Week of Screaming Rally?

Forget Las Vegas, Atlantic City, or even the Native American casinos that we’re fond of.  There’s a more interesting set of odds evolving accessi8ble from any secure online device and a trading account…

Right up front:  This is NOT INVESTMENT ADVICE.  This website only talks in generalities about the economy and tosses out ideas that might be – how to say this? – interesting.

Here’s the set up:

Last month, Options expired on July 19th and 20th.  We look at our Aggregate Index for that period and we see that on Thursday the 19th of July, our Aggregate closed at 23,924.96.  Thursday is when index options expire.

The commercials will sometimes drive a change in Friday’s markets during options week to cover their index options commitments (and a little something for lunch, eh?) that expire Thursday.  So, July 20th, the Aggregate closed at 23911.06.  Not enough to be a big deal, but covering wasn’t too painful.

Now look at where we begin this week:  Our Aggregate closed last Friday at 24081.56 after hitting a short-term high last Tuesday of 24293.24.

Now we sit back, have the cocktailer bring us a libation, and consider some data points we half-way remember from reading UrbanSurvival over the years (and maybe subscribing to Peoplenomics) where we are unabashedly infatuated with the art of making – and keeping – money.

  • There is a weak tendency in the data for monthly highs to happen around options expiration.
  • Conversely, there’s a weak tendency for monthly lows to come in around end/beginning of a month.
  • We also see in the data (Peoplenomics subscribers can refer to our recent notes on probability quadrature) a tendency for there to be a roughly 3-percent gain and a similar loss monthly which makes it “easy” (on paper, lol) to see how to double our money in a year playing extremes of market sentiment.
  • That said, playing the stock market must be approached more like gambling than anything else.  The late Paul Samuelson’s work demonstrated this (which is why he racked up a Nobel Prize in Economics)  The book by Burton Malkiel (A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing) is at least in part based on Samuelson and the MIT Econ Department’s work showing how statistics work out in practice.
  • Oh,, and we also know at the market tends to perform a bit better than inflation…

Next, we step into the kitchen where our big herking Vitamix blender stands at the ready.

How far up should out Aggregate Index go this year?  As a dart-toss, how about 10%?  Through the end of July, the M1 *primary cash) in the economy was up 4.2% thanks to the Fed’s orders from the money-printers while M2 is up an even 4 percent.

At the same time, GDP is going up 4 percentish, too.  Since the Fed has not overprinted – and is “holding” on rates, they want rates to go up.

Problem is, as of Friday, the 10-year Treasury Note was around 2.86 percent and this morning in the futures it looked like it still wasn’t buying the hype about “raising rates.”  This has to be tossed in the blender, too.

Last week, I told subscribers that “ideally” we would have a decline in the latter part of last week beginning Wednesday and then carrying through the end of the week and now it looks like we will open on the downside but less so than earlier.  That goes into the blender.  Turn-around Monday, maybe and then she blows to the upside?

Finally, we have the output from our “Golem spreadsheet” which offers an interesting “delta avg1 divided by delta avg2” approach as a trading signal (when compared with delta avg1, lol) and it says (but this is not advice)  one more high to go this summer.

The last thing into the blender is the “Stock Trader’s Almanac 2018 (Almanac Investor Series)”  Just toss in August, since we’ll need the rest book for guidance later in the year.

Now fill with ice (because all serious investors “chill” fon Monday’s) and then hit frappé for about 3-minutes.

What comes out is the idea of a wild buying in at the lows today.  A run-up and maybe records late this week.  MAYBE.

We’ll be watching the clock, closely.  That’s because the day’s low MAY come in between 5 and 20 minutes into the trading session.  If it does, then we’ll be thinking “Aha!  Rally!”  But, we will await confirmation  (1-hour and 13-minutes into the trading session, or 10:43 Eastern, 9:43 here in Central) when the Big Money eventually shows up for work.  The inflection points in this time-frame vary – which we chalk up to weather, cabs, and traffic.

Still, this is about an even-money bet.  But the idea with markets is they move in the direction that seems to take the most money from the most people….and that’s what makes this a horse race.

End of last week was meant to scare the Chicken Little’s of the world.  We will find out how good a job it did by Friday.

