One of the most under-rated aspects of market analysis is, in my view, time, symbol “t” and pronounced “tango.” Yes, as in whiskey, tango, foxtrot…
Whether you agree that we’re in a replay of the 1920-1921 short-term market ;lows that led to the final blow-off in 1929, and regardless of the social parallels we’ve discussed before, the study of time (the “tango of it”) is extremely revealing.
For the purposes of one of our weekly charts on the Peoplenomics side of the house, we lined up the early 1920’s low with the 2009 housing bubble low and began to consider where the markets are now versus were they were then.
As we measure from our 1920’s inception to where we judge things to be now,time appears to be running slower. The angle of the ascent is less steep.
Notwithstanding, we find a good case to consider 11/29/1928 – just over a year from the crash, to line up well with its modern “first peak analog’ – January 22 of this year.
The weekly close in ’28 corrected to 24,096 and change on the Dow where the modern analog in January weekly data this year came in at 24,161 and change. Close enough, we think, to be of interest.
After all, the timeframe involved runs from September 1921 – so eight years worth. When some 400-odd data points lead me to a similar “marker movement” I pay attention.
The slope, however, becomes problematic thereafter. We’ll look at that more on our Peoplenomics side tomorrow.
But the point I’m working up to – which is why the :terrible tango” is so interesting, is what happened next.
Just as we’ve had some quite choppy trading since January, the same period in 1928 and early 1929 had its bumps as well. BUT, as we get to another timing point (where peaks of both periods are close) we find something of possible use in the modern times.
May 9th of 1929 (in my work), the market went into a short but panicky decline. Here’s how the lineups look to me:
Let’s step through this by letter: Black trace is the 1929 market, red is the modern analog. Both matched up from late 1921. Here we go:
At “A” the market hit a high in late Nov. 1928. The right end of that red arrow is where I think the modern analog is.
At “B” we see the last big rally peak before the final decline that led us into the blow-off top. We follow that red arrow over and see where we MIGHT be in modern times.
We note that we’re a little more to the right. There are many reasons for this, not the least of which is modern Fed policy along with the lack any any Saturday trading which was getting traction in 1929.
So then we consider the last, short, sharp decline to the end of May 1929 that served as the “blast off” point for the final run to the early September 1929 high.
In the current “Replay” scenario, I look for some really bad news within weeks. This is why I am willing to suffer the indignity of short-term four figure losses on the prospect of five-figure gains. Be advised: I am not offering financial advice and I’m much better on Big Picture Strategic views than I am on day-trading.
The market may be able to put in marginal new highs today, but by the close I would expect things to have chilled a good bit. If the Elliott wave count is now complete – as we discussed in Thursday’s column, we are at a point where the ascending triangle/diagonal could now break viciously to the downside.
And there’s where we will focus our attention this weekend: We will be looking for the kind of news that could begin what could be (in the 1929 replay scenario) a drop before the end of September of 7.7 percent. And those kinds of declines would take a 25,500 down down to the 23,500 range.
If you find this discussion boring (though when you have a large enough trading account where you lose or make real money, attention is way easier to come by_) remember that whatever comes along to “fill the news” expectations WILL have real effects o9n everyday life.
We have an extensive “Suspect List” of items to keep watch for:
- Much-heralded trade talks will get underway late this weekend. But, what would the market do if one of the parties walked-out citing “bad faith?” That could roll things down quickly.
- The Special Prosecutor could announce new charges – and should they be for other than “process crimes” (like telling the FBI something that wasn’t provably correct) that too could begin the collapse.
- But, along the other side of the political tracks, my friend “Don Bondi” – a multi-decade veteran of the Bond-trading world, wonders what’s going on with the never-mentioned (by the crooked left-wing press) John Huber investigation of t5he FBI – what IF he issues a bombshell that shocks the nation to its core? As we noted in April, it’s the “second special prosecutor (in all but name) that no one is watching for. Is HE and a pending BOMBSHELL going to scare the hell out of the coopted radical left? We wonder.
