We need to start off with a lot of caveats and asterisks before we go further: A) This is not financial advice. B) The chart that follows is based on the proprietary trading model I developed for www.peoplenomics.com subscribers and my own use. C) The chart is only considered “complete” after the close on Friday’s when all the world’s markets freeze for the weekend. So today’s trading will mean a lot.
And that’s just the top of the list. More important is how and why this trading model may be indicating a top. As you know, I measured the time from the Hoover Inauguration in 1929 (March 4) to the Sept. 3, 1929 market high and counted trading days. This was then measured against Donald Trump taking the Oath on January 20 of this year. When you include the Saturday trading days in 1929, you come up with a projected high date in the August 21-24 timeframe. My preferred outlook would be fresh, new highs before collapse into the fall. Or going higher and no collapse until 2018.
However, as you can see in the chart which will follow, there is a case to be made that we have completed 5 waves up and if we crash down through the bottom of the trend line, it will be curtains for investing as we know it because this COULD be the very first tiny break down.
Let me show you what I mean:
Granted, the chart is not terribly useful without the timebase and such but that’s how subscribers have been watching this unfold.
Tomorrow, I have plans to do an article on “How to analyze a stock in 3-minutes (or less)” using the techniques I’ve developed.
China Tips Its Hand
The Chinese have indicated that they will not become involved in Korea UNLESS the U.S. Strikes first. However, the testosterone is rolling in the military ranks and headlines like “Locked and Loaded” are being bandied about.
Our military affairs contributor (warhammer) offers this perspective.
The position of great dragon wrt N.Korean tensions is semi-officially fairly clear now.
Essentially, the only way China will engage in a shooting war over N. Korea is if their communist ward is attacked first.
The wild card here is N. Korea deliberately trolling the South into ‘appearing’ to fire the first shot, either out at sea, in the air or on land across the DMZ. Then, all bets are off. So trigger fingers in the South are the real concern now. Kim Jong-Un now has everything to lose by initiating a shooting war, but potentially much to gain if he can agitate the South into misguided, undisciplined actions..
It is odd to me that China delivered what is essentially a diplomatic demarche to the U.S. and S. Korea via their state run news site. But then Trump uses Twitter, so times are certainly changing in this regard.
Getting all parties around a peace talk table would be a good thing right about now!”
Still, as indicated in our daily trading approach, it would be best (from a personal profiteering standpoint) if we could just let the hysteria run a few more hours, trade the market down to my trend line so I can go long, anticipating a cool-down of the hype and hyperbole by the talking heads this weekend.
The problem faced by Mr. Tweet and General Mattis (that no one else is mentioning, but we will because it is very useful to know):
In North Korea, everyone is involved in some way in the production of food. The NK’s have been backed into a box and further along the road to mass starvation by western sanctions. This means the NK’s will be “tied up” and not really able to mount an effective invasion of the South until the first freezes of winter show up.
That prospect – the calendar angle – has everything to do with how and when the US plays hardball. Look at it this way:
- If the US goes early and first, we risk China showdown, but mad Dog ain’t no sissy and Trump, well, you know he’s got a military “thing” – the plus is the NK’s are too busy gathering in calories.
- If we wait, then maybe the NK’s will go first, but that means waiting until cold weather and that will then give their mechanized units a shot at the South. But also, China says if they do go first, the Chinese won’t back them.
This leaves waiting as a somewhat risky, but zero blow-back option, but by the time traders figure this out, Ure will likely be on the long side already and waiting for a further move up based on money supply and “leakage” into the markets from all that dough on the sidelines.
In other words, see news coming, and print money for your own account, accordingly. It may seem a bit “amoral” and all, but your money doesn’t know where it came from.
Except we do, so…
Speaking of Money Printing
We won’t screw up our normally lightning fast page load speeds with another graphic here, but a word to the wise: The market top does seem to be at hand when you look at home Janet and the Fed are rolling on the mad money streak they have been on.
We do note from data (here) that to the first of July on a 90-day basis, the Fed was pumping M1 at an 11.8% annualized rate. However, in the most recent sliding window (for the 13-weeks ending July 31) the rate of increase in M1 annualized was just about steady at 11.7% annualized.
So if you chooses to look at the market levels as little more than a pressure relief valve that gives excess Fed money a place to land, then this view would suggest the Fed was happy with levels last seen around the end of July. That would also support our “one more move up” working hypothesis.