Long-Term: Bad Metals Advice

Speaking of non-advice:  I happened to pencil out some long-term results of precious metals because I’ll periodically get notes from Silver Bulls who assure me their assorted junior minors will be going to the moon just any minute.  Toss in a quote from non-economic soothsayers about how there’s huge upside for silver and “What can you tell us about THAT, Ure?

You won’t like my answer.  But, here it comes again, tea leaves of futurtans aside…

When we recommended gold (and bought our lone golden round) it was $279 – back in 2001.  Today, Gold is around $1,200.  Divide the latter by the former and we see Gold’s price is up 4.3 times.  What’s more, compared to CPI inflation since 2001,  the inflation-adjusted cost basis is $394.63.  Which means, the REAL (Pre-tax) RETURN is around 3 times.

Silver is a different kettle of fish.  We bought our “lone round” in 2005 when it was $7.02 for the ounce.  Working out the inflation to present-day, just breaking even on inflation would price silver at $9.01 per ounce.  So the REAL RETURN on silver has been (based on futures at $15.22 this morning)?  1.689-timesOh, also pre-tax.

Is there a lesson here?  Sure:  Despite all the HS&J about silver (that’s hype, shuck, and jive) the Reality Check is that on the basis of how many cheeseburgers it will buy, silver has been a long-term (pardon the pun here) fool’s gold.

Not saying it won’t turn around over time but remember that while there are certain medical uses, the popularity of things like colloidal silver and so forth, the reality is that for now, the gold silver ratio is more than twice what it was back when.  It was about 39 to 1 back when and it’s up nearing 80 to 1 now.  At some point, it’s just “bound to get better” but that’s like betting on when a lucky streak in a casino is likely to end.  MIT Econ department back in Samuelson’s day would be skeptical of any system trying to call the turn with such advice.

And then we have Bitcoin.  Back down to $6452 when I looked, a far-cry (and a 75% decline) from it’s all-time highs.  I know a certain radio show host nationally who has become a True Believer in the crypto “something for nothing/free lunch is real” mem, but I just don’t see it in the charts.  When Bitcoins exceed the old high, there will be plenty of gains left overhead to be harvested but let me tell you a story.

A really good electrical engineer I worked with once told me the classic story of statistics.  He was fairly fresh from “big projects” at Los Alamos…top of his game.

So up comes the Washington State Lottery and despite being an avowed lottery skeptic he bought exactly one ticket.

“How could you do such a thing? After all the bad-rap you’ve given lotteries?”  This was back in the old day, mind you.

“George, if I buy zero lotto tickets I have no chance of winning.  But, if I buy ONE ticket I have a greater than zero chance.  However, in order to have a significant chance, I would need to buy several million tickets.  I would rather have SOME CHANCE than NO CHANCE, but more than one ticket?  That’s how the Lotteries are essentially a tax on stupid people….”

The word to study is “innumerate.”

Or, for $10 bucks, the 1986 paperback is still in print: “Innumeracy: Mathematical Illiteracy and Its Consequences/”

To spin off the classic Yogi Berra quote “Investing is 90% mental and the other half is looking at the data.”

Trump N Mouth Disease?

Oh my, here we go again “Omarosa claims she heard Trump N-word tape after book’s publication.”  Walking back?

What we really want to know is A) “Did someone really secretly record Trump using the N-word?” and b) “Who recorded and when AND WHO RELEASED IT?”    You don’t think the Intel community can make up tapes on demand?  You haven’t been around recording studios much, lol.

The N-word is used by what the lefties call “comics” who get a “pass” from “correctness police.’  It’s also an everyday term on “the street.”  This all circles back to the problem we outlined a while back in a Coping article:  America has run out of “shock language”  See “America’s “Hot Language” Crisis” from mid July…

Language for lefties and legitimate social victims only.  The left is where the linguistics are, lol.

Drop the emotional hooks and stick with non-emotional metrics, please… (won’t happen, but we can hope).

