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Thanks RCKS..I sure love his low targets...But the bulls seem to show up at the right time to save it...
PPT and decades of immediate relief from any debacle has created a numbed society. Free money from pandemic created a huge excess of disposable income. That outcome was known, inflation. but due to supply and demand at the same time was also known. What was not is the stubborn entrenchment of inflation. if it is here to stay it will cause a depression. Obviously we rely on disinflation like an addict.
I expect the same muted response and short term memory to once again kick in. UNLESS external evens are so bad it punctures thru. Next 5 weeks of data should clarify if the crisis itself has blunted inflation. MAY 3rd. Might be the MAYDAY signal. I expect the FED will have no affect going forward on the stock market by then IF inflation is still high and short term over reaction to bond yields and the dollar reverse right back up. the Banks are in dire situation. they desperately need the FED to stop hikes and announce a reversal soon. It might not be up to the FED on MAY 3rd.
I saw 2023 as the year of dramatic deep drops of 40 to 50% haircuts. I had no idea how the economic events would unfold other than understanding a generational process. I did mention that 40 years of disinflation was ingrained in everyone and expectation was for it to continue. To have a crisis over such a small Fed Funds rate tells you the desperation that this economy is in. An addict on disinflation and will always need it to survive. I think CHINA is the wild card. Human nature usually responds to a 2 year lockdown with relief and over spending. So far mixed economic results. They alone could spike commodities thru the roof.
My best GUESS is early MAY everything unravels.
"....so things continue to look "not particularly bullish."
"And bulls have done nothing to help their case, so that stands for now."
http://www.pretzelcharts.com/
"Last update noted, regarding the SPX chart:
In a perfect world for bears, though, SPX stops at or before the highlighted confluence
SPX stopped at the very bottom edge of the blue zone, and shy of the confluence, so things continue to look "not particularly bullish.""
"I want to call attention to one potential near-term path. The pattern isn't clear enough to call this a "hard prediction," more of a soft speculation... but the option is there, so I thought readers might want to see it:"
"NYA just missed its first zone and reversed. It is now coming up on the red trend line, which may or may not offer support"
"TLT is at a near-term crossroads:"
"Last update concluded:
[W]e do have five clear waves down (an impulse) in NYA, which means that unless that impulse is wave C of the noted expanded flat, it will be followed by another impulse down that is equal to or greater in length than the first. We cannot entirely rule out all bull options, but if this is the start of blue 3, that next impulse down will be a nested third wave and thus fairly brutal.
And bulls have done nothing to help their case, so that stands for now. Trade safe."
Shane s- bank liquidity issues
bonds became worthless when rates went up to fast
and some bad loans too
so the fed stepped in and gave the banks money for these bonds
and bad loans. Now when the bonds come back to par they will give
the money back to the fed.
So the banking issues were addressed by the FED.
and liquidity was restored.
Now if new issues arrive they will have to be dealt with
Shane studies the fed daily so i am confident in his analysis.
If my words cause such a reaction it absolutely means people are paying attention and not liking what i have to say.
I SHOUTED a Pandemic, with all the past know charts and current known facts on the virus, was going to hit hard and the response. GO AWAY! As if i was the insane one. I shouted last year disinflation is cyclical and the 40 year period is over! I made fun of the word transitory. I was told GO HOME. I shouted that 2023 will be devastating based on the accelerated rise in rates and that a DEBACLE would result from greed and a generations silly notion that disinflation was still here. I was told to GO HOME.
Now had i gone home or continued to post the only thing that stayed constant. I was RIGHT and made startling calls on the economy while everyone never saw it coming. If YOU refuse to accept what i have to say the easy thing to do is to ignore me. I mean how hard is that? Instead IT BOTHERS YOU!
So let me ask you, had I posted or never did I can guarantee you one thing, YOU ignored me anyway at your own peril. Just because i have been right on major reversals you still have the right to IGNORE ME! It's like me forcing you to see something you don't wish to see.
I am discussing a major Depression style outcome and you want me to what?????
If an asteroid was coming should you insist to keep quiet and let it be? EVERYTHING I WARNED ABOUT has come true. And yet you STILL refuse to listen?
Human nature is a constant and even with absolute exact past you can point to we refuse to LISTEN! I am fascinated by this. A 100 year old PANDEMIC was staring us in the face and WE IGNORED IT and anyone pointing it out was told to GO AWAY!
