Welcome to what we told you about last Friday – our little “crisis moment” Monday. Which brings us to this morning’s “Turnaround Tuesday.”
The problem with “turnarounds” is no one waves a flag and says “Here it is, boys and girls! Come make money from here…”
At its low Monday, the S&P touched 3,229.10. Which even a skeptic would have to admit is a fair drop from last Thursday’s close 3,357.01. If you can’t make lunch money on what was more than a 3% move with us waving our hands about it, maybe quilting would be a better use of your time?
Great Words of Gann
Making money in your investments is not particularly hard. But, as I was pointing out to one old “Coot” over in the comments section this morning, you can’t take the “popularly held beliefs.” You need to check back to the source.
See: Coot’s trade involved energy and he was expecting a mighty cold winter ahead. But know what? We don’t.
Because over at the NOAA climate prediction center here, you can see for your own use that the odds of the fall being warmer than usual are between 33 and 70%, depending on where you live. Which is why I wouldn’t touch an energy trade (based on demand) with a 10-foot pole, or a 6-foot swede.
Information, though, comes in waves – and when it does, there is a time to adapt. So if you’ve been reading the “cold, Maunder Minimum replay” crappe going around the net, time to update reality.
Already, the American Radio Relay League (ARRL.org) and other Sun cycle watchers, have estimated that the bottom is in and the solar cycle is on the rise now and will be through 2025’ish. Although NOAA may not have been responsive to our media inquiries, when you look at their current data (here), you can see why we’re combining both the NOAA Climate Outlook with the Solar Cycle data, and staying as far as possible from the “Ice Sheets are Coming!” crowd. Grist and fools for energy option sellers, as we figure it.
Not saying the Winter ahead will be warm. Just saying we like to “bet with the House” and not against…
What’s “Trading Intuition?”
Since I passed along a great W.D. Gann quote to the Coot, here’s one that I’ve always found personally useful when considering markets like the conditions we’re in right now. I tend to trade somewhat intuitively, and Gann has a great definition of that to remember:
“The best definition I can give of intuition is that it is instantaneous reasoning. It is that something that tells us we are right or wrong before we have time to reason it out. The way to benefit through intuition is to act immediately, and not stop to reason or ask why. That is what a good tape reader does…”
From Gann’s book “Truth of the Stock Tape…”
One of my “personal demons” is always second-guessing myself. Should I have dumped my short position when the market was at Monday lows? Yeah, sure, I suppose….
But when I looked at how things shaped up at the close last night – and then with futures pricing for this morning plugged-in – there didn’t seem to be too much reason to run from the short side – YET.
Stocks Tell the Future – Sort Of…
We think (but this is not trading advice!) that there is a case for the present market wave and channel structure to go something like this:
- From the high at “e” we did a wave 1 down in the left yellow candle.
- Then – right of there – is a somewhat normal wave 2 (a) up, (b) down, (c) to complete tghe Wave 2 bounce.
- What happened on Friday and Monday was in the red candle. So in Elliott wave terms, that means its likely Wave 3 (1) down is done. Now – and with a brief excursion back to (even slightly above) the top downward trend channel arrow (red) – we would like to complete Wave 3 (2) as a rally today or tomorrow.
- What would fit the wave count nicely would be the bottom falling out late in this week.
Hold that thought: big decline either later this week or early next….
Now – since I don’t stare at my computer all day, did I want to sell at the bottom of 3 (1) and spend 2-days or more sniping at the top of 3 (2)? Anticipating 3 (3) which could be the largest move down, still to come (in theory)? Hell no! If you can’t handle your account value bouncing around a bit… I did mentioned quilting, right?
Plug and Play the News
Now that we know what the markets are “waving” for – all we need to do is scan a few headlines and see what’s rolling and likely to trigger the me-too financial press:
Today might turn into a Big Fat Nothing. Richmond Fed and some routine housing numbers plus the Chairspeak.
Sure, the market will run up a little bit today – ideally to the red trend line. This hints that when J., Powell of the Fed speaks today, he will likely sell “cautious optimism.”
Remember just last week he was calling for effectively zero rates through 2023 – which means 2024… Related on the same lines: Swedish central bank sees key interest rate at 0 for years. Munchkin will be speaking, too. (I’ll be looking for his strings…)
There is a chance that Wave 3 (2) finished with the rally into the close Monday, so we might start down as early as European closing time (by 1 PM central, or so). But we’d like to see a bit more time-extension, and a kiss of the trend line, so we start to looking for predictable “news” events to blame when things turn down.
Our leading nominees for mass disappointment?
- Trump’s Supreme Court pick might do it. Tomorrow would fit the wave count.
- Massive fail in unemployment numbers – a spike in jobless showing up Thursday could do it…
- And so would collapse of durable goods orders.
We can’t leave out “left field events” either, but this ought to sketch-out how an old news director can look at markets and plan “time off” for reporters. Rewriting “Hints from Heloise” (who’s a Texan, by the way) is about as exciting as journalism may get until Powell speaks. And by the Chart, only a major gaffe would speed us into Wave 3 (3) down…
Feeling better now? Future on rails. With a little intuition or what Gann calls Instantaneous Reasoning. Sure we can be surprised (the Big Quake, for example), but we needn’t go there. Yet.
Fillers Not Thrillers
Only half an inch of rain in the gauge here overnight. But down south of us? Tropical Storm Beta made landfall in Texas last night and could drop up to 20 inches of rain.
Oilman2 – ever mindful of how Tulip mania is replaying in cryptos – spied a great article over here on Zero Hedge about the rare plants market going nuts. So those this mean we are in a seventh Kondratieff wave of global madness basis ther 1620’s when it kicked up previously?
From news tipster Linda at the Houston desk:
The Texas Central Railroad project reached two major milestones Monday, laying the foundation for the high-speed railroad system.”
Bullets? Training? Texas? Why, who’d have thought?
Those “criticism – self criticism” post Maoists at work in : Ren Zhiqiang, critic of Chinese leader Xi Jinping, sentenced to 18 years on corruption charges. Don’t diss & piss the boss, huh?
And if you’re spending time on a phone: Scam apps with 2.4 million downloads found on Apple and Google shelves… dandy, just dandy…
Around the Ranch
Did an all-day crock pot corned beef Monday. Tenderest yet. Just a harsh look and it fell apart. Luckily, though, it landed on fresh sliced rye and was immediately smothered in a sulfite-free artisan kraut . Then covered up with baby Swiss… Our stomachs don’t know we’re poor. Red jug wine and 12-hours of snooze…..
Off to wait for that masked Fed Chief and agree with MarketWatch which summed up today as Stock-index futures struggle for direction after volatile session as investors await Powell testimony.
This is why we have hobbies like the shop and studio… Good day to snooze, too. Rainy weather and all. Somehow the 12-hours of sleep was busted up as Zeus the Cat woke us up at 1:15 AM to discuss some feline epussany *(cat epiphany). He also complained he couldn’t get into the master bath shower to look around…sheesh. Like a furry child intent on tripping us.
Write when you get rich,