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January 24, 2023
Volatility Reports January 25, 2023 (Video)
Anticipated changes can be more forceful than events happening out of nowhere.
The chart above shows the correction that happened when the last so-called “budget crisis” happened. The pattern is similar to the 2022 sell-off and the second half recovery into a double top the 12/1/22 and 12/13/22 tops. If a valid fractal, the decline that is forthcoming will be a waterfall…
…but as experienced traders you know to expect something similar but different based on the rule of alternations. So what could be different? 2009 just finished a 3-year bear and put a cap on the WFC. Two years later we were bullish but could it be that this time it’s really bearish not leading to recovery after the mini panic on 10/4/11?
January 22, 2023
The Back Story Buzz
The documents with classification markings spanned Mr Biden’s time in the Senate and the vice-presidency, while the notes dated to his time as vice-president. An FBI search of US President Joe Biden’s home has turned up six additional documents containing classification markings, with agents also taking possession of some of his notes, the president’s lawyer says. The search comes more than a week after six other classified documents were […]
Rep. Swalwell Accuses Speaker McCarthy Of “Political Vengeance” Over Planned Committee Removal
Rep. Eric Swalwell (D-Calif.) holds that he did nothing wrong in his associations with a suspected Chinese spy and that House Speaker Kevin McCarthy’s (R-Calif.) vow to remove him from his committee assignments was an act of “political vengeance.”
US judge fines Donald Trump and his lawyer $1.3 million for ‘frivolous’ Clinton lawsuit
A Florida judge has ordered former US president Donald Trump and one of his attorneys to pay more than $1 million for filing what he says was a bogus lawsuit against Trump’s 2016 rival Hillary Clinton and others.
- A Florida judge accused Donald Trump of a “pattern of abuse of the courts” for filing frivolous lawsuits for political purposes
- Mr Trump had filed suits against Hillary Clinton, former top FBI officials and the Democratic Party
Jim Jordan’s Reckless New Committee
Click here to view original web page at Jim Jordan’s Reckless New Committee
The creation of a House Select Subcommittee on the Weaponization of the Federal Government portends an all-too-predictable and largely unproductive cycle of interbranch friction. (The name itself betrays that the panel has already concluded that the executive branch misused its resources.) It will start with overheated demands for information. The committee’s chair, Representative Jim Jordan, has said the wide-ranging probe would include the FBI raid on Mar-a-Lago for documents that Donald Trump failed to return to federal authorities, the Department of Homeland Security probe of disinformation on social media, and the origins of investigations by the FBI and other federal agencies into contacts between the Russian Federation and the Trump campaign in 2016. The Biden administration will comply with some requests while resisting others. Republicans will denounce recalcitrance as a coverup. Fox News, for its part, will condemn any lack of transparency as Democratic hypocrisy. Democrats, in turn, will remind Americans that Jordan refused to speak to the January 6 Committee.
Fed Trap: Stock Market Won’t Rise Until Rates Drop, Rates Won’t Drop Unless Market Slides
The economy and the stock market are stuck in a circular loop, preventing the resumption of meaningful growth. The U.S. Federal Reserve has been doing what it can to try and talk the stock market lower since late 2021, with a goal of reducing wealth-generated spending pressure on inflationary imbalances. For many months, the Fed has even been hinting at the necessary pretext for a pivot in interest rate policy from a rising (tightening credit) to falling regime (expanding liquidity), namely a bigger equity decline on Wall Street. The problem is Fed attempts to talk down prices and valuations are not getting much traction.
December 21, 2022
Volatility Reports December 21, 2022 Dow & Co.
The issue for many is their analogical thinking. Because knowledge is based on first principles, things that are undeniable. Context is one of the first principles needed to be certain what you are looking at is true. Otherwise, look-alikes will fool you.
The example here. The picture of Marilyn Monroe next to a look-alike is a great example that should get your attention. However, the chart overlay seen here is the epitome of what Contrary thinkers know, that background matters compared to statistics pulled out of the blue.
Here is a comment I saw in the public stream and responded to. Just not because it is wrong-headed but because my traders need to know where I stand and why. Also, I am not trying to attract cynics, entry-level or anyone, not a professional or aspiring to be one.
Here is the bullish sentiment in full
- Consecutive years of declines in the US stock benchmark are rare
When they do occur, the second year has been worse than the first
Consecutive down years are rare for US stocks, so after this year’s drop, there’s only a low probability they will decline again in 2023. Yet if they do, history shows that investors will have to brace for another very unpleasant 12 months. - Since 1928, the S&P 500 Index has only fallen for two straight years on four occasions: The Great Depression, World War II, the 1970s oil crisis, and the bursting of the dot-com bubble at the start of this century. In the benchmark’s almost 100-year history, such occasions are clear outliers. Yet when they have occurred, drops in the second year have always been deeper than in the first, with an average decline of 24%. That would exceed this year’s slide of about 20% to date. More than two back-to-back years in the red are even rarer. The S&P 500 tumbled for three straight years from 2000 to 2002 and from 1939 to 1941, while the longest losing streak remains the aftermath of the infamous Wall Street crash when stocks fell for four years from 1929 to 1932.
