There is a dandy quote in “Technical Analysis of Stock Trends” (Edwards & Magee, 7th ed. 1998, p. 493) that goes like this:
“C. If you are not committed in the stock. Consider a penetration and close beyond the limit of the correction between the Tops (or Bottoms) as a signals of a Reversal, and make new commitments on rallies or reactions.”
If you don’t have a copy of “Technical Analysis of Stock Trends” it’s now in its 11th edition and it’s $80 bucks. We don’t buy one every year, but like the “Stock Trader’s Almanac 2019,” it’s one of those books you buy every five years, or so. Look for the changes and keep your wits (and cash) about you.
When the assembled multitude was by yesterday morning, I was giving you numbers of our Aggregate Markets work. Those were looking like a massive Double Top was possible, and sure enough, the Aggregate closed yesterday’s session at 25,006.64.
We would sure like to see that one hold. Because the previous peak in the Aggregate was 25,006.29 back on October 3 of last year.
What would be totally graceful would be a close today around 24,956 which would be a small decline. Because that would “mirror” the weeklyt close (and high for the period) of 24,936.71 that happened Friday, September 21 of last year.
What would be even cooler would be a close below that, and next week’s close coming in like that because that would make an almost perfect “mirror” formation.
My friend J.B. Slear of http://fortwealth.com told me about this “mirror” idea across long, rounding tops several years ago. On the way up, we had a weekly high close about 2-weeks before the dfaily high was set, The mirror on the way down MIGHT see the mirror of the September 25,006.29 which happened yesterday. And it would be dandy to see the weekly “mirrored” today or next Friday if this turns out to be a Reversal.
That’s unknown, of course. So while we scalped a little lunch money in day trades this week, our level of commitment to any outcome remains – as I’ve told you before – uncaring. We need some convincing movement either in new all-time highs if you’re going higher, or a solid downside break to which we can apply some of the trading tools like the Elliott Wave forecasting spreadsheet that our Peoplenomics.com subscribers can pick up from the Master Index page.
That’s not a real complicated tool. (I mean come on! Consider who wrote it, right?) But the idea is that if you see a clear first wave (under Elliott) a spreadsheet can make an “educated guess” at how the Wave 2 (or B) will work out. And if you have completed 1 and 2 (or AS and B) waves, then the C becomes more probable and you can estimate exit points to take some of the trade off at various targets.
We don’t offer trading advice – ever. But, trading is sure a lot easier than buying an airplane ticket to Vegas. It’s “the legal numbers racket” which the government approves of because they get their slices.
OK…that’s all “living in the background” as Baltimora might have sung it.
What matters now, going forward is whatever happens next.
So, Here’s What’s Next
A couple of data points. The first being the Federal Reserve H.6 money stocks report. Here’s the most recent reading:
“Thirteen weeks ending April 15, 2019 from thirteen weeks ending: Jan. 14, 2019 (13 weeks previous) M1 +3.1% annualized rate and M2 +4.0% annualized rate”
Which means what, exactly?
The Fed, looks to us, is trying to figure out how to keep the market afloat but not soaring crazy into screaming new all-time highs. After all, that would be political fuel for the Trump side and it would be back for the Taxacrats – all 30 of ’em who have announced their wannabe status already. (We expect more – since there’s no limits on stupid).
The other side – if the money supply was held too tight, it would riase the cost of borrowing (higher rates) and the (stock) market would drop and money sought higher and arguable more reliable returns from the (bond) market.
With all this to consider, the next economic touchstone of the day is the GDP report just released by the Bureau of Economic Analysis.
Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent.
The Bureau’s first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The “second” estimate for the first quarter, based on more complete data, will be released on May 30, 2019.
Or, if you do better with pictures:
Just so you remember the economics here: M2 Year on Year is up 3.9% and GDP is measured in dollars, was there really any growth or is it just a papering-over game? (Come on, I’ve been dropping hints all over the place!)
After the data, the Dow futures were up a bit. But, with things like Housing data coming early next week (Tuesday) and the “Sell in May and go away” period just ahead, trying to outguess the market is a fools game.
Which may explain why I enjoy it so much.;
As upright animals, who do a credible job of imitating those chimpanzee’s who surf Instagram, in keeping with our labeling of humankind as “button pressing apes” the real mystery continues to be a Yoda-like question: What is the meaning of life?
Nothing else really matters, after all.. So when we paw through the news machines, we wonder “Where’s the gold to be panned from these stories?”
Admitted Russian Agent Butina to Be Sentenced in U.S., Faces Deportation. A hero’s welcome and a nice dacha? Or, into the penalty box (at Lubyanka) for failing?
Meantime, in Spy vs. Spy territory: Head of FSB’s Secretive Unit Detained for Bribery – Reports. Open desk, perhaps?
No, it’s NOT climate change as A deadly storm pushes east. Around here we call it Spring weather. Although we were kind of hoping Al Gore might visit Detroit this weekend – where unseasonable snow is expected. More details in the D-FREEP.
People’s ability to think clearly is in total free-fall when you see headlines like this one. “Climate change worsens economic inequality, scientists say.” So does a college degree…so WTF?
Meantime, the weather continues: Storm Hannah to bring gales and heavy rain to Ireland.
And, you know crime is a real pain-in-the-ass when Theft of 18 colonoscopes worth $450G under probe, police say.
While the border war with Mexico simmers, Trump to receive immigration plan favoring high skills over family ties, Kushner says. Does this mean ICE will stop dumping 1,400 illegals a day on ‘Merican streets? No.
Interesting report for Peoplenomics subscribers (first of two parts) now that the US Navy patents on anti-gravity technology are coming out. Part 1 will deal with the theory side while part 2 next week will cover the economic roll.
So, moron the morrow…