THESE ARE FACTS! Sorry facts and reality get in your way. By NOT hearing it you actually pretend it never happened?
DISCUSS THE OTHER ANNOYING POINTS THAT CAME TRUE and then we can discuss my bothering you with things that might come true. Was i LUCKY!
You like to hear yourself talk, period
Nobody is missing anything your writing unless they stopped paying attention to you, you put stuff everywhere you can.
And the better question is anyone paying attention to you?
Are you paying attention to how people feel about you?
Find another home
WHY? Are the two connected? Are the same people reading both?
So you suggest if there is a fire to only tell the person next to you and hope they relay the message? Not political, check. Not derogatory against anyone, check.
Relevant to the stock market. check.
GOT IT! YOU don't like to hear it. Only a trivial thing of a trillion dollar debacle. I guess I should have stuck to my sky is falling at start of Pandemic to one source.
Am i using up valuable resources? Can't read a half page because everyone is too important to bother with such nonsense? I am frankly baffled, and will always be baffled by the irrational behavior of most humans. All i know is i hope a person that can give me a heads up on bets and future path by plastering it all over so the chances i see it is greater. Is this not LOGICAL? if my words offend bypass it. I don't ask you to buy a book you despise, nor listen to what i have to say. Why would my small number of posts on a small volume blog be so damaging?
gdl
stop posting the same thing on this thread that you just posted on the CCI thread
Something is wrong when the Street reinterpreted Powell's speech today as POSITIVE. It seems they did hear him say rates will be stopped soon and even a reversal possible. Must have been under his breath. They all agree DISINFLATION is alive and well. So the dire mess we would be in because of bad bets by banks going forward will be relieved by a lower rate by the FED? They have on their books a Trillion dollars of property bets that have to be turned over before end of THIS YEAR! no wonder they are desperate.
Bank Turmoil Ramps Up Pressure for $900 Billion of ... Bloomberg
1 day ago — Given higher rates and an uncertain outlook, the number of commercial property deals dropped 51% in February from a year earlier to $26.9 ...
Should have waited for the real market at 3PM!
Bullish when we had a one day banking Crisis of epic proportions, when the Powell speech didn't give them the no rate hikes again speech? When the earnings picture is down right DISMALL and will have to, accept another quarter of really bad news. lets not forget that the quarter after this one is ALSO expected to be negative. What can go wrong?
Lets be clear. Everyone, i mean every single analysts, investor, economist sees one thing going forward and they are all in agreement. Never saw so much agreement. ALL say recession job losses and rate reduction is going to be here this year. this as we added 800K in 2 months, unemployment continues to get taken even lower, JOLTS at historic highs for a year now, Spike in January inflation and now February inflation looks no better. Housing anyone? I thought that was dead? not according to yesterdays existing home sales. Tomorrow we have new home sales. Wanna bet it also is higher than expected.
BTW the street wants reversal in rate hikes and history has shown EVERY TIME it was bad for stocks. Masocistic bunch.
I HOPE and PRAY we trudge higher from here because the DOW is looking like it is about to CRASH!
The Bears Are On Life Support And Hoping For A Fed Miracle
Tom Bowley | March 22, 2023 at 01:59 PM
http://stockcharts.com/articles/tradingplaces/2023/03/the-bears-are-on-life-support-203.html
"The end is at hand. Bears, just surrender now. Since the mid-June low (where I called the S&P 500 bottom), we've seen the fed funds rate jump from 1.00% to 4.75%. Of course, all we've heard since then is what?
Don't Fight The Fed
Well, since that first 75 basis point hike on June 16th, the S&P 500 is UP, not down. We've had four 75-basis point hikes, two 50-basis point hikes, and two 25-basis point hikes. In my opinion, all of it was built into stock prices at the June 2022 low. How else do you explain the significant rate hikes over the past year and an S&P 500 that is 10% higher than it was when the first 75-basis point rate hike was announced? Stop listening to CNBC and the media clowns and pay attention to those who actually do research - like EarningsBeats.com. 2022-2023 isn't the only period where we've seen a number of rate hikes coincide with stock market strength. Do you remember early 2016 when the market bottomed and then soared? That occurred during a period when the Federal Reserve raised rates 9 times:"
http://d.stockcharts.com/img/articles/2023/03/22/bcbdd84c-3f01-492c-ad2a-7bec7d7cc141.jpg
"This chart shows the "Effective" fed funds rate, which coincides with the direction of fed funds. Good thing we "fought the Fed" during that HUGE market rally. Ohhh! And what about the 2004-2006 period when the Fed raised rates at 17 consecutive meetings!?!?!?!?!?"
