Capitulation: Bears Giving Up Early?

One of our readers posted (in the Comment section) a report that expert Elliott Wave analyst Robert Prechter was throwing in the towel on this – right now – being the start of “The Big One.”  In his estimate, the Elliott structure suggests that collapse will not happen for another year…maybe two.

IF that report is accurate, and we’ll check with the Elliott Wave International people as the day goes on – there is a slim chance that bears may be giving up too early.

The reasons are simple…so we can run through them quickly.  NBut, you need to understand how our Aggregated Markets view works.

Let’s begin with the fact that investing in a single stock can be a very noisy (often gut-wrench) affair.

To reduce the daily ups and downs, funds were developed.  These take groups of stock so that when you invest in funds (at least in theory) the prices should be more predictable over time.

All of which is fine because while there are sector funds, there are also funds that trade whole indices – like the S&P 500 or the Russell 2000.  Great way to trade.

Now the problem with the US market – which doesn’t show up when you look solely at the US for your trading – is that the Rest of World is also actively trading.  So, while the US market looks like it’s on the verge of going on to new highs, when we look at the whole global picture over the last 20-years, we can see there is a Global Elliott count that is just now “ripe” for a Global decline.

Here’s one of the charts we used in yesterday’s Peoplenomics column for subscribers:

As you can see, the Global Aggregate is in a nearly perfect position to begin collapse this spring.  It will take a lot of upside Global action in order to negate the bearish prospects here.  Look for the G-20 to slosh mnoney all around to keep up appearances.

The second factor that has me wondering if the bears who capitulate early aren’t making a mistake is the effect of monetary inflation.

Just about every solid analyst I know says, in so many words “George, inflation has nothing to do with wave counts.”?

I’m almost convinced they are right and Ure is wrong, but we can not ignore the reality of the Fed artificially holding rates where they want them and, in addition, money is being shoveled into the system under the concept of Modern Monetary Theory in such vast quantities as to scare the living daylights out of me.

When the market hit its previous all-time high at 25,006.28 back on October 3, the US Money Supply data showed much less money sloshing about.$14.2465 trillion at Seasonally Adjusted M2.

As of the latest reporting period, April 9, 2018, that had swollen to $14.4579-trillion.  So, there is 1.48 percent money money about.

If we take the October aggregate (the 25,006.29) and multiply that times the M2 grown, we come up with near 25,377 for an Aggregate target.  The highest we got on this rally was Tuesday’s Aggregate close of 25,088.75.

Yes, absolutely, under an “inflation doesn’t matter” analysis, throwing in the towel makes sense.  But, to us, the idea is that “money matters” – and especially-so if it’s part of an implementation of MMT (Modern Monetary Theory).

We know some other things, as well.

We know – despite the inability of the Mainstream Media to understand how to report economic  stories, choosing to parrot nonsensical news releases instead,of the honest data.  We particularly decried the fact the number of persons employed in America was 156,949,000 in February but was down 201,000 to 156,949,000 in  the March data.

Yet this decline in the absolute numerical decline in employed persons was lied-over as an “increase!”  This is not to say there were not some bright spots, but the double-counting of jobs due to the “gig economy” swells some numbers and that kind of thinking is both illusory and delusional.

I’m NOT saying that the market will collapse…But, I am not prepared until we close significantly higher than 7-months back when we were hitting highs.

Friday, September 21, 2018 our Aggregate closed the week at 24,935.71.  That’s before any adjustment for 1.48% inflation Based on  the futures early today, we were looking at today’s open being around  24.998.87.

Which is why we focused in Tuesday’s column on the possibility of a “double top.”  Those tend to end badly for perma-bulls and premature-bears.

I’m willing to put on my bull suit and get out of cash, but not until the weekly close is in.

See the Reuters story: Fed done raising rates; cut by end-2020 growing more likely: Reuters poll.

President Biden?

Joe Biden holds an 8-point lead over Donald Trump in a shocking poll being bandied about this morning.