Mean-Times in Media

We are struck by the Boston Globe’s emerging leadership in the bash-Trump movement.  As you may know, the BoGlo editorial board is trying to coordinate an editorial anti-Trump-rising by  in papers all over the country.  (To think I once worked for their broadcast division in news….my, oh my…)

Remember, the Boston Globe endorsed Hillary’s bid for the White House.  Seems their support of anything democrat – like the NY Times which recently added a white-hater to their editorial board – and other Northeast power papers – has never wavered.

Despite the Election.

Ah,, but it’s all the essence of Digital Mob Rule’s Attempted CoupDivide and conquer.

The overarching, real agenda here continues to be the taking-down of Trump…and as we call it, Omarosa’s got as good a shot as Hillary, Strzok, Page, Podesta, Clapper, Rosenstein, Comey, and even Mueller et al.  Because she’s got deeper emotional hooks into the mainstream.

Quantum Hype

We’ve been looking for a quantum computer for ‘ol Grady, chief programmer and whiz of the Nostracodeus software project.  Damned if we can find him one, though.

Notwithstanding, however, the hype machine is running flat out already: Enterprise Quantum Computing Market to Reach $2.2 Billion by 2025, According to Tractica.  Get back to us when we can by one of the ‘Zon and when the Windows-19 service pack finally runs it BSOD-free…

We Know the Answer

As NASA spotted a vast, glowing ‘hydrogen wall’ at the edge of our solar system, we had the divine inspiration:

It’s the Prison Wall.

GMO Blow-Back

We have been watching the situation involving Round-Up with concern for years.  Now that it’s being linked to cancer risks – in legal proceedings (and may be legislated away, see Germany aims to end use of glyphosate in this legislative period: spokesman) there’s an intriguing question for our staff of highly unpaid legal advisors:

“What’s the extended liability of farmers who planted glysophate-ready crops?  How is that house of cards going to fall?  And, on whom?

Korea’s “Little Detroit of the West?”

Empty shipyard and suicides as ‘Hyundai Town’ grapples with grim future. Welcome to cyclical economics.  Can K-Pop save an entire nation?

SNH:  Monopolistic Practices?

(Sick Newsroom Humor): 313 People Injured as Boardwalk Collapses at a Festival in Spain.  No word on injuries at nearby Park Place.

And speaking of properties on the dark blue finishing line, up in Traverse City, Michigan the old Park Place Hotel is being refurbished.  Take a gander at the picture – that’s what a hotel on Park Place ought to look like.

We;ve always been fans of 1920’s-era art deco buildings…Let us know when it’s ready.  We;d love to play a game of Monopoly there.

Week Ahead

Consumer expectations mid morning today.  Import prices tomorrow.  Wednesday comes retails sales then Housing Starts Thursday and Friday wraps up with consumer sentiment and leading economic indicators (its an anagram)…

Hardly exciting, but our Golem says onward and upward, so we shall see…

Moron the ‘morrow...

28 thoughts on “Week of Screaming Rally?”

  1. Cheery gold bug thought for the day:
    Gold can be synthesized but at great cost (also extracted from sea water, BTW). So there is a cap on its value.
    What if advances in molecular chemistry have allowed the PTB to have a cheaper method, they have kept the process secret, and they have been quietly dumping it into an unsuspecting market? Same with Ag.
    Or, what if a cheap synthesizing method is developed tomorrow and the public knows about it?
    Think supply and demand and what happened with industrial diamonds.
    Happy investing!

    • This is a very interesting comment, thank you AG. I would agree with your hypothesis regarding the PTB already producing. CERN would be the perfect guise, having the most advanced particle accelerator in the world. What a great way to ruin you rivals currency/ economy; allow them to build up large gold reserves, only to then show they world it’s all worthless. Pure evil genius!

  2. Jim Meehan, MD is my go to local source for science based medicine. He recently stated that research shows glyphosate passes up the food chain and can be found in human fat. It also is not flushed out by the liver. We not only are poisoning the bees, without which we have no crops, we are also poisoning ourselves with Round-up.

    Anyone who buys and uses that product is a YUGE dumbass.

    • Monsanto and Fukushima are the answer to the social security problem, but don’t tell anyone

      • I think you and I are on the same page..PNW is warm..and there seems to be a problem with bees surviving.