http://d.stockcharts.com/img/articles/2023/03/22/4e0d1fa4-46b7-4364-bbcf-4541b77b30aa.jpg
"Whatever you do, don't fight the Fed! (sarcasm)
I've actually had plenty of folks come up to me and ask how the stock market can go up when the Federal Reserve is so hawkish - that the stock market has NEVER gone up when the Fed is hiking rates. My response? Do some research and STOP listening to the media. Many authors writing articles have never done an ounce of research, but those headlines drive lots of interested viewers! Quite honestly, that's all that matters for most authors. Drive that viewership!
Market Rotation
Let me tell you what's been happening "under the surface" of the stock market. Actually, before I do, let me show you why I told everyone that a cyclical bear market was a real threat as we entered 2022 at all-time highs. A huge part of it was sentiment (and I'll get to that in a minute), but another big part was market rotation into defensive areas. As the S&P 500 printed its all-time high in January 2022, Wall Street was repositioning in those defensive areas. Lots of Monday morning quarterbacks will tell you how they pointed out the bear market. The problem is that most of them pointed out the bear market after it happened. What good does that do? I fired warning shots in December 2021. On the last day of that December, I wrote an article, "It Could Be A Very Rough Start To 2022". That was just one day before the all-time high was set. I've had dozens and dozens of emails and feedback from EarningsBeats.com members, indicating how much money they saved by exiting stocks at the beginning of 2022. And it was as simple as following a few key charts. Here was one of them:"
http://d.stockcharts.com/img/articles/2023/03/22/12ade5de-dc8f-4a9e-a3ea-d8a52f83b89d.jpg
"That red-dotted vertical line represented a MAJOR warning signal for stocks as the bulls' last gasp came after significant bearish market rotation took place. Let's see, should we follow the intermarket relationships or tune into CNBC? Those who used the former and avoided the latter did quite well in 2022.
But now the bulls are getting excited. Why? Because the intermarket relationships no longer favor the bears. Money is rotating quite bullishly into growth areas. Here's the same chart as the one above, but this time for the past six months:"
http://d.stockcharts.com/img/articles/2023/03/22/96a6919c-ac1d-4616-84d7-0f2bae4edad9.jpg
"The growth ratios I follow are all soaring. Wall Street is repositioning into growth and this has been occurring throughout 2023. Ask yourself why. For everyone that's now screaming "inverted yield curve" and "recession", why would money rotate so heavily into growth stocks. It doesn't make sense, and that's why you need to pay attention to it.
But market rotation isn't even the most bullish signal.
Sentiment
The equity-only put-call ratio ($CPCE) is my "go to" chart when I want to understand how retail traders feel about stocks. And when the 253-day (1 year) moving average of the CPCE begins to turn - and it doesn't happen often - you need to take note. Extreme readings, either to the upside or downside, can mark major stock market bottoms and tops, respectively. Here's how this chart looked on Saturday, January 8, 2022, at our 2022 MarketVision event:"
http://d.stockcharts.com/img/articles/2023/03/22/c1b213e3-fc36-460d-951a-825dca71ebf2.jpg
"The red arrows mark reversals in long-term downtrends. These are reversals off EXTREMELY bullish readings and sentiment indicators are contrarian indicators. They essentially tell you to "batten down the hatches" and grow much more defensive, or even think about shorting the stock market. The opposite is true when this 253-day moving average reaches a stop and begins to roll over. On the chart above, it doesn't appear as though we're quite ready to roll over, but I've used a User-Defined Index at StockCharts to track what I consider to be a much more reasonable CPCE. There were several outrageously-high daily readings in November and December of 2022, due to unusual hedging activities of institutions. They skewed the readings on the CPCE and needed some adjustment to more accurately reflect the true psyche of the retail trader. After making those adjustments, here's how my "adjusted" CPCE chart now looks:"
http://d.stockcharts.com/img/articles/2023/03/22/fd792b16-f98c-4257-8063-a695c7b57a64.jpg
The long-term 253-day moving average is just beginning to roll over and if you look above at the earlier CPCE chart, you'll see that when this rolls over, the S&P 500 begins to soar.
