Welcome to the Monday morning edition of The Future Game.
There are multiple “angles” to seeing the Future. One way is “Numerics” – which we do a lot of around here. Stock prices, bonds, cryptos, projections, money supplies and all that represent the “craps game in the alley out back.” A kind of floating estimate of where the future will lead.
Where most people go astray using these measures, though, is the quite human tendency to look at significant “highs and lows” in the action. But, as I’ve discussed (in never-ending technical minutia) on the Peoplenomics site, it’s the change in trend where you make the money. If you can sense the “change point” a moment before whatever streak is running is about to, or has just changed, then you will kill markets.
There’s also The Schedule. Many items in life that strongly influence our estimates of the future are regular, recurrent news stories and statistics. Investors learn (over time) that when you know The Schedule, you can oftentimes spot (in advance) whether the play is “Buy the rumor, sell the news” or the other way around. Small edges matter in The Future Game.
Sometimes the very short-term streaks will drive, but other times the larger trends will overpower. Thus, it becomes an intelligent wager. But this is where we then go looking at News Flows as a secondary input reweighting our expectations of near Future.
Even this will often result in significant ambiguity, so it’s then that we turn up our personal listening posts (our PLP’s) and see “What’s going on with the herd” that might indicate a pending stampede in a certain direction into the future.
I know this is a longish way to wade into Monday morning. But the first takeaway is that “We all play the Future.”
The seasoned player (months from age 75) wakes up thankful for another day in the Game. And proceeds to “run the odds” – which is really what this website is all about, if you hadn’t figured that out, yet.
Market Futures were up slightly during our 5:15 AM Central market check. The Big Picture chart says “We topped in 2021 (Nov. 8) bottomed in 2022, rallied in 2023 (July 31) and we are due to slide down into a deep Wave 3 that could whack a third to a half off market pricing before Auld Lang Syne.
The trading platform offers three options today: A Big rally into the afternoon before hitting the inflection point that would ultimately collapse us through the lower trend support line and one down toward that Big Yellow 3 in the next several weeks.
There is a minor chance, though, the market could continue down and retest (or break lower) from the session lows of Friday. Which is why we didn’t carry a position over the weekend. Why shoulder risk you don’t need to?
Second Level Numerics
Beyond basic technical lines and wave counts, a further level of play is picking a similarly scaled market move and then see how much “entrainment” appears between the present market and your basis of comparison. We like 1929’s waveforms because they are quite (what was Elliott Middleton’s term?) animal spirits driven.
Something like a modest 1-3 hours (in the regular session) rally, followed by an horrific news event this afternoon, and we could be off to the (downside) races. Thus, second-level numerical comparisons open us up to a lot of inflection points we might not otherwise appreciate. Like this chart screams “We’re on the edge of the freaking abys, you moron!”
Couple this with being way under the 85-day Aggregate (meta) index moving average which is our long-term “Stay out from under the bus!” tool and you’ll see why caution runs. (This is not trading advice. But do consider it Big Transit Vehicles are Dangerous Shit to mess with tools.)
In our market model, based on modest waveform entrainment, this is the week things begin to go horribly wrong. Abys, Bus, sure, but where’s the straw that breaks the market’s back. (Except at the Economic Fractalist would not, sometimes such futures are self-arising based on the fractility of Universe – which is indisputable.)
The biggie framing the whole week on the domestic financial front is the fact of Job Week. Which kicks tomorrow at 10AM when the JOLTS report drops. Job Openings, Layoffs, Terminations, and Separations report.
After that (Wed.) here comes the ADP jobs report, Thursday we get the Challenger Job Cuts, and Friday the Official word from Labor.
What’s interesting, I think, is that we may begin to see some of the early recognition that a recession is here. But we have until the end of the month before the next Fed rate hike is expected. By then, we’re pretty sure they will have to pause (again) because by then the whole news arena will be blowing up and they likely won’t be able to raise in the face of economic calamity.
News as a Straw Search
What would it take to blow up the world? I mean WW3 or ELE level stuff? A number of candidates are out there. The Camel’s back.
