What Kind of Christmas? 3 Futures Emerge

Three very different pictures of the future are emerging at what we think of as the “financial sports book.”  And two of the three views are driven by some basic Elliott-wave thinking.

The first future is the one that should near completion in coming days or weeks.  That’s the future where the big Wave 1 down from all time highs resulted in the Wave 2 bounce that appears to be completing.

Unless you are a Peoplenomics subscriber, and playing the “home version” of Aggregated markets, it may not be clear.  But in the Aggregate, we put in a low (bottom of Wave 1 of 19,841.45.  From there we got our first Wave 2 action up to 21,234.75.  Whether that’s an A (or 2) will be revealed eventually.

Point is, we pulled back to 20,667.58 for a (ii) and then drove up to 22,681.34.  A powerful Wave (iii) this one completed January 18 just ahead of the three day MLK weekend.  Oh, options day, too.  (Just like this week.)

The Wave (iv) candidate is the low of 22,330.05 that came in on January 22nd.

From there, the Wave (v) of II (or (v) of B) got rolling big-time.  As of this morning, based on futures pricing, we’re likely to trade around 23,531 level today.

One of the basic rules of Elliott is that Wave 5 must be equal to (or larger than) Wave 1.  Knowing this, and seeing that the first wave up was 1,393.30, we can add this to the Wave (iv) low  (22,330.08) which means the Wave (v) of II COULD end and we could be heading down in earnest sometime over the next couple of weeks..  Still, with a possible level of 23,723.38, as a target, there’s a slim chance of another 5/10ths of one percent upside between now and the Friday close.

That’d be graceful.  But it’s here that the future could divide.

You see, if the market begins to break down in the next week or two, and this is the “end” of larger waves, we could pencil out a future where the market goes down like crazy for a month or two which would be logical given that the Wave I down lopped so much off the market.  The largest wave is usually Wave III and we could be set for entry into that.  So take the big market declines of 2018 which fell from 25,006.29 down to 19,841.55 in December and think of that as a “getting started decline.”

OK, this is horrific but it would be a logical result of everything going badly in the real world outside of markets.  The border funding could still shut down government.  The trade talks with China could still implode.  Europe could fall apart and that might be bad enough that money which might have taken refuge in the US market would be called home to pay off bad margin calls and so forth.

Toss in an actual report from special persecutor Robert Mueller that reveals genuine, legit, efforts to use the Russians to influence elections and back it up with an impeachment drive that gets legs, toss in Melania getting sick of it all…well, in THAT kind of future, the market’s wouldn’t prosper at all.

But Wait!  There’s a Bullish Case!

Just as there’s an “all things go wrong case” that the markets could track, there’s a bullish case where “everything goes right.”  The Trumps live happily ever after, there’s no Mueller report despite the “process crimes” because who even remembers what was for dinner 3-weeks ago, let along what happened 3-years ago while smoking a cigar and sipping drinks?

In the bullish case, there’s a minor pullback for a subdividing II, but then reveals itself as a smoking Wave III up which, instead of crashing, reads nothing but good news.  Some El Chapo money goes to the wall, making good on a Trump promise, there’s nothing impeachable and that peters out, the democrats begin to self-destruct on the radical socialist idiocy.

In the Bullish case, there’s a pullback following the options expiration and a logical top to the recent rally.  But it would turn out short-lived and we would see oil prices, precious metals and the like begin to firm and gold and silver would begin to move up again.  So would interest rates and the Fed would come up with two more hikes that merely slow the rate of climb down to something less manic.

Still Shares and oil at three-month highs but no love for euro and gold holding over $1,300 supports the idea.

So there are two versions of the possible future.  And the third?  Well, that would be a kind of “None of the above, we muddle along.”

This is what making investing very much like playing “Russian Roulette” with two bullets in a three-cylinder revolver. 

Regardless, as the futures have been advancing as I write this, looking to me like the odds of another one percent advance from where we will be trading today isn’t statistically probable enough to get us out of cash.  The future will be along soon enough and no point making brash decisions.