"If the stock market was chess, and I was on the bull side, then I've been calling "Check" for a few months now. I'm calling "Check" one last time. We're about to witness "CheckMATE". It's time to ditch your bearish thoughts. Stocks are about to scream higher. The Fed is our wild card short-term, but once the effects of this meeting dies down, stocks will soar.
If you'd like REAL research and facts and what truly drives the stock market, you need to join us at EarningsBeats.com. I'm never short on conviction. Even if you disagree with my views, I'll provide you interesting insight to make better investment decisions. If you think knowing that a bear market was coming before it ever arrived would have helped you in 2022, then I believe following us at EarningsBeats.com in 2023 during a massive rally will prove quite beneficial as well. CLICK HERE to get your FREE 30-day trial started!"
Happy trading!
Tom
SPX stops at or before the highlighted confluence. 4100 SPX
http://www.pretzelcharts.com/
"So here's something I don't get to say very often: The "passable impulse down" I mentioned last update was a bust, and SPX cleared the noted invalidation level (3965).
Price is still hugging the near-term channel I drew on March 17 -- for now, anyway, but bears probably need that to be a diagonal (approximated by the red and blue lines below) so it doesn't threaten a breakout. If it does break out, it may head toward the confluence shown on the third chart."
"Nothing like a near-term miss to get one thinking, so the NYA chart does mention the bull option (in passing -- for now, I'm not focusing on it):"
"SPX is in similar shoes to NYA. In a perfect world for bears, though, SPX stops at or before the highlighted confluence:"
"In conclusion, we do have five clear waves down (an impulse) in NYA, which means that unless that impulse is wave C of the noted expanded flat, it will be followed by another impulse down that is equal to or greater in length than the first. We cannot entirely rule out all bull options, but if this is the start of blue 3, that next impulse down will be a nested third wave and thus fairly brutal. Today is, of course, a Fed day, so watch your back out there, and trade safe."
Lawrence McMillan's weekly commentary
https://www.optionstrategist.com/blog/2023/03/weekly-stock-market-commentary-3172023?utm_source=Email+Updater&utm_campaign=25bae1c324-Weekly_Blog_Roundup10_1_2014&utm_medium=email&utm_term=0_2f928c56ef-25bae1c324-401767717&mc_cid=25bae1c324&mc_eid=4d62b38025
Home ›S&P 500 ›Weekly Stock Market Commentary 3/17/2023
Weekly Stock Market Commentary 3/17/2023
Posted on March 17, 2023 - 11:51am
By Lawrence G. McMillan
Stocks broke down early this past week, but found support in the same area as the late-December trading range. Specifically, $SPX broke down below 3930 and traded down into the 3760-3850 support area (the trading range from the end of last December). It found support there and bounced. There is still overhead resistance all the way through the zone from 4080 to 4200
At the lows, oversold conditions arose, and some are still in place, while others have morphed into buy signals. The current rally is merely back to the declining 20-day Moving Average of $SPX just a normal oversold rally.
Equity-only put-call ratios remain on sell signals. The weighted ratio (Figure 3) is just starting to move strongly up its chart, so that signal appears to have a ways to run. The standard ratio (Figure 2) is already in oversold territory near the top of its chart.
Breadth was extremely poor as $SPX traded down from March 6th through the 13th. That pushed the breadth oscillators, which were already on sell signals, down into deeply oversold territory. They remain in that state, since the two days of positive breadth since then has not been enough to drag them back onto buy signals.
For the first time in quite a while, $VIX has responded to a market selloff by exploding to the upside. As a result, a new "spike peak" buy signal has been established.
The increase in $VIX, though, did stop out the previous trend of $VIX buy signal, since $VIX closed above its 200-day Moving Average, which is at 24.00 and declining. At the current time, there is no trend of $VIX signal in either direction.
So, there are plenty of cross-currents right now. The $SPX chart is still bearish, in my opinion, as it is below resistance and below its declining 20-day Moving Average. On the other hand, we are seeing buy signals from certain trusted indicators so those can't be ignored. The one interesting bearish development that could occur would be for the 20-day MA of $VIX to cross above the 200-day MA. That's what happened last September and led to a sharp decline into the October lows. As usual, we will be trading these other confirmed signals around our "core" position.
