The next couple of weeks could be pivotal for markets for any number of reasons. It’d be worth your time, though, to follow at least some of the data.
As we have told subscribers to our Peoplenomics.com site we have something of a cognitive conflict going on. It takes a bit of explaining, but it’s worth the effort, I think.
When you think back to the 1929 blow-off top, in chart terms it looks like a massive “Head and Shoulders” formation. There’s a left shoulder, big peak, then a right shoulder. Oh, and then the financial world was done until the 1950’s.
When we line up the bottom in 1920/21 with the 2009 bottom (when the Housing bubble burst) we are fast-approaching the tend of the right shoulder meaning financial destruction could be here around March 22.
That date isn’t just pulled “out of the air” since 55-days is a very common run-time between market highs and collapses.
Now put that thought aside for a sec. The problem is that we haven’t had as big a peak YET. And there’s a pretty good case that we still could have a blow-off into summer and maybe keep the financial system going until this time next year.
This argues the “right shoulder” case. And yes, the charts are on the subscriber side for both outcomes.
Here’s the problem we’re facing that’s a terrible “cognitive bother.”
If this week is a replay of the LEFT shoulder (the one arguing for a higher blow off high in coming months) this week should trade as follows:
Up today, down Tuesday, up Wednesday, Thursday, and Friday.
With the future’s looking positive (+170 on the Dow) the first day looks like a slam dunk for the optimists.
If we are in the RIGHT shoulder case (where the world ends sooner than latter…like in March….the week should trade like this:
Monday down, Tuesday up, Wednesday & Thursday down, and Friday should be up.
THIS IS NOT INVESTMENT ADVICE. But, what happens when you apply my odd Boolean view of the data, it says the alignment of up/downs is presently running 78.94% in harmony with the directional calls of the “we’re done in March” case. BUT the Bulls (expecting a blow-off up move, yet to come) can take comfort in that their case is right 57.89% of the time.
Visually (a whole different way of considering the data) and it’s pretty convincing that the Bulls have a prettier “picture.”
Still, Bulls have a tall order: Between now and March 15, or so, they need to add 75 points-per-session. Failing that, no new All-Time-High in time to reset the clock. And then…well….it won’t be pretty.
Bitcoin the Spoiler?
While all this number-crunching continues, there’s the question of whether the recent collapse of Bitcoin (to less than half its all-time high, wasn’t a kind of “speculative pressure-relief valve for stocks.”
I mean, seriously? Look how the shape of the curves matches up between the 1929 stock market and Bitcoin’s blow-off:
Obviously, it would be in ideal harmony for the collapse of Bitcoin to resume about the time the stock market turns to Jello, but that’s what get’s us up every morning: Trying to find those days when we can click into Casino Wall Street and scalp a few thousand in low-risk profits.
Even so, we still get it wrong because in a way it’s like trying to paint the Aurora Borealis accurately and in advance. We do have our losers. So for now, we continue in cash not wanting to put an apple on our heads and play William Tell.
After being up all night studying for my six-month blood test (an ordeal that requires fasting) I’m convince that occasional losses are a good thing in a perverse way.
No telling what my triglycerides would be given an unlimited prime rib and lobster. Getting it wrong now and then may actually save me.
For those unschooled in economic minutia, that’s the Chicago Fed National Activity Index which now goes like this:
The Chicago Fed National Activity Index (CFNAI) ticked down to +0.12 in January from +0.14 in December. Two of the four broad categories of indicators that make up the index decreased from December, and two of the four categories made negative contributions to the index in January. The index’s three-month moving average, CFNAI-MA3, decreased to +0.17 in January from +0.43 in December.
We might as well finish up the weekly calendar discussion at some point:
Durable Goods, International Trade, and advance Inventory data come tomorrow morning. (Since I’m fasting, I sure hope it comes with sausage, eggs, hash browns, toast, milk, and orange, and a cup of chai tea to finish…say, I’m not obsessing, and I?)
sausage – I mean data, we’ll do our usual second blast when the Case-Schiller, Standard &Poors, CoreLogic (and the pizza guy) Housing data. My sense (and some of this is thanks to front-line comments from reader Andy who’s suffering through the Seattle Housing Bubble) we should be ready to peak.
As we mentioned in Peoplenomics this weekend, when “us grays” were young, we could buy an average home for twice annual household income. Today that’s up to 6.1 times average annual income.
Why anyone in their right mind would pay those kind of prices is beyond me. But then, too, who said today’s young have even a clue as to what in their right mind is?
Wednesday GDP comes out. But here’s the slant on that: When the Fed is printing off money faster than needed (look up Modern Monetary Theory for details how this scam works) the nominal (headlines for idiots) number will probably be OK to great. But back out inflation and the money games.
I wonder if anyone has considered suing the G20 for racketeering?
Trends to Notice
Robotics, Vision and Motion Control Industries Set New Growth Records in 2017. They are coming for your job.
We need to tax machines based on the number of humans displaced, or we will end up with no tax revenue. Remember who said it first years ago!
Are supermassive black holes going to eat the universe? Apparently, I’m not the only one planning to break my fasting.
This may not seem like a big deal, but pay attention here:
This is downright scary. What it tells me is that a couple of near geniuses (Buffett and his bud Charlie Munger) can’t anything worth buying but their own stock.
Remember last week when I was telling you “Beware: Consumer Super-saturation“?
When Buffett’s buying his own paper instead of putting in American factories and industry…says to me time’s close to “up.”
And if you’re watching the military bulking-up (by everyone) around Korea, take note of these two items:
Everything’s a coincidence, right?
Analysis from .mil specialist warhammer:
“Rocket Man is no doubt pleased that his comrade Xi to the North will have his back for the foreseeable future, health and coup attempts permitting.
I wonder how all those progressive Western companies that so heavily invested in China feel about now? Tech giants spreading the gospel of social media and globally interconnected apps will be pumping out products manufactured by a budding totalitarian regime.
Allow me to put on a futurist hat and wargame a worst case scenario – I and many others already suspect that many processors and their embedded firmware manufactured by the Great Dragon State have been pre-programmed with nasty Trojans. How appropriate, should the western tech industry literally find themselves collectively screwed, bent over and held hostage to Fifty Shades of Emperor Xi.
I’ll bet the farm that SecDef Mattis is already thinking ten moves ahead on China’s next moves. Certain Chinese manufactured cell phones are already prohibited in the DoD and in Federal offices (hmmm, wonder why?)
Worse: Is the rise of Xi to power not totally unlike the rise of Hittler in 1933? Thus, one looking at historical rhymes might well ask: How does lebensraum translate into Mandarin?
Will Taiwan have the “Pole” position?
Moron the ‘morrow, so to speak.