All this talk about money supplies comes as we are drilling down into the Consumer Price report just out. Hot off the press release from Labor:
“The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.7 percent.
The indexes for shelter, medical care, and food all rose in July, leading to the seasonally adjusted increase in the all items index. The energy index declined slightly in July, with its major component indexes mixed. The index for natural gas declined, while the electricity index rose and the gasoline index was unchanged. The food index increased 0.2 percent, with the indexes for food at home and food away from home both rising.
The index for all items less food and energy rose 0.1 percent, the fourth month in a row it increased by that amount. The indexes for shelter, medical care, recreation, apparel, motor vehicle insurance, and airline fares all rose in July. These increases more than offset declines in the indexes for new vehicles, communications, used cars and trucks, and household furnishings and operations.
The all items index rose 1.7 percent for the 12 months ending July, a slightly larger increase than for the 12 months ending June. The index for all items less food and energy also rose 1.7 percent for the 12 month period, the same increase as for the 12 months ending May and June. The energy index rose 3.4 percent over the last year, while the food index increased 1.1 percent.
Dow futures were about flat after the news…
It’s axiomatic in our work that Fed money supply increase less the implied cost of inflation (this morning’s headline number above on CPI) leaves up with a general market outlook.
One other thing to be aware of: Bitcoins effectively hit our $3,500 number which we have been telling you would be here eventually.
If you are a new reader of UrbanSurvival, please go back and read how we were predicting BTC’s “great hesitation” in mid June here and you’ll be impressed (I hope!) how deadly-right we were in our forecast. The Great Hesitation is over, and we are looking at the $4,000 area as possible if we get the one last blow-off highs in the markets later this month as we’ve been talking about.
Again, that damned asterisk: Assuming the top is not already in, and that’s a judgement call we don’t make for others.
Corrections and Amplifications
In our Coping section Thursday, we went into some detail about the “Death of America” scenario where a national gird hard-down began to take down nuclear power stations.
We received some expert feedback that corrects a small point, but still leaves the overall scenarios outlined intact:
To set the stage, I am an engineer at a boiling water nuclear plant and your concerns are valid, however a couple of points are not correct.
Whether it is a controlled shutdown or an emergency scram, we can get to “cold shutdown” in around three days. It only takes that long because we are trying not to “shock” the reactor vessel with a dramatic temperature change. But “cold” is about 100 F. If we stop circulating water to the fuel, things heat right back up. This is due to the radioactivity within each fuel rod. It does not stop, it can’t. Not in a time frame any of us care about. Without cooling, “time to boil” is not long. Hours, not days.
The only way out of this is to do a full core offload which merely puts the fuel into the spent fuel pool. It also takes power to run cranes & other equipment and is usually done by specialists who work refueling operations. It takes a couple of years in the pool before fuel can be placed into Dry Cask storage. search on “holtec” if you’re interested.
The pool itself can actually last longer than the reactor vessel because of the much larger supply of water in the pool. The entire pool has to go from 100 F to 212 F and then boil off approximately 25 feet of water before fuel rods start to be uncovered.
So if you have a “station blackout”, you run the emergency diesel generators, get more fuel and get help. Obviously in a regional situation that’s going to be sporty indeed.
But there’s a far worse situation.
Back in the early 80s Scientific American published an article comparing the fallout from a 1 megaton ground burst versus targeting a nuclear power plant with the same weapon. Horrendously worse is an inadequate description.
Feel free to post, just strip my info,
That’s about as “dead to nuts on” as you’ll find. And with an event-sequence like the one we outlined in our cautionary report Thursday, it appears we have not overstated, and may indeed have somewhat understated the risk.
OK, back to see the market sort out the “bottom and bounce” or “Dang, Ure was close on his top call but it came early” trading session.
Yes, kiddies, time for that ever-popular summary of Friday Useless Bull Shit, written by Snidely Slapdash…
‘Munsters’ returning? “No, that’s Congress, you idiot!”
Swift: He grabbed my bare butt. “Stimulus response reaction?”
UK could face Islamist threat for decades, former MI5 chief warns. “And who left their borders open?”
Melbourne cafe charges men more for coffee. “Where, of where, are the defenders of equality?”
This, and a million stories like these, answer that profound question “Why haven’t we had extraterrestrial contact yet?”
Even a three-fingered reptile knows enough not to step into the middle of a cat fight. Which may be why ancient peoples got visitors and we don’t, you think?