"The key level for bears to hold for that potential first wave down to remain on the table is 3965."
http://www.pretzelcharts.com/
"Last update called attention to the fact that SPX had reached the upper boundary of its near-term red channel and mentioned that we might have three waves up off the 3808 low. SPX dropped lower from there, and has now formed a passable impulse down, potentially for all or part of wave i down. The key level for bears to hold for that potential first wave down to remain on the table is 3965."
"Big picture, nothing has changed, and blue (3) remains the leader unless/until the market tells us otherwise."
"Finally, a quick update of the gold chart, which we haven't looked at in quite some time. Gold has formed three waves down (the inverse implication of the near-term SPX chart -- three waves can mark a completed countertrend correction):"
"In conclusion, not much to add to the past few updates, except a reminder that if blue (3) is indeed underway, this market should start to get ugly over the next few weeks. Trade safe."
https://www.investing.com/news/stock-market-news/svb-uk-handed-out-over-15-million-pounds-in-bonuses-days-after-hsbc-rescue--sky-news-3033851
https://www.cnn.com/2023/03/18/politics/donald-trump-manhattan-da-arrest-protests/index.html
Business as usual. TRUMP is the banking crisis manifested 100 fold. he also JUST got reinstated on Facebook and YouTube. Coincidence? he already is calling voters to arms on his own silly site.
Recap: Stock Market nears all time highs after short term rates went from zero to 6% in a little over a year. Second Largest (so far) Bank failure in US History. First ex-president to be indicted and expectation is for at least 3 more separate indictments to come.
So what are the ODDS of the Human Race surviving against a Stock Market surviving? Unfortunately they both have the same odds. NG. Wait till the Trade Wars really get heated up! This will make the roaring 20's pale in comparison. I stated over 12 months ago that 2023 will see 40 to 50% haircut from it's highs. We are NOW assured of it! like determining a Pandemic is started in China and concluding Wall Street already factored in the result and was favorable to a bullish market. I remember this as a fact as I bet the crash and it went nowhere. No logic, no chart, no exact scenario in the past convinced investors that an OBVIOUS result will happen.
We are nearing a huge crash and huge spike moves denying the reality of the situation. i know with certainty this year will be bad. How bad? Really bad. There is NO scenario going forward that can support a good ending. NONE! Easy Money is GONE! Disinflation rise in assets and low costs is GONE! Paying the PIPER!
Surely you jest ...
Now for the weird thing that just came upon me ...
I just did a search on Morgan Stanley then, of course, I looked at the results that came up.
The very first thing that showed up at the top of the results page:
"Results for Livermore, CA 94550 · Choose area"
Then below that was a list of things that related to Morgan Stanley.
That is totally weird. That town is where I bought my first house well over 50 years ago, and that house was initially (temporarily) financed through the builder's bank, then eventually through my wife's bank (whatever that was, I have no clue). Soon after that we moved to Minnesota. All of that happened within about two years (a very long time ago).
Seems to be a SET UP! IF we drop before the announcement that quarter point should help rally this sucker. I expect a down market right before the announcement. How down? Maybe 3720 area.
If on the other hand we actually hold today in a shallow drop (3930?) Monday and Tuesday might be yet another move higher.
Near the close today should be the TELL. On daily chart we have a distinct 3 wave move off of 3/13 low (3850). An overlap down, below 3920, should indicate this is only a 3 wave move. If we manage to hold above that than Monday could be a nice rally.
In other words, what the F? Can't tell when the next decent reversal happens yet. Maybe it becomes clear by close today.
"...the bad news is that there suddenly seem to be a lot of banks that need propping up,"
http://www.pretzelcharts.com/
"Since last update, the rumor began to float that several large banks (including JP Morgan, Morgan Stanley, Morgan Freeman, Morgan Morgan & Morgan, and The Bank Without a Morgan) might team up and, just when they were needed the most, prop up the Federal Reserve. This led to a significant bounce, and SPX rallied 100 points on the thought that maybe we wouldn't have to listen to Powell say "tools" ever again.
Of course, the bad news is that there suddenly seem to be a lot of banks that need propping up, but let's not talk about... hey look, a squirrel!
Chart-wise, the near-term suggests we might have three waves up off the 3808 low, but it could support one more wave beyond yesterday's high and remain a three. It might be easier to watch the red channel than to try to nail down the exact near-term count. If the current rally is a simple C-wave up from 3838, then it already tagged the upper red boundary, but is also allowed to overthrow it a bit if it wants."
