It’s Usually PRICE not TIME

This morning I want to bring you back to a column I wrote in August of last year because it may turn out to be a critical support level this week, of before the BREXIT vote:

The column was titled “Watch 2,050 on the S&P” and if was posted on August 21, 2015. Before that, I had none-too-quietly offered tips on “Avoiding the 2,040 Battle: Tainter and Financial Terror.” That was last July 9. Nearly a year ago.

A word of two about technical analysis is in order. Technical analysis holds that all available information about a stock is priced into it at any moment of real-time data. This saves a lazy person like me oodles of work doing research. Sure, we do research, but in the summer time, there are more important things to do. Like drink plenty of This Ain’t Dad’s Root beer.

When a market is progressing up, that is to say making new highs, pulling back a bit, but then resuming up in an advancing wave fashion, it is common to run into an area on charts which the market just doesn’t want to easily pierce through. Often it will “back and fill” at such places and then punch through, or not.

Being geniuses, Wall Street technical analysts call this “overhead resistance.” No slipping anything past these guys.

In a solid advance, the market eventually gets up a full head of steam, powers on to new highs, and that’s that. The resistance level is noted for later use.

When’s that?

Eventually fate reverses.

On the way down, the market comes sliding back to the region it had trouble with on the way up such that it begins to look different from the recently higher altitudes. Instead of being overhead resistance, it is magically transformed into support.

Simple enough? If it was difficult, I would not write about finance. I could make a lot more money writing about robotics or politics, but it might require more effort.

Recently, in one of our reports, I referenced this 2,040 level again. A reader (somewhere in the zillions of discussion comments) semi-snarfily asked why I thought we could both hit 2,040 shortly (one of the reasons I am short and my position is slightly in the money now) and yet at the same time, be almost wildishly bullish about prospects for a massive summertime rally.

The answer is simple: Fear and greed.

The Fear – at least the one going around for the next 33 hours, or so, is that the Federal Reserve will raise rates. Actually, this would be a good thing, but another discussion for another time.

The reality is that the Fed is very unlikely to raise tomorrow and that will leave most of the amateurs in market gamesmanship bemoaning how weak the economy is if the Fed can’t even raise a quarter point. “Woe to us all!”

To a more detached observer, the market is merely insisting the glass is half empty if rates can’t be raised, and if rates are raised they’ll be screaming the glass is only half full.

Either way, there’s just no pleasing ‘em.

What I think will take place is a drop to the 2,040 S&P support area, either between now and Fed Time tomorrow, or shortly thereafter as the hand-wringing begins in earnest, aided by the big swing in the United Kingdom to BREXIT from the Eurostan mess.

Already, mourners are tuning up as the German bond hits zero percent. Ya’ll have a great cry and don’t mind that “ka-ching” sound in our trading account.

At the moment of deepest wailing, it is my present plan to flip our tiny position in stocks over to a long position, from which we will sit back and wait for a summer rally which should take us to Labor Day.

In any event, buying on the pending (or so I think) lower prices should be lifted to be into the money by the Fourth of July. This is because markets tend to cheer UP a bit before long weekends. Who am I to argue with such a fine tendency?

When I posited this overall background for my tiny trade, the S&P was well over 2,100. This morning, after the open, we should sink to under 2,075. Not that it matters, the tiny trade is already in the money. From here, and further down, it only gets greener as we slide, so I’m passing out black arm bands for the interest-rate mourners, and placing Kleenex boxes everywhere. I want them to have a wonderful, cleansing decline, preferrably to 2,040, or so. Even 2,020 on the S&P would be peachy, just more short-term gains to gleefully pay tax on.

With any luck, the mourner’s will be accompanied by the Charlatan Choir, which will come out singing their saddening Song of Woe. I’ll be playing percussion on that number. When the Charlatan Choir hits its third verse, we buy long…so goes our plan.

As always this is not trading advice. For that, seek professional counseling and have a financial advisor. I’m just a long wave economics student and financial writer and I just comment on what I do with my own money. Trying to parallel trade me is insane.

Still, in my work, there is a case to be made that somewhere around the 2,040 level, or maybe down to 2,000, the heavens should part, the skies clear, and the Fed pumping M1 money out at a 12% annualized rate will begin to perform the Magic of Liquidity. An Easter-like event will follow as the Dow, the S&P, and the Q’s will all be “Risen.”

So it was in the beginning, and ever shall be: Very tradable Gloom-porn without end, Amen.

Check the calendar: The last year in office is seldom the worst. First or second years? (2017 and 2018) should be much better times for the Charlatan Choir which by then should be planning a triumphant World Tour.

The only difference is that by then, having remained aloof from the crowd, we’ll own the tour bus, as well as most of the ticket outlets.

Fed Meeting Starts

Tomorrow afternoon, we expect the non-decision. But in the meantime, we also wonder whether the Fed has a deal with the administration to get advance look at the Producer Price Index, due tomorrow or the more important Consumer Price Index due Thursday? Toss in a phone call to Census for the Friday Housing Start data, maybe?

I know if I was sitting on such an esteemed group, I’d want the advance data to ensure the dancers on the Titanic can be tilted just so. We should have one more year of dancing, maybe less, left.

How About Retail Sales?

