Miserable Market, the Terrible Tango

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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…

27 thoughts on “Miserable Market, the Terrible Tango”

  1. George,awesome news for “Hams” regarding the CRIMINALS in obama administration who have been reported to have used HAM COMS during their operation crossfirehurricane.obama, lynch, nellie and bruce orr and sallie yates…not sure who C.S. is,one of six perps mentioned. “Texts, Emails, Ham Coms, PS/XBOX chat logs”…Hmmm does this mean Ham Coms are a really great way of circumventing eaves dropping by law enforcement types? Just keep switching frequencies every 3-5 minutes. George you made it sound like Ham is a excellent hobby with SHTF capabilities,when in reality it is a great means of communications for facilitating criminal activities.You sly Dog….ever been to Ketron Island in PNW? ever do a barrel roll in Q400 turboprop, wondering how hard that is to do with NO flight training other than video games?

  2. George,

    While I don’t get every last nuance of how you reach your conclusions, I do respect your commitment to looking “over the horizon”. So much so in fact, that I’m not too concerned about the accuracy of your “Tango” factor. I think that you mat be on to something, broadly speaking, in your hypothesis that the economic meltdown is due, and that it will be followed by a rather large military conflict in the 2022-2024 time frame.

    I will be impressed if your forecast for the economic crash hits within a six month window, and that’s all anyone can really ask given all of the variables that are in play on any given day. As for the military conflict scenario, it stands to reason that resources will be in great demand for a population that is beginning to exceed the carrying capacity of the planet.

    Looking at the population spike that is coincident with the economic extraction and use of liquid fuels, and extrapolating that in the event that those same liquid fuels become uneconomic to extract for our use, then the population will be the declining variable until it reaches equilibrium with available resources.

    Adapt, Migrate or Die are the three choices available to organisms when confronted with changing environmental conditions according to my 9th grade biology teacher. Truer words were never spoken.

    There may have been more useful nuggets to be gleaned from school, but I dropped out to join the Army the summer of my junior year, so I’ll never know.

    • “the event that those same liquid fuels become uneconomic to extract for our use, then the population will be the declining variable until it reaches equilibrium with available resources.”

      Maybe.right now I can’t see it happening..it totally depends on whether we as a species sends ourselves back ten thousand years and what we’ve re learned what was known is lost again. At this point there’s an island of plastic in the ocean larger than the state of Texas that can cheaply be processed into oil. An abundance of hydrogen etc etc..if that knowledge is hidden away and lost because of an emp or other cataclysmic event..then yes we will be thrust back to the dark ages. Everything we know now will be gone.

  3. Well George being from up-state N.Y. and by-passing the local/state elections and now the national elections,I have to admit that maybe,just maybe that perhaps Cuomo told the truth for once.Lets not forget as its seems we always do (after all we are told from the cradle to the grave how wonderful we are) that many countries fought in both world wars,that without Russia in WW11 destroying the cream of the German army we would have had a much different outcome,a much greater loss of life for in reality we American have never seen war up close and personal,for if we ever did I’m sure our attitude would change in a heartbeat if we were on the recieving end….

    • But to say we were never great?
      That’s NOT what an American would say. commie stooge in collusion with? Oh, hell yeah…

      • Were we George or is it simply an illusion, much as empires are illusions, our (the American bankers) meddling at the end of WW1 brought on WW2 and our meddling in a country called Viet Nam would bring on yet another war, but first we had to have Korea where we lost thousands and they lost millions,then came Nam where again we lost thousands and they lost millions,then again Afghanistan,Iraq Libya,Syria where again we lost a few thousands and they lost not only millions but even their way of life.You know George this country has seen very few years of peace since it was formed and that in itself should tell even a die hard person that something is wrong when war is our daily bread, as natural as eating sleeping or hopefully getting up to go to work…

      • Not what an American would say? That’s true, but then again, when have Americans ever told the truth, or been told the truth? Not in my lifetime, thats for damn sure.

        A nation built on exploitation, first the Native Americans and Africans, then the Chinese and Irish to build infrastructure, then on cheap resources exploited out of South American until the Empire was built on the ashes of world wars, then world exploitation for cheap resources using the world reserve currency backed by a military 10x larger than the next competitor. You don’t take our dollars, we will give you a dose of our democracy straight from the industrial/military complex paid for with our printing press. Its just that in the last 30 years they don’t bother to disguise it.

        It was called the Monroe doctrine (1823), a notice that Latin American was ours to exploit, no colonizers from outside the hemisphere. Read Economic Hit Man For details, he was not the first the USA used to exploit our neighbors to the south. That had been going on for over a century and still is. Here’s your green card and your USA/Panama/Cayman bank account. You now work for us. Sign these loan agreements and these contracts. Works every time. You will never read this in USA history books but its been going on for two centuries. Read: Open Veins of South America for documented details.