    • You forgot high-fructose corn syrup, especially, in sodas…causing the fatty liver ongoing 30 years now; please don’t sit all day and suck on those high-fructose laden sodas, your liver will get so fat, and you will get diabetes, just like that. Also, glyphosate affects the guts, acts like an antibiotic, constant killing of good fauna, causing irritation and a lot of other nasty effects. Don’t ya ever wonder why people have so many digestive disorders and are avoiding gluten, why did bread become so bad? Yeah, there’s 2 pesky little secrets, bromide in the flour, glyphosate sprayed in the fields to kill weeds pre-planting, and then again pre-harvest. Go organic, then find the flour products that don’t add bromide. When you go down the bromide rat trail, you get to fluoride, and you’ll see where the sheeple comments come from, then you get to Iodine and Iodine deficiency, and hypothyroidism, (aren’t there a nasty bunch of descriptors for that disorder?) then you get to depression and anti-depressants. It’s a fun ride, and when you stop, you get off the pharma-go-round and reclaim yours and your family’s health – that’s if they’ll listen to ya, normally they won’t, cause they believe the CDC, and their doctah, hook, line, and sinkah!

  3. I’ve typically taken long positions in mutual funds or relatively small medium term positions in stocks. I finally decided to take the plunge and took a small position in a 3x etf. Bought at the day’s low Fri (yeah, risky move buying into the weekend) and hope to unload it late this week for a respectable gain. Here’s to your short rally, hopefully it pays for my subscription!

  4. “Oh my, here we go again ”

    God it gets old after a while.. that reminds me.. I have to change my voting status from Dem. to Rep..

    the puppeteers must really be struggling .. and congress doing the https://www.youtube.com/watch?v=P8yqWU0UzeY
    since I believe they once again don’t have to accomplish anything at all.. its all done for them and will once again blame someone other than their incompetent selves.. What gets me.. is the same old bunch that have the crappiest work record in history will be voted back in AGAIN…
    what is funny is I got an email for donations to the.. HAITI relief.. LOL..
    https://www.youtube.com/watch?v=_ke9TuLLbXk
    didn’t they look good LOL.. convincing even

  5. What ?! Ure news nose suffering from seasonal allergies? Where the blazes is the “dirt” on the SeaTac incident on Friday??? What did U not notice the the Giant Q on the side of the plane in question. Pretty fast scramble for fighters jets out of…what base Navy,AirFarce?
    What was shot off from Island in question several weeks ago that looked like a surface to air missle??? Same day as Nuclear Inbound Missle alert goes off by accident in Hawaii …just as POTUS was about to arrive? Anyone still think this is a Live Action Role Play..
    WWGOWGA

    • No worries on any glowing lights..that would be stupid..and lets face it they’re not STUPID..
      What would be the easiest is internal division with a huge financial separation.
      Then target the ones that aren’t controlled with the support of the masses.
      If its another country then a few well placed emp blasts. It would only take five or six..then withhold supply lines.
      We aren’t tooled to manufacture and it would take five to ten years to get to that point.

      • after the what ninety percent have died during the winter then come in as the big savior with relief supplies.. just in time to plant crops.. and have the golden glove given to them for saving humanity..Now you might say.. well we would do the same to them.. yup we would.. and they would have a hard time but… and that is a big BUTT.. these other countries have been running duck and cover drills for years.. building bunkers for the population stockpiling supplies.. in the USA the only stockpiles are are for the very few.. YUP I FEEL TEARS A STARTING.. cause you and me we ain’t invited.. LOL so in perspective.. they may have thirty or forty percent survivable population.. we have five or less..
        in some countries.. a can of soup is worth a night with a woman a loaf of bread.. a gallon of clean water.. a warm blanket.. hmm.. puts a whole new perspective on it..since we have been blasting the heck out of a lot of these countries.. they are use to hell we are not.. and I am pretty confident they don’t have a lot of love for our country or people.. we take..( not really the people just the elite that want it all unfortunately the image flows over onto the whole population..)

  6. “What comes out is the idea of a wild buying in at the lows today. A run-up and maybe records late this week. MAYBE.” Thank you, George!

    Every thing else was just too confusing for me, but I respect your work so much that I called in my short position ;-( after reading and wait to get long at the appropriate moment. Indeed, horse racing, many years ago, was easier. This is NOT INVESTMENT ADVICE.

