A number of my colleagues have an ongoing discussion about whether a) News moves the markets or, alternatively B) The Markets “create news.” Today is a “working paper day” when there’s an opportunity to see the question answered – or not.
Around 10:45 AM EDT to the Friday close would be a grand time for “out of left field” news to move markets.
The timing springs from my work in “Aggregate Indices.” In other words, the broader your view of money sloshing around the financial system, the more accurate your outlook can be. There is (ultimately) only so much money out there.
This is why (for our www.peoplenomics.com subscribers) a twice weekly view of markets is not as useful as a week ending view. Especially when comes to “squeakers” like today. We advise an abundance of caution and patience:
Let me show you the problem:
This is how our Aggregate of the US market closed Wednesday. And yes, before the open Wednesday I cautioned PN subs that I really liked a +250 outcome for Wednesday since we still had upside room to get to the top of the trend line.
Sure as hell, we got it: +346 on the Dow. But that – along with other readings – lands us at the “problem child” at the end of the red arrow.
Using trend channel theory (or Regression Channels if you’ve read Trading the Regression Channel: Defining and Predicting Stock Price Trends by Gilbert Raff and understand there are other factors) we think “something’s gotta break. Like today or tomorrow.
You see, oftentimes, when you get to the top or bottom of a trend line – and arguably we are there right now – you will see a meaningful change in the market. The tide will either turn down here, or we will trade on higher.
What’s not clear is whether it will be a spontaneously arising breakout based on big news OR whether the market is (as my low-profile world expert on Elliott theory reminds me “The market will always make the wave counts. SOMETHING will be blamed because people have a hard time wrapping their heads around the strength of waves…
We don’t expect the outcome to be clear right at the open. As you zoom=in on a market view, the finer level of granularity offers the prospect of a bit more on the upside, simply due to “trading noise.” Study “Trading on Momentum: Advanced Techniques for High Percentage Day Trading” by Wolff, Schumacher, and Tappan if you’re serious about not being poor.
With more than 2-hours to the open, it looked like we could tack on another third of a percent. This would set us up for an upside breakout. Should this come along, we might be looking at the long wave economic future that holds hope for another year – maybe two – before things really hit the silk.
Just to make it clear, even a higher break today may not mean the skies turn blue and the birds sing until All Eternity. Often, a “false break” above a trend line can occur…It’s like SIDS for a breakout.
Assuming we see this 60-point Dow pop right at the open, and then things slide after the “opening/amateur hour” – and in a worst case, some “unsettling news” breaks later in the day, then the odds change as the markets arguably change at a natural inflection point where things could derail quickly.
Since we don’t offer investment advice, I won’t pretend to tell you which way things will break by the close today. But, we’ll be watching and looking at the wave structure today and Friday to see if there’s something to be learned. For now, I’m in cash – ready to dart wherever I think there’s some quick money to be made.
On the technical side, there was some very good news for the economy Wednesday: We have more jobs than people to fill them, for example. Well, that’s a stretch, because if you’re over 60, male, and so forth with nothing to market as an EEO marker, finding work isn’t all that easy. Even if you understand basic programming, this is a young people’s world – and we respect that, being app-haters as we are.
Wednesday’s Big improvement in the Balance of Trade was HUGE, but we have to point out that some stories – like this one – are beating the old paradigm. “China’s mountain of maturing debt puts a fear that nobody’s talking about.” Sure, China could implode the West by dumping. There’s no logic to it. Why, it’d be like a robber killing the victim before getting their wallet, stocks, bonds, car keys, lake house and mistress. In other words, not smart.
What people have missed is that if we really MAGA, then there is a path to deficit reduction (look up “earn-out”) and American Re-Invention can work. Don’t expect democrat politicians to admit this – nor the RINO’s for the most part as they’re too stupid to see it, as well.
Corporate taxes are down, jobs are plentiful, and there is a path to another 2-year leg up.
That’s why the news flow today is so critical. We break upward and while the markets can still collapse, the odds begin to swing to the upside.
Keep the news inputs hot. A critical market inflection point like this is a potential biggie. The monthly indicator (May closed lower than April) is still skeptical of too much upside.
Since the first trading week of the year (rounds to 25,296) the market hasn’t made much headway. But, we’re getting close. Hundred points?
There’s a scene in the movie Top Gun where one of the pilots says something like “Break right! Break right! I’m on his tail!” That’s the vibe of today.
CNBC reports “Buffett says economy is feeling strong: ‘If we’re in the sixth inning, we have our sluggers coming to bat’...” We’re not the only ones feeling it.
Such Buffeffett cheer sure doesn’t sound like a solid democrat, does it? Or, is he “talking his own book?” Time will tell…
On the slim chance that we do see a market-moving story? Look for who’s behind it. A downside break could be the old Clintonistas -Obamanista – Deep State in putting a thumb on the scales..
Alternatively, an upside break today and moving above the trend would be a massive win for Trump. The next test would be the old all–time Aggregate highs.
We take this stuff one-day-at-a-time, however. Like waking to a fresh puzzle to assemble each morning, when you see in a flash of insight how a whole bunch of pieces are going to fit, then it’s less stressful to put on a trade.
Like Zeus the Cat, napping in the shade of a roosting tree, we try to just keep cool and let the birds come to us.
Any “News-Pushers” Here?
With nuclear deal under threat, Iran shows off centrifuges. Only moves markets if Israel strikes.
President Trump’s tariffs have united his opponents at home and abroad. Give it a read; count the globalists.
Got to hand it to news orgs. What with ABC’s Michael Jackson “news” special monetizing the dead, and such, there’s a grand news way to sell ads being spun out there.
Today’s entry? NBC “Monetizing Melania.”
“Amid rumors, Melania Trump makes first public appearance in nearly a month. The appearance came hours after President Donald Trump tweeted criticism of the “unfair” and “vicious” media coverage of his wife..”
Retail Shrink is Shrinking
You know, like 12-ounce “pounds” of coffee, right?
All Of Which Explains