        Unfortunately, the rulers are running out of territory to exploit, and have now turned on their own, eating the American middle class. Don’t think its true, run your income history not through the Federal Reserve inflation calculator, use the shadow stats numbers or the Chapwood index. If you are not part of the 5%, you are all poorer than you were 10 years ago. I got a whole $17 increase in Social Security last January. WooHoo!

        Nobody can tell me what the USA will look like even five years from now without abandoning logic or exhibiting extreme ignorance of their current situation. Its a dire situation, and America has a chance of becoming great again when USA wages and taxes equal Chinese wages and taxes. Unfortunately one of the cheap foreign resources exploited was labor, and working Americans were screwed into the ground. As George Carlin said, “Its a big club, and you ain’t in it!” “Its called the American Dream, because you gotta be asleep to believe it!”

    • If Germany never invaded Russia, & Russia never entered the war, Germany would have been nuked like Japan.

    • And more recently, if war is a measure of greatness, perhaps the outcomes of Viet Nam, Afghanistan and Iraq need to be considered.

      • Who ancestors came from Italy mine came from Normandy back in the mid-1600’s,fought in the French and Indian Wars and 26 fought in the revolution, some signed up for the duration,so you see I have a vested interest in this government that my ancestors helped create and I’m not sure looking at it today if it really was worth their trouble.!!!

      • Good point. Talk about a group that imported crime. The Italian Mafia immigration was the importation of organized crime to America. Cuomo is just a hoodlum a generation removed from the streets

  4. What if the next financial crash is sovereign debt? (How could it not be?) Where would the big money flee? Possibly low cost low tax places with smaller deficits and actually producing stuff people buy? Places with stable political and legal systems, with property protections and rule of law?

    Where would people themselves flee?

    Which states have no income tax, little debt, low cost of living, net exports, room for new residents, weak leftist politics, business friendly governments, jobs, warmer climate, lower pension loads, sistainable demographics, alternative energy friendly, needs immigration, stable government, stable legal systems, strong infrastructure, and are not run by math impaired hypocrites?

    Hint: not California, Washington, Oregon, illinois, Connecticut, New Jersey, or Peurto Rico.

    There is a reason Texas and Florida are perpetual construction zones, and have been for 70 years.

    • Doug, California checks all but a few of those boxes. There is a reason why 40 million people live here….and why our unemployment rates in the Bay Area are near Full employment numbers. We are nothing but a perpetual construction zone. There are literally hundreds of high rise construction cranes all over the Bay Area. It’s almost too much. More important, developers don’t build without a return. There is a reason they are building so aggressively…On the other end of the spectrum…Take the town of St. Louis. they haven’t built a high rise in their downtown since 1988. Their population as a result barely rises above the birth/death rate.

      Yeah, we could use less taxes…but we have zero debt..In Fact, we have a multi-billion dollar surplus.

      • I totally agree St. Louis , detroit, Philly etc.totally suck .my question is if the bay area is so great why then is the poverty level just shy a quarter mil a year and has endless news stories of the homeless. College graduates that make huge sums of money but are in worse shape than someone sacking groceries in another state.
        Why don’t those in leadership positions use some of that cash flow being directed on expansion redirected to the serious problems that are destroying the city.
        From my viewpoint those at the top are that because the problems aren’t affecting them personally that leadership is basically ignoring the seriousness of the problems.At this point SF would be one of the last places I would visit for a vacation.

      • I should clarify what I was saying in my last post.. We all will agree that the bay area is one of the most beautiful garden spots on the planet.. it is progressive and growing hand over fist.. at the same time there is the cancer.. that everyone seems to be trying to ignore that will eventually eat up the city of growth..
        St. Louis , Detroit, philly, Pittsburgh etc. the old industrial cities of the country where poverty and decay has taken over because of the outsourcing of their economic situation..
        They are forced to decay where San-Francisco is not they are letting the cancer grow by choice.
        We all will agree that if you have a cancer you hit it head on hit it hard and fight it.. what is disturbing is that those that are progressing are ignoring this serious cancer.. the piece to the puzzle and like most things won’t be addressed till it is so serious that it starts to consume the city.
        where if those with the power and the money and the progressive plans were to put a little of that energy into fixing this problem it could be resolved quite easily.
        instead young college kids making huge wages compared to other states and cities don’t even compare to the low end wages of working in fast food preparation or the lowest of positions.
        just saying.. it puzzles me why those with so much energy and money are so willing to allow their own social demise. I use to be liberal thinking because I totally agree that some need a real hand up.. not a hand out but a hand up a chance to become a useful member of society and self pride and self worth.

  5. I was in your part of the country the last three days. Austin is a great little town…Morning runs along Lady Bird “Lake, (it’s more of a river) but still a nice water feature in a growing town. The weather wasn’t as bad as I thought it would be.

    I missed a few of your past columns…so I am bit verbose here, making up for lost time…haha…but there are more “events” that scare me more than the ones you mentioned. The biggest is the fact that China sent strategic bombers and fighter jets to train in Russia a few weeks ago and is ramping up those exercises again in what many think is a back up plan in case trade talks break down. Look for North Korea to be a part of this too.

