Tape-Painting Tuesday

Although our entry into a short position last week looked brilliant at the close Monday, the Dow is set to open up 143 this morning (0.61%) when we checked future.  But the S&P is looking to open up only 0.19%.  Likely the Plunge Protection Team trying to ensure the market doesn’t do our projected K3 and rolls to K4 and maybe up from there.  But we will await closing prices before deciding whether an extra spritz of Right Guard will be needed.

A number of colleagues have remarked on the Robert Prechter (https://elliottwave.com) note to his subscribers (“It looks Like a Top“).  Though colleagues are admitting that they are still skeptical.

The class assignment for the rest of this week is to observe how the top is formed.  Slowly.  If, indeed it is the top.

(Continues Below)

 

Bolstering the idea, however, we see that Bitcoins are back down into the $5,720 range after soaring to our modeled predictions which we’ve shared with our Peoplenomics.com subscribers.  Main thing is that the Bitcoins are showing some entrainment with markets.

While the Dow was down 54 points yesterday, our proprietary Aggregate Index was down 92.73 Monday.  What that tells us is that the broader market was much weaker.

The S&P was down 4-10th’s of a percent while the tech-heavy BASDAQ composite was down almost 2/3rd’s of a percent.

What I’m expecting today will be a first bounce.  While we have no idea how long it will last, the idea of the professionals would be to suck every last civilian possible into the fray.

In Elliott terms, the action Monday may have been the tiniest wave one down, today could be the wave two up, then by tomorrow or so, a larger wave four.  Possibly bouncing some late in the week, but a harder down next week, and so it could develop.

Understanding Elliott Waves begins with a studied read of Ralph N. Elliott’s classic “The Wave Principle” and once you’ve been through that, the Prechter and Front book, “Elliott Wave Principle: A Key to Market Behavior.” These, along with a read of “Technical Analysis of Stock Trends, Tenth Edition” (which ain’t cheap at $110!) are the three books we’re using as “investor education” materials in our forthcoming Peoplenomics Handbook.

Once you have the basics down, then you’ll be able to pick up and follow where our own work has taken us over the past 20-years.

Playing Investors Like Fiddles

Oh, it’s easy to see when the MSM rolls with Ivanka Trump says tax plan addresses needs of US families.  We just want into that $1-million dollar bracket.

The (not so fond of Trump) Washington Post is pretty clear: Don’t fall for the latest GOP trick: Republicans are still cutting taxes on the rich.

I remember the last time this happened.  Theory was that the rich would build more toys – and that would stimulate the economy. Mowing the grass twice a week and such.  It’s all so laughable.

Ultimately, the market is still in position where it could move (unbelievably) higher.  There was no “upper bound” to the price of Tulips in the 1634 mania.  Sure things (being mental diseases) run their course in semi-predictable fashion.

It all depends on what you want to use as your rate of play.  It’s like having a video game when you can shoot your opponent once every year or two, OR you can play NRT (near real-time) where first look, first kill and the fastest internet connection and best keyboard wins.

In stock trading the analog is we enjoy two “rates of play” as well.  Our longest model has been bullish/long since October of 2015.  Even if the market was to fall on its ass this week, it would take a decline of considerable magnitude to unseat the long-term, slower indicators.

But, like I said, rate of play figures into it.  As you might have imagined, we have “fast money” (pappy used to call it personal M1 and we have our “slow money” personal M2.

The “slow money” approach uses modest leverage (or outright ownership) of declining finite resources (like stocks of gold and silver or oil, for example).  This money bought gold in 2003 ($273 per ounce) [but just one round, lol] and silver in 2005 ($5.94-$7.04 per ounce)  [maybe it was two rounds…].

Other long term leverage opportunities come from buying real estate. Really a useful strategy for the young, you simply put 20% down on a home.  Then wait for the total value of the home to rise.

Say you put $40,000 down and buy a $200,000 home.  The inflation at 3% happens for 10-years.

That compounds to 34.39%.   So that house has a likely net to seller price around $268.780.  You’d think of this as “I put $40,000 down and in 10-years with no effort, I made another $68.700.  When you sell the home, in this example, you’d have over $100,000.

There’s no free lunch, of course, so you’d be paying more for the next home.  Since the founding of the banker-takedown of Congress’ mandated role in creating money, the purchasing power of  money has decline about 3.25 percent per year.

That’s all slow play.

Faster play is our other trading idea which has been long since November.  This one, too, has had a pretty good run.

Making a trade every 10-months ain’t exactly CoD gaming speed, but along the way there have been three distinct waves where money could be amplified.

The really sad part?

Everyone (almost regardless of age) talks about wanting to be rich and so on.  Yet, when you ask these people “What books have you read on markets?” the answer is usually “None…but I’m going to…”  Yeah.  Right.

Ask them a more grown-up question (“What level is your trading account?) and they will look at you like you have two heads, or something.