- Then there’s the slow, but steady increase in volcanism go9ing on around the Pacific Rim. As you know, we are in a major solar minimum in the gulf between Cycle 24 ending and Cycle 25 beginning. The problem we recently pointed out on the Peoplenomics side is that the forecasts – which none of the lazy mainstream bother to report on – looks ahead to December 2019 and SHOWS NO RESUMPTION OF SOLAR ACTIVITY to speak of. Does Global Cooling lie ahead? Sure seems that way.
- Another shocker in the wings might be an investigation of Tesla – where is all that money to take them Private and what about the impact of the Canadian Ontario government en ding e-car subsidies to Tesla? You remember how “New Tesla owners on hook for $14K after sudden end of electric car incentive program” right? People begin to ask questions…Rumors fly. Rumors of a Musk breakdown.
As always, we are approaching the “coming disconnects” quite cautiously, playing only index-related positions to avoid any chance of us being accused of “insider trading.” We’ll leave that to member of Congress.
It’s with the Bigger Picture of where we MAY be, that we can read the daily news flow and possibly have a small edge. When you play in the Big Casino, even a small edge for the player can be turned into a fortune. In the meantime, the free show rolling by is more than worth the price of admission.
Shall we go in now and and see where we’ve been comp’ed this morning?
The March to MAGA
While we are awaiting a short-term (1-month decline) there are a number of stories that look to us like they could fuel the final blowoff into elections in November.
Take for example this one: “Trump administration nearing deal with Mexico on revised NAFTA — but issues with Canada remain.”
The actual final blow-off in 1929 was a 90-day’ish affair. To hit a significant decline – then blow-off rally – would spur us to thinking about some kind of “terrible election upset” – like the globalist Left candidates scoring a massive win. That would demoralize the working class, non-government people and that would set the way into the Greater Depression to follow. Which would come complete with national bankruptcy in the wings. At that point, even a modest Chinese devaluation of the yuan would topple the US financial base. But let’s put that aside.
Hope for Manafort?
The report that “ Jurors in Manafort trial send judge four questions, including asking him to redefine reasonable doubt” could be a real plus for the Trump administration.
Remember that Manafort had previously been cleared in one tax-attack on him so would this be “double jeopardy?” But more on point is how this is even remotely-related to the serious Russian charges – that have already blown-back on the FBI and we’re dying to find something in print about the Huber probe of the FBI…
In case you missed it, the Epoch Times had a dandy article by Biran Cates in late July. Don’t miss his analysis in “The Great Leak Hunt: A special FBI unit is mapping the network of partisan leakers between agencies and media.”
Pay special attention to where he remarks:
“While there were many important issues facing the incoming Trump administration in January 2017, the most serious one it faced was this: a network of Obama/Clinton partisans who were already demonstrating a commitment to a strategy of leaking classified information, in order to sabotage the incoming president and his team.”
We get back to our view of the markets about here and to answer a question of my friend the vond trade (“George, will they try to crash this before the elections?”) Seems to me the answer is likely to be no.
What isn’t beyond belief would be a weak Mueller case being released in a week or two and then a John Huber/Jeff Sessions report that “cleans house” at the FBI. That would be seized-upon by the idiots of the left as campaign girst. Lovely stuff to ponder, isn’t it?
Speaking of Leftist Idiots
As we see it, the governor of New York is an idiot who’s dividing the Empire State in barricade-huckster style more appropriate to the Russian Revolution. Even CNN had to headline “NY Gov. Andrew Cuomo says America ‘was never that great’.”
Can you say “Lefty kah-kah?” Let’s make everyone a victim and lead that way…you betcha!
We won’t offer the impaired governor a list of successful, though too-slow social reforms the country has been through. Nor will we remind about Two world wars we decided with our greatness. Nor will we go into inventions like, oh, electric lighting, transistors, nuclear power, space..
Anyone who votes for this clown needs to schedule an emergency checkup with a proctologist. Their head is missing and we have and idea where it might be hiding.
Well, off a grand breakfast and another hot weekend here in East Texas. On tap tomorrow, more details on the timing of what may be ahead (decision-tree mapping) and on here Saturday and Sunday we have articles on prepping. “How to Improve on Laziness” tomorrow and a new ham radio “Monster Antenna” project for the winter.
Tomorrow, then! And write when you get rich…