we see the media honestly report “Democrat immigration push kills first planeload?”
Hmmm…I sort of doubt it.
Producer Prices Flat
Hand me the press release ju jour, please?
The Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in April and edged down 0.1 percent in March. (See table A.) On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in May.
Within final demand in May, a 0.3-percent increase in the index for final demand services offset a 0.5-percent decline in prices for final demand goods.
Prices for final demand less foods, energy, and trade services fell 0.1 percent in May, the first decline since a similar 0.1-percent decrease in May 2016. For the 12 months ended May 2017, the index for final demand less foods, energy, and trade services moved up 2.1 percent.
Final demand services: Prices for final demand services rose 0.3 percent in May following a 0.4-percent advance in April. The May increase can be attributed to the index for final demand trade
services, which moved up 1.1 percent. (Trade indexes measure changes in margins received by
wholesalers and retailers.) In contrast, prices for final demand services less trade, transportation, and warehousing fell 0.1 percent, and the index for final demand transportation and warehousing services declined 0.5 percent.
Against this backdrop Dow futures are up 26 and NASDAQ futures are up 24-ish.
Turned out to be a good call (for now) to get out of the short. More on the use of the mid-channel trend line for Peoplenomics subscribers tomorrow.
Our usual fun and frivolity back here Thursday morning, although we may post the FOMC Statement tomorrow with a few remarks…
Off to a tooth cleaning. As Jumping Jack Flash puts it, “It’s a gas, gas…” has…