Oh, fine. I will park the pontificating (say, does that make me a pontif?) and lay our Press Release du Jour on you:

“The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $455.6 billion, an increase of 0.5 percent (±0.5%)* from the previous month, and 2.5 percent (±0.7%) above May 2015. Total sales for the March 2016 through May 2016 period were up 2.4 percent (±0.5%) from the same period a year ago.

The March 2016 to April 2016 percent change was unrevised at up 1.3 percent (±0.2%). Retail trade sales were up 0.4 percent (±0.5%)* from April 2016, and up 2.0 percent (±0.5%) from last year. Nonstore retailers were up 12.2 percent (±1.2%) from May 2015, while Health and Personal Care Stores were up 8.3 percent (±2.1%) from last year. The advance estimates are based on a subsample of the Census Bureau’s full retail and food services sample. A stratified random sampling method is used to select approximately 4,700 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms”

My consigliere note that the way to keep the numbers looking good is to look at the retail sales in the auto industry.  You can see it in this chart:


You know, double-check this, but GM sells more cars in China than in the US…”

(light goes on) “Would that account for high auto sales?”

So this leads to a fine question for an enterprising reporter to look up:  Since my consigliere points out that GM is essentially now a Chinese car company with headquarters in Detroit, is it possible that sales to China (booked in the US) are counted in “retail sales” figures for the USA?

The point could be argued either way:  Yes, there are jobs associated with US production.  But, if the consumption is in a foreign country, should that be counted as US Sales?

I won’t even pretend to answer this since it’s a big enough issue you could drive a Kenworth through.  Still, it might make an interesting article for someone like John Crudele of the NY Post, for example.  Since it paints retail as peachy, no reason not to have a little “peach fuzz” in the logic.

By now, based on past retail reports, we should all have half a dozen cars in our driveways – per person of legal driving age…

Come to think of it, such sales could also be accounted for oddly in the International Balance of Trade, too…could they not?

Comey on Defensive Soon?

The FBI director has been put in a difficult spot – as I explained yesterday – because there was some previous agency contact with the purported perp in Orlando.  Now,  we have the story of that previous contact being ramped up by the Washington Amazon Post  today.

Again, our inclination is to consider the possibility that the FBI director could be forced out by events which could prevent him from coming to logical conclusions in the investigation of Hillary Clinton classified emails. 

It’s the kind of Machiavellian  solution to a huge problem for the PowersThatBe.  Comey would not be able to attack back on something like Orlando, but he would be able to defend well on his agency’s diligent work on Clinton.

All looks like a chess board, after a while, doesn’t it?

Dueling Transcripts

Hillary transcript on Orlando speech Monday here.

Transcript of Donald Trump’s remarks is over here.

While the HilBama crowd is seizing the moment to rewrite the Constitution (“shall not be infringed” is clear to everyone but lawyers) we notice that even the NY Times admits events may help Trump’s case.

Fishwrap Media

Grand story in the Washington Examiner today about how public confidence in the news media to get it right has hit a new bottom.

We hold that UrbanSurvival and our subscriber insider newsletter Peoplenomics are much better than run of the mill fishwrap.

We fancy ourselves the perfect wrapper for economic pickles.  And there’s a never-ending supply of them, seems like.

10 thoughts on “It’s Usually PRICE not TIME”

  1. How does the recent mass shooting fit into your theory on a mass killing every so many days? Maybe I missed it if you said something earlier.

  2. I’m not sure who benefits, but the Orlando event scored a social issues grand slam: gays, guns, Hispanics and Muslims. A little something for everyone.

    • Well news of the massacre got Trump’s comments about Curiel and the NYT’s expose on Trump pocketing casino chips while shifting personal debt to the casino, laying folks off and declaring bankruptcy off the front page.

  3. The Fib 78.% retracement from last year’s high is roughly 2063 on the S&P Emini Futures. It was “wrapping around that” this morning. I have resistance at 2073 and support at 2030 right now. 2050 is right in the middle. It’s in a holding pattern waiting on Yellen and Brexit.

  4. With population growth at a pretty consistent 3%, any YOY figures less than 3% is a reduction. And any interest rate under 3% is negative. It’s why BofA raised their balance transfer fees to 4%. Otherwise they would be paying you to borrow Monet from them.

    And any change under 2% is statistically insignificant.

    One of my Canadian friends already had the experience of trying to take a position, but there were no takers on the other side of his offer.

    I see small traders like fleas on a dying dog, hoping the dog is going to find one more meal so they can get another shot of blood. Have to warn you though, that last good meal may be the one the dog gets at the shelter just before it is euthanized.

    And for all you metals guys, when the dollar price of metal rises, it will not mean you are richer. It will represent the devaluation of the dollar. Unless you are prepared to convert that metal into a currency that has some real value, your wealth will never increase to more than what it is today.

    But not to worry, there will be plenty of Chinese around to buy your metal, but only with dollars.

    That’s how it looks from Ecuador.

  5. About the S&P … I agree; So you might want to be careful. [snicker]
    Anyhow, I have my finger on the SPY call button at any sign of the proverbial falling knife hitting the ground. Just a day or two play though. I don’t want to be long or short in my trading account before the British vote.

    Having said that, it’s hard to believe the PTB would not steal the vote to maintain the status quo. But if it happens; If the vote is to exit, seems to me that would signal the beginning of the end for the world economic system. Their intent would be order out of chaos … “The New World Order.”

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