- To be sure, both fund managers and Wall Street strategists forecast a muted recovery for the S&P 500 next year. “Recession does not have to be doom for equities and markets tend to bottom before a recession starts,” said Manish Singh, CFAchief investment officer at Crossbridge Capital. He believes the S&P 500 saw its bottom in June during peak inflation.
I understand how smug the boys are in Boston, I have pals in the industry and interviewed with a few, and sat in Vanguard’s “war room” for a number of their meetings. Be that as it may. It is the big picture and context that matters. Not what the public wants, the market is selling risk, not iPhones.
Looking back to the 1908 low (after the rich man’s panic), how the market trends in a 15 to 17-year secular bull followed by a sideways or down correction of the excesses for an equal number of years.
From the 1929 peak, Dow & Co stayed in a correction until 1949, 20 years after a 20-year bull. It is not arbitrary to start from 1932, it is a strong bullish bias to make their numbers look better.
From 1949 to 1966 (Dow hit 1000 for the first time) a secular bull of 17 years ended followed by a bear market from 1966 until 1982. So for 16 years, a broad trading range corrected the secular bull before a new secular bull.
Again, from the August 1982 low into January 1, 2000, high pivot, it was easy money followed by a secular bear of 10 years into 2009 (see Nasdaq.)
Finally AFTER the demographic baby boomer growth period another 13-year secular bull market to 1/4/22. What was crowned the “Great Bull Market” or the “Everything Bubble.” all of which was based on money growth, not population growth or productivity growth.
So in context, two down years is not rare, what is rare is after a secular bull market to avoid a secular bear has a low probability and given the added context of a Fiscal and Monetary policy that is painted into a corner.
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Below is the S-T chart for Friday’s trade.
December 21, 2022
Volatility Reports December 21, 2022 (Crude Video)
Oil has a positive correlation to the S&P. Along with Apple and Bitcoin the premier risk takers market, Crude is also a leading market. A foreshadower of stock market’s direction
Crude oil futures made their recovery high on 11/6/22 providing a 23-day lead time to sell onto the last phase of the rally in the S&P and FANNG+ stocks, which topped on 12/2/22.
The weekly chart is plotted here with the SPY in the background to show the positive correction since 2018. The featured charts in this report focus on price, time, and dynamics.
November 14, 2022
MarketMap™ November 14, 2022
“The US Securities and Exchange Commission and the Justice Department now investigating, remains of FTX “
Bill Clinton’s Treasury Secretary Larry Summers making Enron comparisons
Back Story Contagion from the Crypto
THE WOLF STREET REPORT: Where’s the Contagion from the Crypto Implosion?
Here is a sample of the headlines.
The fix is in, there is only one Intermarket relationship that matters to the bulls and that is the USD against the world equity markets. While all eyes are on the dollar staying below its breakdown point, other relationships are being overlooked by the majority. For example, the inversion of long-term rates with the shorter-term.
Their study of the dollar relations is cited at best, looking back at 2017 as their model that says “when the bastion of safety is down” its risk on for stocks. Their research is front-end loaded. They forget the dollar bear in 2008 along with the world financial crisis or the dollar bull during the neo-liberal Clinton stock bull market.
Inter-market relationships, come and go. But this one has set up an influx of a liquidity pool for the smart money and big money to sell into.
So the news is good, inflation is under control, the Feds are going to pivot, and the dollar is “risk on.” Now it is all clear, the game is the bulls to lose. They have all the analogies backing them up. They even pulled out the old Philly A’s trick, because if the Phillies had won the world series it would be a bearish omen, dead set. But they did not mention that an original NFL team, the LA Rams, won the Super Bowl as crème de la crème of bullish analogs. I guess they remembered the G-men beat the Pats in 2008, a nasty exception.
So what can go wrong? “All you need to know. $UUP $DXY $USD” if you listen to the public stream?
“…One of the biggest developments this week was the breakdown in the US Dollar. The US Dollar Index dropped 4% this week, marking the worst week since 2009… that broke the uptrend line that has been in place for the majority of 2022. The strength in the US Dollar has been putting pressure on stocks and risk assets all year, so this is exactly what the bulls have been waiting for. “
Here is CT’s chart of the US dollar index showing the ruler trend line everyone is excited about its break. However, the long-term and intermediate-term trends are up; and the best the bulls can hope for in the “USD indicator vacuum” is a high-level trading range from 104 to 114.