  7. Dow Theory Bear Market Confirmation:

    Dual registration of daily closing lows, (3/23/18 DJIA & 4/9/18 DJTA), for the averages’ secondary trends confirms that the primary trend is down. The only way for the market to negate that signal is for both averages to climb to new highs, which hasn’t happened in the last 7 months. In other words, wave 2 has topped and wave 3 down is starting… Paraphrased from EWFF 7/29/18

    None of the new highs has reached the Jan 26th of 26,616 (DJIA).

  8. I have to agree with you George on metals I see a drop to below $10 and $800 respectively before you see any up movement! The big boys are going to do everything they can to chase the small players and suckers off before there is any movement besides down!

  9. To paraphrase, ‘the deep state may have faked the tape of trump using the n word, but even if trump did use it who cares because it’s culturally acceptable for some.’

    That sounds like ‘there was no collusion, but even if there was it’s not illegal’.

    I see a pattern. Jeesh.

    • Wanna cite the CFRs and tell me where we can find “collusion” defined? Nope, Roger Stone’s m,maybe right… witch hunt.

      • You’ve been trained very well. Where have I heard that before?!?! I won’t waste time discussing conflicting dogma with a cult’s member.

        Suffice to say that your defense ‘no CFR covering collusion’ won’t get far. More charges will be filed. It matters not that collusion won’t be specifically charged.

  10. George if you are going to compare returns on gold and silver to show their respective returns you need to do so, without the bias of your entry point.

    In 2001 the entry point was 4.52 making it a return of 3.3… while not as good as gold, still decent and not worth dissing. It also is an easier medium of exchange if shtf.

    Bought my lone nugget at 4.52 and mailed it back at $20 as registered mail would not take a more valuable package than that.

    Watched a very disturbing geo-engineering video showing how oxygen levels are plumeting as the heavy metals being sprayed are killing plankton, the largest source of oxygen on planet Earth and trees the second largest and as fire crews are stating fires are behaving weird…. Probably because of those heavy metals burning with the trees.

  11. Metals of any color are never an investment, except in a very short-term play. They are preservers of wealth, worth approximately the same today as they were 10, 100, or 1000 years ago.

    You have to read clear to the end of the NYT piece to read where Omarosa states no tape exists and she never heard DJT use either the word in-question, nor any of a number of other potentially-offensive terms, but states that: “He must have, at some time…” REALLY? The NYTWaPoGlobeTribTimes and the MSP networks should all be ashamed of themselves. If there remained any intellectually-honest Liberals, they’d be Trump supporters by now for the simple reason of the blatantly obvious injustices through which the man is being put.

    When I was a kid, lactose intolerance and peanut allergy were so uncommon (<1:10000) as to be nearly nonexistent, as was autism (@1:14 newborns is diagnosed with autism, and of the 300-500 people with whom I’ve frequently personally interacted since winter went away, seven RISK DEATH if they EVER leave home without an Epipen. Glyphosate? GM foods? Perhaps a combination of both? My feeling is it’s the latter, but simple common sense and an ability to observe should demonstrate to the non-ChemE and non-geneticist that there’s a problem now which didn’t exist when the Boomers were “blooming,” and its likely cause lies with one or t’other of these esteemed groups of scientists…

    If you plan a stay at the Traverse City Park Place Hotel, you should reserve for a month, in the spring, because those $800 rooms with a $700 discount are a lot easier on the pocketbook than those same $800 rooms with a $90 surcharge. This would afford E and yourself the opportunity to sample a portion of the local bottled cuisine and also to trade BS sessions with the locals, down on the waterfront. The Traverse City area sports something like 38 craft breweries and brewpubs, about the same number of wineries (the world’s best blueberries and pie cherries come from this part of the planet), and 6-7 craft distilleries (Traverse City Whisky Company’s rye and bourbon acquit themselves favorably when compared with anything from Northern Kentucky.) At least it did when I was there a couple years ago. AFAIK they’re all good. I’m partial to Mackinaw and Monkey Fist, and to Earthen Ale, but was also in town not-nearly-long-enough to sample wares from every brewer, let alone the wineries…

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