The future wears a ghillie suit, but the Elliott and Aggregate tools are useful when you’re trying to spot movements in the brush while you still have tactical advantage.

Now, About Christmas!

We just got the fresh Retail Sales data for December – delayed because of the government shutdown.  Let’s roll with that first:  Que the graphics:

“Advance estimates of U.S. retail and food services sales for December 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $505.8 billion, a decrease of 1.2 percent (±0.5 percent) from the previous month, but 2.3 percent (±0.5 percent) above December 2017. Total sales for the 12 months of 2018 were up 5.0 percent (±1.4 percent) from 2017. Total sales for the October 2018 through December 2018 period were up 3.7 percent (±0.5 percent) from the same period a year ago. The October 2018 to November 2018 percent change was revised from up 0.2 percent (±0.5 percent)* to up 0.1 percent (±0.4 percent)*.”

What this means is that spending on Christmas this year was about like last.  Because while there was an increase that was all basically offset by actual year-on-year inflation.

Next out is the Labor Department’s January Producer Prices report: Simply put, it’s looking a little deflationary to us:

“The Producer Price Index for final demand edged down 0.1 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices also fell 0.1 percent in December and inched up 0.1 percent in November. (See table A.) On an unadjusted basis, the final demand index advanced 2.0 percent for the 12 months ended in January.  .”

See the problem? Blue line:  Final Demand Goods.  Are we arriving at the long-discussed Consumer Super-Saturation?  Damn hard question that, but after you own 3-UHD TVs and two cars per person what do you really need besides food?  (We could argue about whether you needed that “other stuff” another time.

Later on today, business inventories report at 10 AM Eastern and then the Fed H.6 Money Stocks after the close which will give us insight into which thumb is on which scale and how heavily.

Oh, look, now the futures are looking a bit glum because of all this deflationary stuff..now the Dow’s up only 80.

Italy Out of Olive Oil?

Oh yes, Times of London reports they could be out of olive oil by April.

Interestingly, this is being blamed both on disease and a COLD SNAP which falls into the “climate change” bucket by the climate marketers but to more rational people it’s just “The Weather” which has ALWAYS been variable…(But who do you know who has been telling you for how long that an extended Solar Minimum could bring food shortages?)

See, one of the things that happens at the end of an economic long wave is prices hit bottoms.  But then they begin to rise.  And if there’s a Depression lurking in our future, be ready for “hungry times” ahead.

So far, not much to worry about.  In New Zealand, for example, a big ag country, “January food prices rise 0.8% from year earlier.” while here in the U.S. the Consumer Price report out Wednesday revealed ” The food index increased 0.2 percent, with the index for food at home rising 0.1 percent and the food away from home index increasing 0.3 percent.”

The management problem for the government continues to be making the transition from pernicious deflation (where prices go down and the purchasing power of money goes up) to the “other side of the gap” where prices go up and so people don’t “sit on their wallets.

Refer to the previous story about Producer Prices.  Those need to go up and since they’re not, we aren’t yet- buying into the idea of a bullish big wave up on our doorstep just yet.

U.S, Dept. of Interesting

General Motors launching AR?V ‘sweat-free’ electric bike company.  We’ll take two…

Some else is rational: Sen. Joe Manchin slams Green New Deal: It’s not a deal, ‘it’s a dream’.  Or, political crack to the phoneheads.

Since both Elaine and I are over 70, this kind of story gets out attention: “Going Broke Remains Top Concern in Retirement: Survey of CPA Financial Planners.”

And the EU scores another notch in our “They can’t govern but they sure bitch a lot…” tracking as Google, Amazon among those targeted in EU unfair practices digital rules.

House guest coming today so busy banging the keys today until he arrives…moron the ‘morrow with the moron being you-know-who…

Holy smokes!  Dow futures now negative…I must not the the only one seeing deflation lurking despite the Fed’s hype and rates…..