Few seem to grasp the ugliest fact of Life:  You’ll get out of it about what you put into it.

Put stupid in, you get broke out.  Put smarts in, get money our.  Seems pretty simple to us.  But then lots of things get simple when you’re on the way out.

Laughing At Bitcoin

I assume you know that North Korea is one of the world’s largest, if not the largest, of all counterfeiters?

When I read the DPRK (democratic people’s republic of Korea) tweet this morning, it was laughable:

Comments

Tape-Painting Tuesday — 16 Comments

  1. Bitcoin Profits, those who take profits before it implodes, will be reinvested into the stock market giving the stock market more fuel to rise higher.

    • There’s not much retail driving this market. It’s mostly the FED goosing it with monthly injections and insiders playing with that knowledge. It’s that corrupt.

  2. It might be nice to use a pause symbol (P) after certain passages as a suggestion that the reader may want to stop reading for a moment, become still, and feel and experience the truth of what has just been said.

  3. I am trying using weekly charts to predict long term trends. So far it looks like it may have merit.

  4. Yeah G, you go baby! Don’t listen to us “detractors”, keep shorting that DOW, never mind the Yellen PUT. Bubbles everywhere,Palladium Bubbles, Crypto Bubbles, Currency Bubbles, Stock Market Bubbles and the GRAND DADDY of all bubbles.. The Bond Market Bubble.Of course every person who has tried to short the Bond market this year has gotten their face ripped off, including myself. Me thinks you are going to need something stronger than Right Guard.Your long bond friend has it half right. Yellen Put makes being long Bonds and the NASDQ a winning combo – FED is trapped in the zero bound range with currently no way out.

  5. When are you going to follow your own charts – bullish. You went short after Trump was elected in 11/16. You are addicted to missing the All Time High short wise & are trying to will a market downturn. Remember the old saying “The trend is your friend until it ends. The good news is that if you hold your short position long enough, you will eventually be right.

  6. No profit from last house a man lives in.

    Unless you find a way to take

    it to the grave with you.

    • It’s called a ‘Reverse Mortgage’. Take the money out and spend it before you die. You keep the house as long as you are alive. Afterwards the bank gets the house.

  7. As long as those printers are working 24/7 at the Fed, this market has endless opportunities for new highs, sometimes daily. How can technical charts and systems like EW theory work, if the forces behind the numbers aren’t natural?

    • I agree with Robert, there is no natural price discovery. The Plunge Protection Team was created by Reagan thru executive order to keep markets stable. The FED (ie. Exchange Stabilization Fund) with unlimited black funds and other Central Banks are Rigging the Markets with tons of paper. The FEDs purpose is to support the market, is it not. So to swim with the sharks and their algorithms, one has to understand how this sham works. It would seem that market psychology and historic charting practices maybe no longer work. Just my thoughts.

      Chris

      • I think those funds came from the Social Security income that was added to the national budget to..

  8. Amortization. Lots of folks don’t get it and yet it’s one of the most important pocketbook concepts. I think it warrants an entire column. Before I go through my quick amortization speech with my students I tell them it’s probably the most important thing they will ever learn. Banks, like everyone, want their money up front. That’s why the closer the loan is to its inception the more interest you pay.

    In your house example I ran the numbers assuming a 5.25 interest rate which is more than conservative with a 3.25 inflation rate.

    Ten years into the loan the buyer has paid almost $30K in interest, the remaining balance of the mortgage is about $132K, commissions will be $14K, property taxes conservatively $30K, down payment of $40K brings us to sunk money of $246K, not including maintenance, pmi or insurance. Very thin margins.

    People buy a house for $200K and sell it for $269K and think they made $69K when they really didn’t.

    The worst part is that when the home seller/buyer gets a new place they go right back to square one on the new mortgage just feeding blood interest to the vampire bank.

    Don’t chase rates people! Run the numbers and compare total interest remaining on the current loan to total interest on the new loan. People screw themselves all the time by refinancing to lower rates.

    • I like the website: hughchou.org – plenty of calculators on there to do the interest calculations, amoritization schedules, AND lots more, for all the scenarios.

      Many people can lower their rates in a refinancing, shorten their term AND save a lot of money.

  9. If the ‘story’ is denied by military, then accuracy may be implied. Or simply a ‘leak’ to make observing opponents think something. Sometimes it is just smoke…

    • Indeed! It essentially boils down to classic PsyOps, vetting information, collecting metrics (e.g polling data and political pushback/support) and then steering information in an deliberate direction to achieve a desired end state. In this case, there is solid evidence Minot AFB in ND and Barksdale AFB in LA are improving B-52 runway aprons, taxi ways, parking ramps, alert areas and crew facilities. Perhaps the renovations are simply routine, but why waste the opportunity to highlight them to America’s adversaries, forcing them to take notice. I am reasonably certain SecDef Mattis is fully engaged with the POTUS on these matters.