We will get to this morning’s import and export price data in a minute.  But, the most important issue on my plate today is how to play this market.  Not an easy decision…but waiting could become even more costly.

Based on  the early futures today (about 5:30 AM Central) our favored “Replay of 1929” track was about to blow-up.  If future’s prices are any indication of what to expect when the trade talks wind up in D.C., our “rhyme of ’29” will hit the rocks:

As you can see, the close yesterday was “uncomfortable” and yet a down market close today would maintain the idea of a replay.  However, in order for that to occur, here’s what we’d want to see out of the news flow today:

In our Aggregate view of the market, let me mention a few other items that cause me to remain skeptical that this morning’s firmness will hold through the close.  (I’m invariably wrong!)

First, there is a possible Elliott count that would from the peak at “V” count as a 1-down, 2-up, 3-(i) down, and (until 2 is bettered) it might count as a 3-(ii) rally.  3-(iii) down might follow.

Second, it looks like a classic “head and shoulders” formation across the top.  That’s the bar with the left, head, and right shoulder above highlights.

Third is the trend channel, which looks very broken to the downside.  But, we could be coming up for a “kiss of death” before heading back down…

Fourth is the large Ascending Triangle broke (we’ll show that for subscribers tomorrow) which has broken.

And fifth, there is a red trend line which is one of our long-term gauges of the market and if we close above that, then a change of trend could be at hand.

Another thing that has us doing some head-scratching is commodity prices which have soared – like a tradce deal is done, and it’s not.

Should the trade talks wrap up on anything less than a signed deal that is super-good for America, I think there’s still significant downside ahead.

And, while the market took the president tweets Thursday as positive/constructive, there’s another way to read it:  It Trump hinting the US still needs to contain China, still needs to get basic “self-sufficiency” on-shored?  Is that why he says of the trade deal “But do I?” (want one)?

If that’s the larger picture, no trade deal, especially shomething like China going home without “signatures” the motivation for the Kudlow and Trump stock-pimping would fall into place as “If the market’s going to come down a lot, let’s run up it while we can” on the theory it won’t go down as far that way when the decline resumes.

Other background factors to thinking of include these:

  • While its true that the absolute number of people working in America is up 1.4 percent compared with September of 2018, the population is up, too: only about 1/2 of 1%.
  • There’s another ponder of jobs to roll around:  The line in the data that refers to “job leavers” which is up more than 13% year-on-year.  Re-entries are down, too.
  • And this story has been bouncing around for a couple of days now “Mental Health cited as the primary reason why millennials leave their jobs

We’ve raised this question before:  Absent a big national motivatgor (go to the moon, then Mars, then the Stars…) people can get cranky and lazy and wonder “Why bother?”  If you’re going to eat, anyway, WTF, right?

But, more than anything, the country today suffers from terribly divided leadership and that, more than any trade talk hype, is of growing concern.  Throw in Wall Street Week Ahead: Bruised U.S. banks expected to report third quarter earnings decline and you have the idea that things are pretty-much same-o same-o.  Reason to rally?  Not in one old man’s view.

The high points of this morning?

With our 1929 track certainly looking like it’s inb trouble today, I’m reminded it was Alan Greenspan who famously said words to the effect that “Markets can remain irrational longer than you can remain solvent.”  Tell me about it.

We’ll have more tomorrow on the Peoplenomics side…but take a look at the NY Times “Stocks Have Reached a Turning Point, but in Which Direction?

Or, as I have pasted on the screen here:

“No Guts, No Glory.  But No Guts, No Gory, Either.”

Partial market closure ahead Monday in observance of Columbus Day: US bond markets and the Fed will be closed, but stocks, options, and futures markets will be open. 

Also on the calendar, next week is options expiration.  Last month, our Aggregate Index was at 25,290 and with it at 25,075, it’s only a small decline (less than 1%).

If there was ever a market trying to “climb a wall of worry” this is the poster-child.

The Trade Price Data

Just out from Labor

“U.S. import prices increased 0.2 percent in September, the U.S. Bureau of Labor Statistics reported today,
following a 0.2-percent decline the previous month. The advance in September was driven by higher fuel
prices; prices for nonfuel goods edged down 0.1 percent. The price index for U.S. exports fell 0.2 percent in
September, after decreasing 0.6 percent in August.

Imports

Prices for U.S. imports advanced 0.2 percent in September, after decreasing 0.2 percent in August and
unchanged in July. The price index for U.S. imports has not recorded an increase larger than 0.2 percent
since the index rose 0.6 percent in March. U.S. import prices declined 1.6 percent from September 2018 to
September 2019.

Exports

The price index for U.S. exports declined 0.2 percent in September following a 0.6-percent drop in August
and a 0.2-percent advance in July. Price declines for agricultural and nonagricultural exports each
contributed to the September decrease. U.S. export prices fell 1.6 percent from September 2018 to
September 2019.

The data took a bit of the hype out of futures prices.  Imports getting more expensive while exports command less is not good for the Balance of Trade Deficit…

Need to Know

More blackouts are expected as winds rise and “Wildfires rage across Southern California.”

A press conference with 500 questions?  See What Ukraine’s Zelenskiy Said About Russia During His Marathon Press Conference.  Zelenskiy is trying to keep Ukraine from getting into a deeper war with Russia over the Donbass region.  As we have reminded you, though, the long-term prize is the Dnieper-Donets petrolum basin.  Wars have been fought over less.  Which is one reason why the dems and the r’s here are so stinky on this whole Ukraine business.  Trump’s arguably peace-oriented and maybe others want a corporate war for Ukraine oil…  a kind of eastern Europe spin on Iraq, perhaps?

\This is an important sub-text to the Trump-Ukraine mess that people don’t think deeply on and seldom shows up in press coverage.  But trust me, petroleum people do.

The Muslim Reconquest of Europe is picking up steam, too.  And with the US backing-off Turkey, Russia’s Vladimir Putin Says Turkey’s Syria Operation May Allow Militants to Escape.”

Which will put more social pretty on the Brusselspricks who have, in the past, used immigration as economic stumulus.

Around The Ranch

Weather’s definitely changing:  At 4:30 AM when Zeus the Cat wander in for breakfast, it was 73 on the screen porch.  Down to 50 now and the low tonight will be into the bottom 40’s.  Makes working in the shop fun, however.  You move faster to keep body heat up (especially with a short-sleeved shirt on!)

Son G2 (who’s busy getting his firefighter 1 & 2 certs, EMT’ing, and Uber & Lyfting to make ends meet) tells me there’s fresh snow on the peaks around Seattle, already.  Up in the mountain passes, too. People in the PNW are worried about a super-cold winter ahead.

“Climate change, Dad” said one daughter.  “No, winter,” said an old dad. “You kids are suckers for anything on a phone.”

Despite the temp drop tonight, highs ought to be back into the mid 70’s to low 80’s next week.  Just about perfect working weather for household chores.

One of which is falling by the bushel-basket now.

Made the mistake of leaving some of that crap-gas (with ethanol) in the backpack leaf-blower, so another quick carb change on that is queued up at the workbench.  Carb change in 15 minutes.

So goes life as 71 quickly comes into view.

Enjoy the comment section, have a great weekend and write when you get rich!

george@ure.net

Projecting Difficult Markets
CPI Report + This 1929 Chart Will Scare You