How credible is a MorningConsult/Politico poll, anyway? With a year and a half – and then some – to elections, this looks to us,  (to recycle a quote a president near you) “total bullsh*t.”

But it fills up up column inches in the fish wrappers, huh?

Let’s Monetize Everything Dept.

See the story in the NY Times this morning “Cannabis, Marijuana, Weed, Pot? Just Call It a Job Machine.” Got the munchies just reading the story…  But, how much job growth claimed by the Trumpers is from “budding new industries?”

More Substantially?

Durable Goods are up in data just released:

durable goods chart

That should keep the market from falling too far.  But, tomorrow we get GDP and that’s always fun.

On the Radar:

Media or phone-driven crazies?  Americans Are Some of the Most Stressed-Out People in the World, a New Global Survey Says..  Not just here, though: World sadder and angrier than ever before, study finds.

Word that KFC debuts ‘Chickendales’ dancers, dessert biscuits for Mother’s Day has us wondering why the me-me’s aren’t screaming about sexual whatevering…I can just hear Elaine now:  “A 20-piece bucket for the old man and I’ll take a side of thighs…

I’ve hidden the car keys.

Speaking of cars and things that “light up your life” One in 7 Washington State drivers with children in the car recently used marijuana.

Some Personal Woo-Woo

Odd dream overnight about a seriously overweight gangster/fat-cat/politician who was having lunch when I walked into a restaurant and sat down across the aisle down one table and facing the door.

The capo with him as a body guard.comes over and says “Boss wants a word.”

I get up, walk over to the table.  “I don’ts like youse lookin at me while I eats.”

“Nothing personal.  Just every since I was a kid, I always faced the door no one can sneak up on me,” I explained.  I went back and had a good lunch.

There was more to it, but after a vivid dream like this one, we’re just waiting for the lunch picture of a mobster/politician with a body guard to hit the wires… odd looking future ahead, indeed.

Moron the morrow!

28 thoughts on “Capitulation: Bears Giving Up Early?”

  1. Your dream reminded me of what happened to me last weekend…
    Last Saturday, after the KC Hamfest, I went to a Subway that was close by. I was the only one in the restaurant. I sat down facing the door, when this kid walks in and sits across from me. I’m hungry , he said, and I don’t have any money. So, I pull out my wallet and gave the kid $8 dollars. He kept sitting there. I said “why don’t you get some food”. He said that Burger King is cheaper, and kept sitting. I finally got up to leave, went outside to my pickup, and unlocked my door, got in, and he’s over there yanking on the passenger door….When he saw that I wasn’t going to unlock his side, he runs over to my side, but I quickly closed my door, and locked it. It was the middle of the day….glad it wasn’t at night.

    • Ralph… I am one to extend a hand up to..
      Those in true need on the average never ask for help. They are the ones digging in the trash and usuly will give you some excuse like it’s an experiment or I wanted to see how they did it..abused women ..oh I fell the kid through his toy etc

      I did at one time help the ones asking then ran into a woman that was looking for help. Her mother was dying she was a refugee and needed to get home to see her. I was born without enamel on my teeth.. the whole first set had to be surgically removed and my second set crumble..needless to say I had bad teeth. I saved a nickle out of every hours wages and collected returnable pop bottles.. I was just about ready to have the down payment to start the work done and then she came with the story of her dying mother..one of the nurses realized I was going to fund this trip home..and she pulled me aside and told me this was a ploy to get money. I didn’t help and had the badly needed dental work started.
      Since that time I only give from a distance or like with the ones that we let live with us.. I know their situation before I help.
      A young man sitting down is basically forcing you to offer. I would have said something I’m sorry but I don’t have any money would you like half of mine. If he took you up on the offer then I’d go up to have them split the meal and replace then order him a sandwich.
      I am glad you made it out of the situation safely.

    • Ralph, as soon as you gave him money he saw you as a target. Just tell him, no money, goodbye. If he doesn’t move, call the cops. These people are a__holes.

  2. George, I’ve been reading you and others for 20+ years now. I appreciate your efforts to provide a wealth of ways to look at the world’s and the USA’s financial picture and wonder how much data you are using has any value?