25 thoughts on “What Kind of Christmas? 3 Futures Emerge”

    • Thanks for sharing… That’s one of my favorite songs to and sheknocked it out of the park.

  1. President Milktoast has become an embarsement to the Make America Great Again movement. The Dems have slaped him in the face again with that 1.7 billion Wall offer, & PT hasn’t a clue what to do. If you talk tough & then act like a confused milktoast, you will not get any respect on any part of the globe. PT’s stupid idea of a gov’t shutdown backfired on him because when you pay employees for the shutdown period, it is just scam politics. Just another example of PT’s confused ineptness. This job is way to big for him. He should go back to real estate & bankruptcies. He already got his tax scam.

    I read yesterday that cash positions in investors accounts is at an all time high which could negate a February correction.

    • There has to be some kind of dizzying ramp up to draw in all that sidelined cash. When it is all in, then the crash will come. I’m taking the dollar strength to be European money looking for yield but also safety. A 3 percent 10 year note is a pretty good deal when yields are near negative in Euro land but its a really good yield when the dollar is gaining another 3%in 6 months. Lots of evidence of Euroland trying to get out of the Euro…… the end is coming for the Euro.

    • From Wikipedia….Caspar Milquetoast was a popular American cartoon character created by H. T. Webster. The term “milquetoast” has since come to be used for a meek or timid person.
      I hardly see how Milquetoast applies to PT. Are you sure you are using the right insult for him?

  2. Just reading where Dec. sales were a disaster,well that was after you get thru all the B.S. on the rousing Christmas sales which were more wishful dreaming then reality,then you switch over to the Baltic Dry Measure which has just about hit bottom, and add in that 70% of all auto loans are behind in payments while the orange clown tries to play his great wall and the China/Russia card of making America great again,after all its all their fault.
    I can’t help but wonder how any sane person when your trillions in debt can cut taxes on the 1% by billions while increasing spending for the MIC by billions more,I suppose its some kind of new math that some think tank came up with while wall street keeps rolling along on freshly printed IOU’S.!!!

      • their invasion we will be even more in debt than the wall as they mostly have every disease we have eliminated along with herds of Kids which they pop out yearly, If the Thousands of Boarder jumpers succeed in their Invasion there will be a flood of them daily Free food, free Medical, Free Dental Free rental moneys along with any monies earned here is promptly sent back to their home nation to support the rest of their Family untill they also can get into the USA

    • The bulk of the bad debt continues to remain below the MSM radar. The bits and pieces you do see are reminiscent of a 2008-2009 rerun. Prechter at Elliott Wave was screaming about a hidden debt crisis a year and a half back, but he continues to maintain the strongest correlation is with the 1929 – 1933 sequence of events, not 2008-2009. Debt slaves are as debt slaves do, I suppose, but always under the delusion that it is a new age, with no prior precedents. I am beginning to wonder if the precedent with be something more like Venezuela or the Balkans, rather than prior American experiences, as a side effect of globalization. Time to reread some Selco stuff. Happy Valentines.

  3. Several media sources have said recently that the USD is moving ever closer to losing reserve currency status. That has to be a big wild card in your market analysis.

    • I’m glad, though really surprised that the USD has held this long. We need a new reason to maintain its value other than the petrodollar approach.

  4. News Flash — Digital Mob seen taking over JPM Bank!
    Chairman Dimon announces JPM’s very own JPM coin.
    The coin will be used by largest customers to facilitate instantaneous settlement for large transactions.
    This is only the beginning, someday in not too distant future every single person in the world will be on ID tracking blockchain system as the “NWO” (nazi world order)gets their way.

    Deflation is easy, STAGFLATION – Inflation is High – check, Economic Growth Slowing – check, and Unemployment stays high – check, with a caveat that Not Looking or Not In Work qualifies as Unemployment Staying High.
    The policy dilemma being any policy move put in place to correct Unemployment will neg affect Inflation and vice versa..rut row.

