We are looking forward to a decent rally in stocks at the open this morning. In fact, up a couple of hundred points isn’t out of the range.
We have seen a pretty good recovery in the global picture: The Asian markets were trying to turn around. Exception: Japan down 2.3% Friday, didn’t trade Monday. In Europe this morning things are up 1.2 to 1.6% and a similar gain – call it 1.5% – would bounce the Dow up 350, or so, today.
There is just a mess on the news front, so we are tentatively looking at today and tomorrow as a good time to “sell the news” coming later in the week.
Among the headline worries:
Wednesday both retail sales and consumer prices will be released by the government. This might clarify where the bond market herd might stampede next.
By the same token, there will be some forward-looking data this week, as well. For instance: Treasury Budget this afternoon, small business outlook tomorrow, producer prices Thursday…though most of it is terribly boring stuff.
HOWEVER there are a couple of calendar notes of sizeable importance.
One is that this is options expiration week. Thjird
Friday of the month. Which means index options will settle on Thursday’s close, so I’m expecting a solid bounce from the last couple of weeks of decline until that window. Look for a “running of the shorts” in order NOT to pay off on cheap put options.
But then, going back to cash may be a “feel good” move…we’ll look at the slope of things in a day or three.
A three-day weekend ahead is just ahead, too, and while we always enjoy some time away from the keyboards and monitors (gives us time to make things), there many other factors weighing.
As we pointed out to Peoplenomics subscribers Saturday, the presence of large, massed forces of China AND Russia on their respective borders with North Korea are a major concern. How to read it? One school of thought is that they are in place to ensure that Kid Korea doesn’t go off half-cocked during the Olympics. The other school of thought is they’re on hand to “take his back” when he does something dumb. Either way, put that on the worry list.
Second item on the worrywart’s list is the situation in Syria. An Israel jet was shot down over the weekend, and the Israeli’s are making it clear to Iran today “You want to go for it…let’s go…“
While the markets ought to be up early this week, there’s that OTHER big event with a clock running in the background.
While the market will likely try to “run the shorts” ahead of options this week, there is still a circle on our calendar for March 22. That’s because the normal length of time from a market peak (like Sept. 3, 1929) to the market crash (wiki the details) is often-enough in the range of 55-days that we’re not planning to be playing in the middle of that freeway. Looks to us like a good way to get hurt.
So, if there is a major market meltdown ahead, what would be the best way to play it? I get this question several times a day lately.
To be sure, the “normal” ETF’s that are triple geared, seem safe enough for now. But what may have had a hand in the recent declines was the ETF was that gearing the volatility index (V IX) and the main one was called the XIV.
We had warned subscribers about the “clay feet” of ETFs several months ago when I explained that you can’t operate a casino offering both long and short players a 3X leverage because at either an upward – or downward – extreme, the casino goes broke.
That’s what happened last week in a sense, so we strongly recommend deep study of How XIV and SVXY Went Off the Rails and Took the Market With Them.
The good news, which we pieced out mid-session Friday in our own accounts, was that a hell of a snap-back rally is due the first part of this week. With futures up more than 250 when I looked, that one seems to be “in the bag.”
Less clear is where we go next week, so just a heads up: Peoplenomics may post tomorrow instead of Wednesday because of the long-term tactical problem outlined in the Saturday report.
You may get a kick out of this: Working title of the report is “Occam’s Spreadsheet” for reasons that will become apparent.
Is there other stuff going on?
Sure…but with nothing new on the docket that would hurst Schiffty and the Schumerviks that requires liberal pals of funds to drive their bad news off the front page, we think the snapback rally this week ought to be a marvel to behold. My last batch of upside true believing was “UDOW Executed @ $79.3195.” It was trading $89.59 in the extended hours session when I looked.
THIS IS NOT A RECOMMENDATION. We don’t offer financial advice, but I do write about what I really trade. Sadly, not all my Friday UDOW was at the genius-level price. Most of it was $84.6452. Still, it should be lunch money.
Still, was I gleeful to read “Futures up more than 1 percent after worst week in two years?” D’uh.
I wrote a spreadsheet for Peoplenomics users which is on the Master Index page. It’s called brainamp.xls. To open it, the password is on the page, too.
You might want to build one of these for yourself if you’re not a subscriber because I find it really, really useful as hell.
Essentially, Elliott wave says when the market makes a wave 1 down and then a 2 up, there are reasonable ranges for the following waves (3,4, and 5). This spreadsheet (no warranties, yours mileage may vary) let’s you plug in the first wave and then it takes a stab and where the whole dog and pony show will end up.
So let’s look at the all time high to the Friday low in the S&P 500: The spreadsheet tells me the first leg down was 340.18 (I used the close on all-time-high day and the intersession low Friday if Ure wondering).
My version of the spreadsheet is a bit more detailed but in terms of how far we COULD OR MIGHT bounce, basis the S&P 500, I’m looking at my spreadsheet and seeing this:
Based on how strong markets are today, we could hit that first Fibonacci level today or tomorrow.
Being a full-blooded coward. these are SOME of the zones where I might “get off the bus.” But, I can’t emphasize this enough: I DON’T GIVE FINANCIAL ADVICE. I do share my own thinking and some of my own trades. But you’d have to be nuts to try and trade like me…I have big swings up AND DOWN.
Though Peoplenomics, people says, if very interesting in a sick horror show kind of way.
Bye-Bye Warming Nonsense?
Oh-oh. Time for Al Gore to polish up the resume?
Live Science is headlining that the possibility of massive SOLAR COOLING will begin to be sorted out in 2020. Meantime, WHO has been telling you WHAT and for HOW LONG despite much derision from the peeps?
And In Other News
What? Talking about making money is market’s isn’t newsy enough?
I don’t know WHY you read the news, but I do it for money-making ideas. Who care about Hollywood and crap?
So how about these stories?
Does it really matter “How Jamie Anderson, America’s Olympic Hippie, Won Snowboarding Gold?” I’d say the Winter Olympics have been going downhill, but that would be a comment of momentous gravity…
And under #NotHerToo: Supreme Court Justice Ruth Bader Ginsburg Says the #MeToo Movement Is Here to Stay.
Now please excuse me: I have to go do a “happy dance” now and work on Occam’s Spreadsheet. Wonder if my Scrooge McDuck suit is back from the cleaners?
Moron the ‘morrow…