The major one is the escalation of the war in Ukraine. Because the “next things in the inventory” are mainly naval. NATO has been in a pickle because Turkey has tried to keep Western militaries from occupying the Black Sea. Because there are just too many ways that does not end well. Yet, here we go: Suffocating pressure on Turkey to open the Straits: British and other NATO ground forces to enter Western Ukraine with aeronautical cover from the Middle Sea and Poland – WarNews247.
Toss in a handful of Russia reiterating what Putin has been saying all along (“Medvedev is clear: Russia will occupy all the original Russian territories in Ukraine!“) and that whole region over there begins to seem like it could flash any time.
And in the “A fish rots from its head” department: Biden vows to stand by Ukraine, despite budget fiasco – BBC News. No shutdown, but also no leadership on ending this mess.
Taiwan’s Only Marginally Better
When we look at the 1929 comparative waveform, we can almost make out a two-part slide in the next two or three weeks. Like bad news from one quarter and more (even more strategically important) from another.
As we alerted subscribers this weekend, a pending tropical storm off Taiwan could have saved their bacon this weekend, but next weekend? As reader Stephen2 posits:
“fwiw New Moon is Saturday (UTC) Oct 14 at 17:55 UTC, which is 3:55 AM, Sunday Oct 15 Taiwan time. Oct 16th is Monday.
China – Taiwan over the weekend during the New Moon?? From all reports China now has all of the elements in place, including the converted ferries which have been moved up from Southern China, in place.”
More to the point, China is obviously getting ready for the invasion sooner than later; China’s September incursions into Taiwan ADIZ up by 42% from August. Seems to us there’s an obvious trend to pay attention to, in there.
What will come as the shocker is if/when China does go into Taiwan, what the possible impacts on American trade will be. There are tons – literally – of advanced solid-state devices (and passives) that don’t come from anywhere else in the world.
Try eating a global supply chain collapse for breakfast, some morning.
Personal Listening Post
We have one other recurring theme (besides WW3) that has popped up in our personal contacts. The idea that we could see a major rise just ahead in Covid (new variant) outbreak. In fact, the head of our Houston bureau reported two relatives in Main have come down with it. (prayers, of course).
But it feels like there is progression of public concern worldwide on this again/ See ??Coronavirus Search Trends?? – Google Trends for more.
But our point is that when Japan is #1 in queries on this and Germany is #2, we should be able to keyword out what’s going on by putting in Covid, Japan, for example, or Germany. (As in COVID-19 variant BA.2.86 found in Germany)
Nobel Prizes are sold the same way as One-a-Day vitamins: Monday is Medicine, tomorrow is Physics, Wednesday the winners in Chemistry, Literature Thursday, and Friday we get Peace. Except, well, we won’t – not really. Come on, these people invented dynamite, after all. I have a long-running argument with myself over whether the Nobel Prize is sincere or just a big “rub our faces in it.” I could be swayed either way…
Me? Grouchy because this is the 74th year they have overlooked me?
There is – like all mornings – the constant drone of shit hitting the fan. But it’s at sufficient distance from all of us that we may not be splattered on, like with these other stories.
Remember Jim Carey’s classic delivery? The movie was The Mask and while reacting for the life-altering mask he does the big, toothy smile and says “It’s Show Time!” Here lately, that clip is replayed in a quiet corner of my brain. Triggered by stories like Donald Trump’s business fraud trial gets underway in New York.
Why, toss in that BTC is up into the low $28,000s and you have a good case for the early rally (at the show) to continue as forecast until the afternoon. But we won’t even think about making a bet in this pig of a market until after things have been open 15-minutes and we can get a better sense of things.
Future always gets here, just often not how we think it should.
Around the Ranch: Summer’s End
To us, summer has nothing to do with equinoxes, or any of that. To us, it’s all about temperatures (and the related power bills that follow).
Our first day post summer with a high of under 80, is set to show up Thursday (October 5). The last one before the Big Heat was May 21st. That’s 137-days of summer. Which (and this is weird) is very close to the length of the Murder Cycle – which by the way – should be delivering a fresh dose of gore sooner than we’d like.
About to click out and the premarket was weakening….
Write when you get rich,