We held onto a short position with our personal Gambler’s Stake over the weekend. The core logic of which was the topic of the ChartPack on Peoplenomics.com. The main idea, though, came down to “playing the Gap” between the U.S. Aggregate Index Oscillator and the Global Oscillator.
You see, Friday, the Red (US line) screamed higher than the Rest of World [RoW[ blue line like this:
Look at the gap between the US (wildly bullish led by an inept financial press and sheep-shearing trading outfits) on the one hand and the more difficult to corral Global flow of “hot money” on the other.
The bet – as we strolled the Big Casino Friday was “Will this gap close with the U.S. falling badly Monday – in which case we hold short. Or, is the other side of the bet more appealing? In other words, will the gap close with a major U.S. decline?”
The Futures telegraphed a (possible) answer with the early (7 AM E) futures plugged in:
The red line seems ready to fall back in-line with Reality. Nice. (A soft kah=ching is heard from the speakers…)
What the Hell is Going On?
Well, understand that this is ALL ABOUT MONEY. Because? (A chorus line please!)“Everything is a Business Model!“
The comprehension problem (in order to harness some of that wild money) depends on your mental toolset. Really dumb people shouldn’t play this game. Just stay out of debt, work hard, keep your nose clean, and work on becoming a “Life-Long Learner.”
Some portion of people will pick up a dime store degree in finance. To at least one such person, ahem, that education frames today’s dart toss like this:
(That funny descending squiggle left and above the big 5 is our “Don’t let widows and orphans get bullish” indicator.”)
As I have often touted, Gilbert Raff’s book, Trading the Regression Channel: Defining and Predicting Stock Price Trends, is an outstanding adjunct to basic Elliott trading. Please notice, even with Friday’s manic move, we did not “bust the channel.”
Another great book – which at 63-bucks is one of my more expensive Kindle books – Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals.
Perception Frames Your Tools
While my personal choice for trading decisions would be hard to explain, since it’s part intra-day technical indicators, part Elliott, part Aggregate (hot money flows), part Channels, and so forth, it fits ME because that’s who I am deep down inside. An information aggregator. If the Aggregation says stay short, that’s what I do, although with far-from-perfect results.
Aggregation is not the ONLY path. Excellent results are claimed by Fractal traders, as well. Again, since I aggregate inputs, the latest from my fractal friend the Economic Fractalist is yet another pennyweight on the short/log scale:
“The nonlinear end of the 33/71 week March 2020 low x/2-2.5x fractal will end on Tuesday 1 March 2022 completing a 5/12/11 day three phase decay fractal series for the US SPX/Wilshire/NASDAQ/Russel composites; a 5/12/12 day three phase decay fractal series for the French CAC and German Dax, a 4/10/10 day three phase decay series for the Nikkei; a 7/17/18 day three phase decay fractal series for the Shanghai Composite; a 3/7/8 day decay series for the CRB, a 11/24/26 day three phase decay fractal series for the M-F trading cryptocurrencies/ cryptocurrency proxies and a 4/10/10 day caricatured three phase growth and decay series for gold.”
I know this is pretty intense (it is a Monday, after all). But our point is that there are many ways of “getting at Future” and – since it’s a voting process defined by the Many Worlds Interpretation of Quantum Mechanics – intuitively the “answer set” to “better trading results” is better comprehension of Future.
Now, let’s go work on that a bit.
War – Talk – War
There’s a cycle here.
Each of the sides plays it, the media follows, the markets then rally, or tumble based on the spin. Simply put, however, War is just Economics by Other Means, to bend-up von Clausewitz a bit.