    Is the “Turn” upon us ?

    “faster, faster, until the thrill of speed overcomes the fear of death.” H.S. thompson

  5. Oh did ya the sennuts did something to devert attentions away from doing nothing. They locked up another 1.3 million acres of land. Where the hell are their brains. What a stupid bunch of show clowns. Wants to see me pull a rabbit out of my ::: No leadership nothings. Just keep giving me me beneies and I’ll show up in pretty suit.

  6. y’all sound like a bunch of whiners you know this has been coming for a long time this pic and collapse but it’s Trump whoever else is in office powers that be are going to use whoever they can what are they cooperate or not to get what they want that’s total anarchy here in the United States so they can usher in their new communist deal so stop whining and get prepared for the ultimate and slaughter

  7. The Dems are divided right now, just like the GOP was divided back in the late 2000’s with the Tea Party. We need to get away from extreme politics. The AOC movement is the same thing in reverse with what the Tea Party did for the GOP in 2009.

    What I hate about all of these movements now is that each extreme side takes the stance that it’s their way or the highway. I can appreciate being more aggressive with asking for more as a negotiating starting point…but take the approach that this is just the beginning…

    If each party would just say…OK…here is what we propose…and let’s discuss like adults on how to make both sides happy, that includes of OUR CONSTITUENTS…not each other’s ego’s, or corporate donors…then life would be great…While I am not sold yet on Howard Schultz, he made some good points on this very topic. He dumbed it down a ton…which I have a huge problem with…but the sentiment was spot on.

    But, I am still looking for a politician that talks sensibly, way over our head….if that makes sense. Take George’s Charts…At first, I looked at them with a blank stare…but after studying them a bit, they make total sense.

    I want that in a politician…I want someone to tell me something, using terms, words and theory that I don’t know, but would love to learn about. Raise the damn bar!

    • I actually don’t think any of them are divided Mark….they have been placed in a position they haven’t been expecting to happen and they don’t know how to handle it.
      for over half of my life one of the dead horse issues has been improved border security.. Now we have a virtual army marching towards our borders demanding entrance illegally and that we will offer them stability and security and to basically pay their way.
      If the members of congress vote for border security of the USA then they face the opposition of the puppeteers that may close the open checkbook.. if they vote against it they can’t ever run on the dead horse issue of improved border security.
      My fear is with some of the laws that the congress has passed in the last few decades that they don’t have any clue over what was in them being enforced.

    • Generally coming from the other side of the fence, I totally agree with you! People need to rise to the situation, not have it dumbed down to sound bites. I’m libertarian at heart and feel that we need to maximize individual freedom consistent with peaceful commerce and national/world security. Compassion needs to balance with justice to provide for a humane world.

      Extreme polarization creates a large inertial moment in the structure of society. Not good for any sort of maneuvering.

    • the Barr has been raised
      snowflakes fall by gravity, yet eagles soar
      get some popcorn and enjoy the movie
      unless you are a cheese and whiner kinda of guy

      • What!!! No crackers!

        For the vast majority of us. We don’t have a clue what future events will play out like. Our parents and grand parents did and a replay terrified them. Even corporate leaders were terrified enough that the focused on their work force and community and its needs. They took a smaller profit grew slower but made money.
        The roles are reversed again back to where they were prior the crash.
        Time will tell..
        I only pray that I’ll be able to make it in one piece.

  8. I was thinking about emp’s and such.. and find it funny.. the USA created internment camps and deep underground bunkers for a very few.. Russia and China civilian bunkers in such an event for their people and do regular test runs.. then you hear of china going crazy building ghost cities and factories where no one lives they are just there waiting to be manned.. could it be that they built the cities and ghost factories so that if such an event did happen that it would be business as usual.. their strive for energy independence is obvious and the manufacturing superiority.. where it leads us is to be totally dependent on them for our survival if such an event did take place.

Comments are closed.