    No self respecting conservative would ever answer any phone survey from any source; phone, email, internet, Facebook, etc.. Ergo, no survey suggesting Biden is above Trump in any poll looking 2 years in the future has any validity. Bull**** has real value in the yard, but none in polling.

    The same with US Supply Money figures. There have been many stories of double books in government agencies, especially in the Defense Industries. Since most US dollars are maintained in computer systems, how can anyone state how much money is sloshing aroung, even when you don’t count the non-dollars in the derivitives markets?

    I’m sure every reader of Urban Survival understands how manipulated the gold and silver price is and when these values are dicussed, I can’t find a single source that suggests that ANY price stated for the real value of physical GOLD or SILVER has any real world validity if everything were known about all the facts behind the curtain.

    So many unknowns and if’s and maybe’s and Who the Hell Knows! Thanks for your efforts.

  3. Hi, George,

    Reading about MMT has been very interesting. I need to read even more about it to improve my comprehension of it. If government debt sits upon a balance sheet, where inflation is stagnate and interest rates are at zero or even below, what is happening to the debt? Does it really do or affect anything? If governments ignore the debt because inflation is not a current factor and then print or borrow more money, how is debt accounted for when one looks at the balance sheet? Does any of this effect the economy? In the very short term, maybe not much that is noticeable in a negative manner. It might even make the economy appear to flourish and be strong, which is explained as a political bent rather than a debt consideration. However, in the long term, I think that it might place the economy on par with a precarious house of cards, where a natural disaster or a declaration of war could greatly affect it or even bring it down. I am not real sure. So, I can understand your alarm, as you are far-sighted.

    • Hi Nancy…
      I don’t know about the MMT but I truly believe in the power of sincere prayer.

      I put everything in our heavenly father’s hands. Every time I was in true need. ( mind you being one to handle the situation. I never let anyone know what our personal situation was either. I just prayed about it)
      The help I needed at that point in time would just show up out of the strangest places..from sources you wouldn’t ever expect. Those times I considered woo woo events.
      I always pray about the ones I lend a hand to as well..

      • Looking out of the box,

        Thanks for sharing your wisdom. I had my heart ripped out of my chest in February, and the aftermath in March was like roping a tornado, as I dealt with a mountain of paperwork and government agencies. Thank God for my great friends. The only way I was able to stand and face the tasks at hand was my faith in God. So, I completely understand what you wrote.

      • Nancy thank you for understanding my faith. You would be surprise how many razz me about my deep faith. They think I should not believe in a god.. but from what I’ve personally experienced and the totally odd and strange answers that came to me in the way they did, while I was at the very bottom. Are totally unbelievable. Yet very true says there is a God and an angel watching over you.
        The times I got myself in the situations I was in was when I had taken the reins of my life instead of letting him be the driver of my fate. Yet When I put my life in his hands everything worked out.
        An example was several years ago. I was sick and we ended up without an income for a year. At our lowest a guy I hadn’t seen since he was riding a tricycle sent me a letter ( in his fifties) he said you aren’t going to believe this but I keep dreaming about you and when I pray I keep getting the thought you need help. And in there was a badly needed check for just enough..not more than or less than but just what was badly needed.
        So young lady take it from an old man that’s been on the bottom more than you will ever know. He is listening. We don’t understand the why, but in time his meaning will be obvious. Put your life and troubles in his hands to guide.

  4. George

    “phone-driven crazies?”

    Yesterday I watched a technical review of the Samsung folding smart phone on EEVblog via youtube.

    It seems that early reviewers of the phone are tearing off the top layer of the screen thinking it is protective shipping layer like earlier smart phones.

    No, it’s actually part of the screen. When removed it screws up the 15 or so layer stack of active components of the screen.

    Their are other issues with the screens. They were tested for over 100,000 folds on testing jigs that ran night and day in Samsung’s testing labs prior to going into production. However that does not tests real life use.

    The layers of the screens can creep against each other and cause lots of problems. Bulges and voids can be introduced by this creeping. When that happens the screens fail.

