Stock Futures were pointing to a weak open, earlier. Buoyed when better than expected import prices data hit. But this doesn’t mean the downside won’t open over the weekend. In fact, this weekend could be early.
As a result, we’re going to “sit this one out.”
An old investing axiom is “The Crowd is usually wrong.” We certainly hope it is this time, but consider the growing sense of negativity in passing headlines:
- To begin, this is a “Day of Rage” for Hamas. Israel warns more than 1 million people to evacuate northern Gaza.
We will not be surprised if Gaza simply ceases to be a country. Palestinians were causing problems back when Britain was ruling the region – long before establishment of the Israeli state. As the Wiki on this rolls: “The 1936–1939 Arab revolt in Palestine, later known as The Great Revolt (al-Thawra al- Kubra) or The Great Palestinian Revolt (Thawrat Filastin al-Kubra), was a popular nationalist uprising by Palestinian Arabs in Mandatory Palestine against the British administration of the Palestine Mandate, demanding Arab independence and the end of the policy of open-ended Jewish immigration and land purchases with the stated goal of establishing a “Jewish National Home”.
Want to go back further? 1929 Palestine riots – Wikipedia.
While Jews are understandably concerned about what terrorism has been planned for this period, the historical record teaches that Palestinians have had it out for Jews over historical time scales. Battles arise periodically, tensions ease when negotiations slow fighting, but it rinses and repeats.
The Contrarian wonders if this won’t happen again, here? Or, could it be the actual real-deal light up into the Gog-Magog showdown? A lot depends on how the rest of the Islamic world wants to play this. It’s a global decision.
From our standpoint, however, the financial world is in an Elliott and Trend Channel position where things could break either way. Get the break wrong and it could become spendy.
We like to sit back and watch. We like to make winning bets, only.
Let’s look at our Aggregate Index. This is an equal-dollar weighted meta index comprised of many indices. It arose because of the financial industry being misleading over investor losses when the Internet Bubble collapsed in 2001 (which may have had a 9/11 distraction to divert focus). It was repeated in form as the Housing Bubble collapse 2008-2009. And correct me if I’ve overlooked something, but in EITHER of these, did anyone go to jail? Madoff was a non-related swindle.
As you look into the following chart, you need some simple baseline concepts.
- Elliott Wave theory is markets move in 3 or 5 wave steps. And this is fractal, to the degree that there is a “yellow scale” (biggest of big waves) and under this are subordinate counts.
- Trend Channels offer the idea that going with the trend is where the real money is. Such that when markets decline, there are simple ways to draw channels in order to project trend into future.
With these in mind, consider…
On the far right, you can see we are “between trend channel limits.” Which is a hell of a spot to be in. We are in rally mode – or are we?
- The rally case depends on the idea that the large Yellow Scale 2 is not over. These if reason for this, because the area m market by yellow shall letter a-b-c-d-e is not really “pretty.”
- It is possible the a-b-c-d portion of the chart above will become (in near future) a zigzag (1-2, 1-2) for a larger “a” up. This would, in turn, convert the small yellow “e” (by the yellow 2) into a “c”.
- Following the possibility? IF this count is realized, it’s possible that the decline from the “e” high (July 31, 2023) to present, is only a larger “d” and the relabeled “e” to crest (yellow) 2 is still ahead. 2024?
This case is the one where future-history could line up some really big changes.
- If Israel completes “urban renewal” in Gaza and doesn’t take out Iranian nuclear facilities, then there is a path (though Hezbollah in Golan is a problem) where negotiations and ceasefires might come along.
- With Russia reminding the West that Germany is going to be cold (and economically imploding this winter due in part to their gas connector line being sabotaged this week), a slowing of hostilities in Ukraine might be found, though only for a very short-term. Months, say.
- China has failed to move in open “planning windows” against Taiwan, though we have a new moon this weekend and reasonable military weather over Formosa this weekend). So, if China can sit tight until elections in January in Taiwan, there will be more indication of how bloody and forceful that “reunification” might become.
One of the hardest lessons as a professional senior manager is learning the art of decision-making. Sometimes, you need to act fast – like get out of my way I have to call someone and get some things rolling, fast. Other times, though, you can put off making a decision and watch events. Time will, given a chance, make many decisions for us.
Which is why – as a contrarian, well experienced with watching time value of information and it’s real impact on the future – we are taking a breather this weekend.
Oh, and to wait out the Pattern Day Trader penalty box. I have already made 3-day trades this week. (Fancy footwork to breakeven as the market organized a rally which began to fade Thursday.) I can get “out of the box” by moving money from other accounts, but sometimes it’s good to just sit and wait. Like table stakes poker rather than Big Money poker.
Circumstances, chart indecisiveness, and too many people all riled up, seem like good reasons to knock off early. Enjoy a Friday the 13th glass of wine on the screen porch and burn some prime New Yurks’.
About Ex-Im Data
This is always a “glass half full, or empty” opportunity. I’ll show you what I mean based on this data:
“Prices for U.S. imports ticked up 0.1 percent in September following a 0.6-percent advance the previous month, the U.S. Bureau of Labor Statistics reported today. Higher fuel prices drove the September increase. U.S. export prices rose 0.7 percent in September, after advancing 1.1 percent in August.
