Our work has been indicating for some time (at least if you subscribe to our Peoplenomics.com site) that the markets are likely to place themselves in a “break-either-way” position by the time we get out to the congressional mid-term circus three weeks from today.
What hasn’t been clear is just how things will work out at the inflation point. There’s a chance we could be at the bottom of a trend channel, or a top. Let me show you what I mean:
Since we landed (in this daily view of our Aggregate Index just about smack-dab on the bottom of the mirror trend channel, it’s only logical that we would bounce today. I suppose it helps to know that the blue trace is the Aggregate itself and the red trace is the 9-day moving average (9DMA). Or, not.
Sure-as-shootin, there’s the Dow future’s: Obediently looking to bounce 140 points at the open. We picked up a few hamburgers worth of lunch-money on the long side and bailed in the Monday session to take some spare-change off the table, realizing that there would be a chance of something akin to a short-term double-bottom, which is what we figured the 89-point peel-off of the Dow was Monday.
Making lunch money isn’t a big deal…but making larger bets on the post-election outcome is where things get pretty damn interesting. Markets are “smarmy” this way, trying to ingratiate themselves with whoever the likely winners might be.
As a dart toss, we would have to look at pre-election action working its way up to channel support, but then, in the final election press a decline to the channel marked with a C. It is said that markets are “driven by news” – but a clearer view is that wave counts, channel action, and money flows are off “doing their own thing” and that news is always happening. It just gets “the blame” when convenient.
Although this is NOT TRADING ADVICE, it seems to us that we should be in a few days of up action, moving toward the B channel line, which would line up with options expiring Thursday (indices) and Friday (equities). Could be a good pop, too, since bulls hate to roll over and give bears Big Money. A continuation into early next week, then a correction, one final press, and then we should see which channel line it is.
As we have noted previously, the present action should be viewed with great suspicion. That’s because if the jackass party wins congress, America is headed for two years of sociopolitical gridlock.
That would be very bad for markets, but near as we can figure, the real Crash Risk is still ahead the Monday after Thanksgiving, or so. Our reasoning here is simple: From the top in 1929 (Sept. 3) to the Big Crash, we noted 55-calendar days. Similarly, in such things as ’87 and so forth, we see the same clustering about the 55-day from all-time-highs.
With this in mind, especially if the jackass party wins, we could see something like either a terrorism even over Thanksgiving, or there could be a Middle East Oil Embargo, or even something like a major West Coast Earthquake.
This latter is rather the intriguing possibility because Quakes seem to be “drawn to named holidays.” We had the Boxing Day (Banda Aceh) quake, the Good Friday (Alaska ’63) quake and so forth. Additionally, there has been plenty of recent quake activity around the Pacific Ring of Fire, and to our simplistic thought-models, when you move one side of a plate, things can get dicey antipodal to that.
There is a minor cluster of market breaks around 37-days after the ATH, in which case the holiday to watch will be Veterans’ Day on November 11th. Maybe something like a jackass party win…a fake-out rally – and then going short the 8th or 9th. (I think I’m on CoastToCoast with George Noory on the 7th of November, economics, new book and such…details to follow.)
As always, with out small cookie-jar of assets, we’re pleased to know that the Great Stealth Inflation (which is how the recovery from the Housing Bubble collapse was affected, Print Like Hell and hide the evidence under a TARP. As the National Debt continues to relentlessly compound, it will be entertaining here in an hour, or so, to see what the Fed gins up in the way of Industrial Production and Capacity Utilization.
With the export of US Goods sluggishly not responding to presidential exhortations (because the dollar is strong, effectively raising US export prices when landed in foreign countries) and with Retail Sales more or less steady (good), we expect to see Industrial Production stable. The degree to which is varies from bounds (or sales and exports) we will infer the Fed really does have a political thumb on the scales.
So watch and be amused…or not.
Great piece of investigative journalism in beliefs of Missouri democrat senator McCaskill over here. Project Vertias strikes again. ““People just can’t know that.” MO Sen. McCaskill Hides Agenda Including “semi-automatic rifle ban” from Moderate Voters, Staffers Reveal in Undercover Video it “could hurt her ability to get elected.”
Gee…a democrat willing to lie to and deliberately mislead voters…who’d have thought? Country’s full of ’em. Polling Company on FiveThirtyEight calls it Hawley, not McCaskill by 3.
In Aridzona, as CNN sees it: “Neck-and-neck battle for Arizona Senate seat.”
Between the Lines
Nothing against UnitedHealth, but if Obamacare is saving us all the money (as promised, right?) where’s all this profit coming from???
Between tokes? Musk says new autopilot chip to be available in six months.
Passings: Paul Allen
NYT Obit over here.
Tuesday Marketing Class
Dandy example of how “trying to be too hop” can backfire. As Coca Cola learned trying to roll with the reemergent te reo Maori language in New Zealand.
Here’s another “kitchen aid” for you: “Roasted pig in luggage found by CBP beagle at Atlanta airport.” Can we assume the flight didn’t original in Israel or a Muslim country?
Around the Ranch: Colder’n hell! Dropped from the mid 80’s to a high of 52 today and more rain in the gauge than expected – 3.75- inches in the past week with river flood warnings popping up in East Texas. Climate change? Not going to sell that around here, bubba…I’ve got a nickel side bet with Elaine that we’ll get some snow this year.
But enough already… all this talk about food and beverage has me primed to chase the cook around the kitchen…so come back for another helping tomorrow. On tap we’ve got a longwave discussion about prepping on Urban, ERP applied as a “whole life” concept on Peoplenomics, along with more detailed charts after what could be a rally into the end of the week.