    Trump has a good cause in his fight against opioids…but that will topple pharmaceutical giants like Johnson and Johnson, Teva, Purdue and Endo. I think this awareness of the dangers of what some drugs can do to people will help mainstream a resistance to drugs altogether and start a more sustainable health movement. I haven’t touched a prescription drug in 10 years. I go to the doctor and if I am diagnosed with something, I find a way to cure it with natural remedies. It works. Trumps influence here reaches those 36% base of his that up to this point are dependent on their insurance, drugs, etc. I think the traditional drug stocks will weigh in on that industry and start a huge pharmaceutical recession. That mostly affects the heartland. On the other hand, this may have an opposite effect on Bio-tech, which seeks more natural stem cell, plant cell “natural” cures. That will affect Boston, San Diego and San Francisco in a positive way.

    Iran is in trouble, they are desperate, but of thousands of years of history will tell us, they are stubborn and won’t go down without a fight. Same with Syria and their partner Russia. Unfortunately in Iran’s case, the EU supports the Nuke deal, so it becomes and U.S. vs Iran fight. Will it be another Middle Eastern War we can’t win while putting America in deeper debt?

    Back to Asia…Since Trump opted out of the TPP, will China and Japan call in the US debt obligations if the TPP and trade talks don’t go their way ? The maturities of the debt securities is around the corner. The only other option is for the Fed to buy them up…just what we don’t need. China owns $1.17 trillion and Japan owns over $1.07 trillion. That is devastatingly HUGE.

    Finally, you mentioned Tesla. We need Tesla to succeed. My Model 3 is coming next week. I test drove one last week. It is one of the most exciting and revolutionary cars I have ever driven. I can’t wait to get rid of my Mercedes. Not only do I save about $250 in gas every month, but the range (310 miles) on this bad boy can get me to Tahoe and back with just a simple 110 overnight charge. My Mercedes can’t do that without a $65 fill up. But the biggest opportunity is new jobs…Tesla is a hit with consumers, especially here in California…The big eight…GM, Ford, Chrysler, Toyota, Honda, Hyundai, Mercedes and BMW will be right behind. The investment alone in ramping up electrified cars will be in the 100,000 new jobs range. Yes oil will suffer…kind of. We still need oil to power our long haul, factory and construction equipment, farm equipment etc. But, talk about bringing American jobs home, we can rid our dependence on foreign oil for good. America will be self sustaining on American soil pumped oil. Isn’t that a Good Thing?

  6. George, Yesterday I explained some common sense things: If a kid is hungry, you feed him. If a person is sick, you heal him. You house your grandmothers, you don’t bankrupt your unemployed workers. Your reply seemed to me in basic agreement with these common sense notions, but you were frustrated by other areas of wasteful spending.

    Good point, sure. But wouldn’t your side be better served by focusing on the actual wasteful thing, rather than holding common sense things hostage?

    Moreover, you fret pennies, and ignore the the big ticket items. The Conservatives just siphoned out $2 trillion with tax cuts borrowed onto the national debt. Stimulus in good times. I know you weren’t for it, but still, hardly a peep out of you. Conversely, the Conservatives lost us $3 trillion by forcing austerity in the recent bad times. http://theweek.com/articles/789956/biggest-policy-mistake-last-decade

    That’s a $5 trillion swing. How many kids could you feed for that? Best, Mike

    • O(K, common sense thinbgs> We have 11-million SA’s in
      America, most illegally so.
      To those of us in Trump’s base (I’m still nonpartisan, but this is Texas – the thinking state) seems to me if we can trim half that down and shut off drug flows that would be a good thing, would it now?
      So can give free cheeseburgers to little Jimmy any time, but common sense: Fix the big issues first.
      Finish the damn fence.

      • George, so you want to feed hungry kids, but it’s common sense to you to use them as pawns, to get a border fence? Man, that’s whacked.

        (Which BTW, is inefficacious too, and I’ve already given you the two effective ways to fix our immigration problems.)

        Stick to economics, which very good recently. Best, Mike.

      • >> but it’s common sense to you to use them as pawns, to get a border fence?

        They are ALREADY being used as pawns, by their oh-so-caring parents!

      • >> but it’s common sense to you to use them as pawns, to get a border fence?

        They are ALREADY being used as pawns — by their oh-so-caring parents!

  7. The 1929 v 2018 market comparisons are interesting.

    However, have you considered making the charts with log and deflated data?

    My guess is that it would add to the subject.

    • Actually, int. rates were higher going into in the Depression and it doesn’t change the comparison substantially.

  8. it,s not the guns,not the drugs,not the dogs….it,s the people. most active young persons where not raises like we were in the 40/50/60,s.i raised 4/four 3nbos one girl and never had any problems to this day,i,m 77.they will always be kids but are leadin a grown up life.it starts at home.parents can,t buy their kids lunch but drive at=round in suvs and have 2/3/4 telephones.it seems like all people overlook the real problem.

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