Doggonit! If I had just looked at the market charts, instead of working in the shop this weekend, I would have seen that the Chiefs were going to win. Because? (For those of us not hooked on Vegas-style T&A half-time shows, having sourced our own locally…)
Investopedia has a good article on the “Super Bowl Indicator” over here. Since Kansas City is in the AFC, the market set to decline in the coming year. But, markets don’t always pay attention to what’s going on down at the sports book…
Because, on any day, the odds of the market going up, or down, is nearly 50% (Samuelson, Fama, et all in “Efficient Market Hypothesis (EMH), MIT), however, it helps to read the 2019 paper (Tom Delcey, cited here) because there really is a key polysemy between Eugene Fama’s “random walk” approach and Paul Samuelson’s “Martingale” basis. There’s random and there’s Random. And the art to all gambling, including stocks, is in recognizing “the runs” of up and down action.
Whew! Too heavy for this old mind on a Monday, huh? We do a lot better taking an idea like Elliott Waves and then sketching in “trading boxes” to help see where things might be going. Not using a single market indicator, either: We use a pile of data for “instant smoothing” of what’s going on in our Aggregate Index approach.
Fast-forward to this morning: My expectation for a Wave IV down in “in process” as you can see here:
Several colors of boxes above, so what do they all mean? Green is the longest-time-frame on my daily chart. Under the green are the recent 3-yellow boxes *meaning the intermediate 3 may be done. Because the red boxes of the 3 look like a complete set of 3 up. And the gray on the right are the decline we’re now into. Oh, and this is ALL SUBJECTIVE.
What this chart suggests, and this is NEVER INVESTMENT ADVICE – just a friendly chat over the back fence between compulsive gamblers – is that (referring to the green trading boxes) we have had a large (i) Up, (ii) Down, then the (iii) Up let go. The three red boxes of (iii) show Wave ((i)) was the smallest, so there’s a valid Elliott count possible there.
With those gray boxes to the right? Aye, that’s where the trouble-ahead lies. Because we obviously had a 1 down of some magnitude. Which resulted in a bounce to the beginning of the right-most box top, but you’ll notice that this morning’s “rally at the open” may be worth sitting out. We “need” (in crackpot market theory) to “complete the box” down.
That’s because if this is indeed the Wave (iv) I’ve been waiting for, then what comes next will be of great interest.
One of the many possibilities is that the small three down (to make this little 3 down complete by going lower than the 1 down gray box) is yet to complete. Which might lead to a rally today, but not closing higher than last Thursday (as an Aggregate, Peoplenomics readers who use our spreadsheets might peg last Thursday around 28,027 and the futures pricing this morning suggests 27,650-ish at the open.
Cheaper than Vegas, but no one comes by offering free drinks. So, for the dyed-in-the-wool pandemic paranoid, stay-at-home gambler, we’ll have to make due with half-time show re-runs and see where we are Wednesday, or so.
My hunch (and both Samuelson and Fama point to nearly 50-50 odds on any particular day) is that now is not the time to be brave bull, or to visit China.
Speaking of China
Cases continue to mount up. You only need to go as far at the NY Po9t’s “Chinese stocks plummet as coronavirus outbreak worsens ” to get the gist of things.
More usefully, if you click over to the Hang Seng chart on Yahoo Finance, you can see the chances for a minor rally from here, (complex 4???) but then more downside is possible as Hong Kong’s population tenses up.
Part and parcel: Futures Rebound Despite Historic Bloodbath In China Where 3,257 Stocks Hit Limit Down. Hour to the open US Dow futures up 162. “Getcher dead cat bounces here!”
There are two other aspects to cover quickly.
The first is apparent confusion over where HIV fits in all this. Outfits like Forbes say don’t believe the HIV bioweapon conspiracy tales around the web. Business Insider gets to likely source of confusion because “Thai doctors have been using a cocktail of flu and HIV drugs to treat coronavirus cases.”
And that may have led to the overdone claims that “Thailand ‘cures’ coronavirus with anti-HIV drug cocktail in 48 hours.” Then, based in part on the UK Daily Mail hype about HIV meds here, Dettol, the company that makes one anti-viral has issued a press release downplaying hopes of a quick fix. As the Brussels Times article here shows, coronavirus is listed on one of the company’s products, however.
Again, mental acuity is something to hold-onto in strange lands like this: We need to be clear that an HIV anti-viral is a million miles from being a “vaccine.” Soft heads the day after Super Bowl might be permissible some places. Just not here.
Worldwide, 14,557 confirmed cases as of Sunday with 305 deaths. We expect when today’s report is issued, it will be up from there. Compared with the 2002-2004 SARS Outbreak, which had 8,098 and 774 deaths in two years, Novel Corona Virus has already topped SARS cases and we’re half-way up the death count comparison and in less than a month. To early to make meaningful comparisons, but BIG and SERIOUS are two words to keep in mind.
The Week Ahead
ISM Manufacturing at 10 Eastern this morning, the PMI 15-minutes ahead of that.
Tomorrow Redbook and factory orders may not move the needle much. BUT come Wednesday? ADP Employment numbers. and International Trade. This would be a logical place for disappointment, since all those “leading economists” were telling us last month “no recession in 2020.” Color us skeptical of “experts” (anyone from more than 2-hours away).
Thursday the Challenger Job Cuts report (we expect it to be up) and they Friday’s employment situation report from the FedGov which may be a “pull the rug out” or it will come next weekend.
Trends and Tracks
We will find out today how stupid voters in Iowa are. (We admit to an anti-Biden bias based on his son’s antics in Ukraine). See Battleground Tracker: What could happen in Iowa on Monday? We like to think of this as a statewide IQ test, though.
Four years of Digital Coup and no sign of apologies in the MSM for the made-up Russia Hoax. Glad Carter Page is suing the DNC and the law firm involved. President Trump is likely to be acquitted in impeachment trial, but we didn’t expect him to be tossed out by the Online Uprising, anyway. Cue the State of the Union, eventually.
We are doggedly staying out of BTC despite stories like “Bitcoin logs best January performance in 7 years as value surges by nearly $40 billion.” We continue to repeat there are no barriers to entry, and more than 2000 other cryptos out there. A list of the top 200 is here. Which to us sure looks like Making Up Money…
Missable Or Useless Dept.
And on the BBC this morning, we see on the English government is whining about how “Nearly one million miss tax return deadline.” To which we would remind the self-righteous governoids that from the East Texas Outback perspective, this looks liked citizen payback. How long did it take government of the UK govt to finally – eventually, kicking and screaming – get out of the EU? See? Turnabout is what (bitches)?
A quick look at the free money report from the NY Fed Repo Depot ($59.85-billion) and off to another exciting day of….. Oh, 78-degrees here Sunday. Climate change? No. But a nice break as the rain and cold are due in for a few days…
Enjoy the traffic and Write when you get rich,