The price index for U.S. imports increased 0.1 percent in September as higher fuel prices more than offset lower nonfuel prices. U.S. import prices last declined on a monthly basis in June, and advanced 0.9 percent in the third quarter of 2023. Despite the recent increases, prices for U.S. imports declined 1.7 percent for the year ended in September.
U.S. export prices rose 0.7 percent in September following a 1.1-percent increase in August. Higher prices for nonagricultural exports in September more than offset lower agricultural prices. Despite the recent
advances, prices for U.S. exports decreased 4.1 percent over the past year. The 12-month drop in September was the smallest over-the-year decline since February 2023.
Once you can see data as either good, or bad, you’re on the path to being a detached, more objective observer. Watch the crowd, not the data. Unless the crowd is watching it, in which case…
Flow of News
Lying Liberals Losing Luster. My consigliere made a dandy point the other day. “Notice the Left’s hand-wringings over a death of a few children in Ukraine? Yet where is their outrage when thousands are killed by their darlings in Gaza. They can’t come to terms with it.” Which is why they are useless, wasting so much energy on two sets of standards (theirs and anyone else’s). So now to the point. Some people are seeing through the bullshit as a result: Israeli billionaire Idan Ofer quits Harvard board in protest of student letter (nypost.com).
Sadly, the Right is wrong, again, too: House chaos stretches on after Scalise’s stunning withdrawal as speaker candidate. What’s next? We’re down to just hoping for a grown-up.
The intel community has to be reviewing notes on the recent Kim trip to Russia. Is NorK up to something? North Korea Raises the Specter of Nuclear Strike over US Aircraft Carrier’s Arrival in South Korea. Or, is this the defense industry “stirring things up” to get bigger contracts? Again, more information over time.
Fixing Energy issues or Election issues? One hint will be looking at how red and blue states fare as our favorite house plant is giving out more free money. Biden awards $7 billion for ‘clean hydrogen’ hubs… Honestly, we have no idea where the money for this will come from, since we are on the way to $34 trillion in debt as a country. If only we could capture hot air, eh?
Speaking of debt, if the Fed takes a pass on a rate hike at the end of the month, it could set off a major decline in markets. And there’s a chance: U.S. Treasury yields: investors weigh interest rate outlook (cnbc.com). If rates do come down, it means lower (to negative) growth. That will drop stock prices as assessments of future gains from earnings evaporate. But over on the bond side? Falling bond rates mean higher bond prices. Which could see maybe 20-percent of the market’s cap meandering off to bonds looking for higher returns. And yeah, my deflationist pal Jas Jain would be stunningly well off from his growing pile of long expiration put options.
Related: Mysterious rise in US Treasury yields perturbs markets isn’t at all mysterious. Rates are doing up because it compounds the increase in national debt when the fed raises. If housing prices don’t come down (and they are not – yet: Mortgage rates reach 23-year high. But Redfin says ‘all hope is not lost.’ Why? ). On a normal planet, when rates were raised, housing prices would have fallen. But pushing rates up means housing’s going up – and so the basics of circularity in hyperinflations is reveals. But not to everyone, apparently.
Crypto Madness may be fading. For one, in times of rising tensions, governments get really interested in what the “secret money” is buying in the way of uprisings. But more relevant to simpletons (like me) is that BTC still hasn’t been able to claw its way above $27-thousand again. This despite hype like Bitcoin’s (BTC) Unstoppable Rise: Will it Surpass Gold and Silver? (ethnews.com). Wanna check the price of BTCs at this time in 2021 and get back to us?
Our kind of “magazine” story: Court stays ruling against California ban on high-capacity clips – (latimes.com) Interesting way to sort your friends. Some of mine insist I use the term “magazine” out on the range. “But Newsweek is a magazine, and I’m helping your precision of thought… ” And about clips? Have anything to do with roaches?
Time to load up on New Zealand butter? Burp tax causes pre-poll stink with New Zealand farmers. They not only have a looney left, but in the outback of nowhere cow farts and climate farce plays on…
Around the Ranch: Droning On, BSP
A further reason I deliberately keep less than $25 000 in my “Lunch Money Gambling Account” is it keeps me from spending too much time in my chair. Which then leaves time for drone adventures and Big Secret Projects.
Last weekend, we explained cutting down a tree that got in the way of our flying last week. This weekend, we’re going into “being a landsman” a bit deeper as we show you how to cut up a downed tree in no time. Yes, a drone taken picture, of course!
Weekend after this, we’re going to begin the Big Secret Project. And a key part of it will be using the drone to put ham radio antennas much higher into trees than we’ve ever been able to do with climbing.
Weekend after that will be the Big Secret (HF antenna) Project.
Charts are the main point on Peoplenomics tomorrow. But next week’s report? I have never seen a reporter write up their experience actually going through a past life regression, but that’s one we can take off the bucket list now. 5,000 words worth, so to speak.
Have a great weekend (and no, I was not kidding about the wine and New York steaks today…)
Write when you get rich,