    Samsung spent many years developing this technology but there was a desire to be first to market. That probably caused them to cut some corners and not give a bunch of phones to the general public for real world testing.

    I hope they are successful in the end as this technology will have many uses!

  5. “As you can see, the Global Aggregate is in a nearly perfect position to begin collapse this spring. ”

    “The second factor that has me wondering if the bears who capitulate early aren’t making a mistake is the effect of monetary inflation.”

    I have to consider the real world factor.. for the average household since that is just what I have an average income household…

    https://www.theguardian.com/business/2018/may/20/oil-prices-rising-but-set-to-fall-in-2019

    https://www.brookings.edu/wp-content/uploads/2016/08/where_does_all_the_money_go.pdf

    https://money.cnn.com/2017/06/16/real_estate/rising-home-costs-affordability-harvard/index.html

    https://www.forbes.com/sites/michaelkay/2017/06/27/what-to-do-when-your-bills-exceed-your-income/#5caa1dd82895

    https://www.bls.gov/news.release/cesan.nr0.htm

    A short time ago.. gas prices at the pump were declining.. giving the average wage earner household another hundred to two hundred a month to spend on things..

    https://www.cbpp.org/sites/default/files/atoms/files/4-30-13tax.pdf

    Not to mention an overall cut in the good samaritan programs..

    https://www.americanprogress.org/issues/early-childhood/reports/2018/04/10/449262/trump-plan-cut-benefit-programs-threatens-children/

    https://www.marketwatch.com/story/the-hidden-ways-rising-health-care-costs-affect-you-2018-10-10

    Now.. I don’t have a thing wrong with the good samaritan programs.. I think a simple overhaul is needed.. like if an employer with high profit margins has the higher number of employee’s on benefit programs then they should have a higher tax rate.. ( boy that will start an arguement.) but I remember applying for a job with a fortune five hundred company.. at the end of the interview and the job offer.. the interviewer said.. ” you know you will be able to qualify for food stamps..” I said.. did you know that that isn’t a benefit and left..I think big businesses use those programs to enhance their portfolios.. where in years past they accepted a smaller profit and looked after their employee families. that is why today we have one in three and from what I have read will be one in two on social programs very soon.

    with the increases of fuel to get back and forth to work along with the increased costs of daily living expenses can only do one thing.. you can’t spend more than what you can make. eventually you will top off and interest on the debts you inquired while plastic playing will take over forcing you down the rabbit hole.
    we are at that point here now.. along with a new campaign season fast approaching.. can only be seen by myself as a tool to focus the attention on certain candidates for the presidency and congress..
    necessary living sources should never have been deregulated..in my opinion and tariffs should have been implemented on countries not purchasing goods and companies outsourcing manufacturing and services…

    a two hundred dollar a month cut in income here is two hundred dollars a month we cannot buy goods and services. there is no where else to go but down in the near future.

    “Its production costs vary across countries. The marginal cost (the cost of producing an additional barrel of oil) is lowest in Saudi Arabia at US$8.98 per barrel; the highest in the U.K. at US$44.33. In Canada, it’s $26.24.”

  6. G – I willing to bet dollars to doughnuts U argue with the GPS directions while driving/flying. Crash does not do double tops, think that is more horse-hockey nonesense. The trend is always your friend…”Buy the Dips – Sell the Rips” is still the best game town, unless of course you R long the commodity BBQ spread – Long Whole Hogs,Long Live Cattle/Short Bean Complex. The Bandicoot is liking Silver and Gold at these levels as well. WAR trade is winning so adding to that ticket. Market wants to go higher, and globally looks as though things are starting to re-ignite..
    Slow Joe, Crazy Berndog, Kamala i’m taking your guns Harris, Corey no really Im not a rumpwrangler Booker, Joe I’m not a racist,Im gay Buttigeig – surely the demonrats can find/run someone with more than half a brain.
    Speaking of halfwits how do U think Brennan, Comey, and Clapper are going to look wearing orange jumpsuits, imagine the Hildabeast will look like a big giant scary carved pumpkin.