Easiest way to sense the flow is to read both the Moscow Times and the government Ukraine Inform websites. Let’s do Ukraine’s view first:
- Prohibited bombs dropped on Okhtyrka, oil depot on fire (ukrinform.net)
- Russia has lost about 5,300 troops since beginning of Ukraine invasion – defense official (ukrinform.net)
On the Russian side:
- Russia Blocks Number of Independent and Ukrainian Media Outlets – The Moscow Times
- Kremlin Says Russia Will Ride Out Western Sanctions – The Moscow Times
With all this flying, we have absolutely zero expectations of genuine progress on the Belarus/Ukraine talks ongoing now. Anyone who believed the hype about “peace” going around Friday needs to have their head examined. Especially with Vlad Putin saying:
“I would now like to say something very important for those who may be tempted to interfere in these developments from the outside. No matter who tries to stand in our way or all the more so create threats for our country and our people, they must know that Russia will respond immediately, and the consequences will be such as you have never seen in your entire history. No matter how the events unfold, we are ready. All the necessary decisions in this regard have been taken. I hope that my words will be heard.”
Underscored in today’s AP story Putin puts nuclear forces on high alert, escalating tensions. One reason? Russia’s Stock Market Closes and Ruble Crashes as Sanctions Hit. Sanctions driving runs on supplies and such… Gov. Greg Abbott asks Texas retailers to take all Russian products off their shelves (dallasnews.com).
As we collect “voting on future” inputs, sure looks like it could be a down day today and a Turnaround Tuesday – ahead of the “buy the rumor” since Wednesday Jobs Week kicks off with the ADP data, Job Cuts follow Thursday, and then the officious numbers Friday.
Fresh Monday Data
Call Dial-a-Train-Wreck. Like so:
Advance International Trade in Goods
The international trade deficit was $107.6 billion in January, up $7.2 billion from $100.5 billion in December. Exports of goods for January were $154.8 billion, $2.8 billion less than December exports. Imports of goods for January were $262.5 billion, $4.4 billion more than December imports.
Advance Wholesale Inventories
Wholesale inventories for January, adjusted for seasonal variations and trading day differences, but not for price changes, were estimated at an end-of-month level of $798.2 billion, up 0.8 percent (±0.4 percent) from December 2021, and were up 17.8 percent (±1.4 percent) from January 2021.”
Stupidity Compounded? Well, a monthly trade deficit of $107,6 billion come out to…um… a 7.06 percent gain month over month. Which in turn compounds to 226.858 percent annualized. Someone might want to sell some more of that BS NFT art, huh, Joe?
And in Other…
In our “Shut up Bernie” and “Shut up AOC” file: Democratic Socialists blame US imperialism for Russian invasion of Ukraine (nypost.com)
Thanks in part to Biden’s open border disaster, Mexican Cartels Appear to Be Getting More Weapons From New Source (businessinsider.com)
Droughts in the Northern Hemi, but what about South? Rooftop rescues in Australia as tens of thousands evacuated from floods (phys.org) Climate is still averaging out as we figure it.
Ure’s Bigger Ponder du jour: If we can’t solve baseball, do you really think we can solve Eastern Europe? MLB Lockout: Time running out for baseball to reach new labor deal. Time is running out in Europe, too, as we figure it.
ATR: Gardening and Fish
Soil’s loaded, air leaks are staunched, and the square foot grids today will line up the Veggie Garden Room for planting. Just a few for trips of UPS, FedEx, and the Postal Service to round out finishing preps.
On mornings like this, songs go through my head. Like this one – theme from Hitchhiker’s Guide to the Galaxy. Dandy piece of music and lyrics:
“You may not share our intellect
Which might explain your disrespect
For all the natural wonders that
Grow around you
So long, so long and thanks
For all the fish
The world’s about to be destroyed
There’s no point getting all annoyed
Lie back and let the planet dissolve.
Feels like this movie needs to be watched tonight after dinner. Just in case. You know…thanks for all the fish.
Unless the UFOs show up, of course. But so far, they’re running late.
Dow futures down
382 463 at click-time. Are you herring me?
I figure when the U.S. figures out BTC is a sanctions workaround, that will be the death knell of the crypto bubble. Watch for it to happen…
Write when you get rich (or peace breaks out),