    • ORANGE will be the ‘IN’ color for 2019…….as many of the ‘in crowd’ don their ‘orange suits’ and vacation on the Island paradise of Cuba…. all inclusive… in the confines of GITMO…….Bon Voyage…….scumbags and traitors….

  7. Is it just me or are we in the geriatric phase of politics? Trump is an anomaly. He isn’t a politician in the normal since of career politician like Bernie and Biden. So he doesn’t count.

    What do we have out there from the Dems? Sanders is 79, Bloomberg is 78, Biden is 77, Warren is 71, Harris is 56 and has no chance, O’Ruorke is a young 48 but is a loser in his own state and Buttigieg is a young 38 and he hasn’t ever won outside his own town. None of the last three have a chance in hell of winning the Dem nomination. I am sure that most of the people are running for a position in an administration if the Dems happen to beat Trump.

    Trump has a way of labeling his opponents in a way that sticks to them, even if you don’t like his approach. Everyone thinks Crazy Bernie, Sleepy Joe, Pocahontas is never leaving Warren and so on. You would think with age comes wisdom. Not so from the Dems. They have taken a hard turn to socialism/communism. It has never in history worked out for the people, only the people who are in charge.

    This political season will be interesting to watch with the two candidates for the presidency being well into their 70’s and one could be 80 if Crazy Bernie wins. 80!!!

    • I hate to say it, but Mugabe was 93(I think) before he resigned under orders from the military. People age at different rates, but the dictator types hang on. Every one of the dem hopefuls are pushing their demands and requirements on to regular people.

  8. FWIW, creepy Joe Biden was picked by Obama as impeachment protection. Even dems that I know were terrified back then of having a “president biden”. I see nothing in him that’s presidential and he has plenty of dirt in plain sight. Yes, compared to some others on that loony fringe, he might seem a bit mainstream, but he’s really nothing of the sort. He is a serious political insider though. I really don’t trust the one poll that put him ahead – it just seems like yet more fake nooz.

    I suppose we’ll all find out in a couple of years.

    • I’m not buying that poll. Biden 8 points ahead? What about his quid-pro-quo that won his son a board seat on Ukraine’s largest oil company? I smell need for a “special prosecutor”. Hey, I hear Mueller’s out of work….

  9. I think I remember seeing an excerpt from a mystical ancient text which when translated read “The cosmic balloon don’t pop ’til the last holdout celestial bear rolls over”. Are you suggesting the next-to-last bear just rolled?

  10. A 20 piece bucket with a side of thighs huh !! LOL. Wow is Elaine ever tolerant !! Most would be miffed by that one.

    • Nope Bruno. Remember a while back that video I posted. The Bear scene from the revenant? Dude was aiming his gun in the wrong direction and the Bear came to maul him from behind. Very important. Oh that dude survived, but not at great cost to him.

      I see lots of people pointed in a direction, lost in the woods. Wondering. or is that wandering?

      Im mindful of the scene in that movie. Very mindful.

  11. “As you can see, the Global Aggregate is in a nearly perfect position to begin collapse this spring. It will take a lot of upside Global action in order to negate the bearish prospects here. Look for the G-20 to slosh mnoney all around to keep up appearances.”

    I use the Russell 2000 with a 200/20-day SMA for my interpretation, and I’ve arrived at the same conclusion ;-). Though, FXI, RUSL, and DAX are bullish, it all can change in a heartbeat!!

    My point is: Stocks go up, the value of YOUR money goes down; Unfortunately more and faster than ever!!

    Nothing to cheer about, IMHO. Am I the only one seeing this????????????

  12. Prechter and his advice are not good ways to make money. Have known him and followed his stuff for many years. Basically trash for investing. Great writer though.

    • Elliott waves always provide precise 20-20 hindsight. Using them alone for decision making on events which are yet to be is risky. Prechter’s research is usually very good, and can give insights, even if a lot of his timing projections are usually too far off to be of practical value. The man does do his homework.

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