"Big picture, not much to add to the past few updates. Red 2 is not invalidated yet, so we can't entirely ignore it as an option, and it stays on the chart for now:"
"In conclusion, not much else to add to the past few updates. Trade safe."
Turning on a dime ...
I liked what NCLH was doing during the day today, so I squeezed in Buy/Write trades (this week's expiration) in both my accounts before EOD trading today. That brought in cash; then wash/rinse and sell more Calls early next week.
Waiting for GODOT!
Yes I read a lot of the SC guru's stuff over the weekend...Sur a lot of stuff to try and keep up with..I'm too old and tired to stay up to date on all the guru's..So I depend on people like you to help keep going..Thank you for your Ewave stuff and all other stuff.
I see so many wedge patterns on 1 to 5 hour charts, 5 wave or 3 wave completed, and continued news on a bank contagion finding ways to make it a POSITIVE? Hey if a nuclear bomb wipes out 9/10th of the population we can have zero rates forever! Overlap at 3950 which I suspect will not be able to close at or above.
Best guess is a drop to 3750-3720 area before the Fed Announcement! It would till be very controlled and predictable. As for today, this would be the third day on the upside. all but one finished the upside before resuming a deeper drop.
NEVER saw a recovery and continued bullish move on more banks in trouble and more bailouts. Markets and people will believe anything as long as it is positive. The SPIN ZONE!
Have to bet by close. Itching to bet.
With that logic a Pandemic in China is a known factor and the street concluded it can handle it in a bull market. that was the consensus. So bad news is good news? Bank run means less lending and lower yields? the silly notion that this so called transitory inflation is due to supply constraints? really? how about the SURGE of 800K in 2 months with JOBS. How about the 10.5 MILLION want ads unfilled. how about the third consecutive month of housing demand, permits surged in February. Economics 101 - what is the top factors that causes inflation. Time is up!
We see what we want. A car salesman never ever tells you to come back when deals are better. BTW a PUASE? This when the ECB raised by 50 basis points AFTER the bank debacle?
the world is delusional and refuse to use common sense and a little bit of analytical projection. What the bank crisis just did is guarantee a disaster dead ahead. Inflation either gets stopped or stalled by the FED or it is run-a-way time and yields will jump regardless of the FED. Pay me now or later.
No one even bothered to understand the absurdity of a banking crisis at these levels? OUCH! never had this before, a first! You do know historically the fed Funds is at the AVERAGE RATE now. No, not even close to where it can go.
Now for a Bullish take, pending FED pausing.
Technology Resets PPO, Now Rolling; Fed Should Pause
Tom Bowley | March 16, 2023 at 12:34 PM
http://stockcharts.com/articles/tradingplaces/2023/03/technology-resets-ppo-now-roll-832.html
"I remain extremely bullish stocks the balance of 2023 and into 204, but I've been a little short-term cautious the overall market since mid-February, but bullish signals are beginning to emerge once again. The most important sector, in my opinion, is technology (XLK). This sector reeks of aggressiveness and rapid growth. It generally needs a strong or strengthening economy, however, to trigger the group. A favorable interest rate environment helps as well. It was just one month ago that the XLK had fired a technical warning shot as a negative divergence appeared on its daily chart. That typically takes 1-3 weeks to iron out with potential 50-day SMA and PPO centerline tests awaiting. We've now seen both of these and it's 4 weeks later. Check out the chart currently:"
http://d.stockcharts.com/img/articles/2023/03/16/1ca95928-1b24-41a9-a1e6-33383c8bb3ea.jpg
"The recent bank crisis is doing the Fed a big favor. The Fed has been raising rates trying to control inflation. However, this inflation was induced primarily by inadequate supply/supply chain issues. Raising rates does little to increase supply. Instead, the Fed's game plan has been to try to kill demand. In the process, we're seeing a bit of collateral damage in the banking group. As banks falter, their ability and willingness to lend diminishes. If banks limit lending, even temporarily, economic growth will slow or stall. This short-term crisis will help the Fed achieve its goals. In my opinion, it's time for the Fed to pause and the bond market agrees. Long-term treasury investors take a number of things into account before deciding whether to buy or sell. One key factor is inflationary expectations. The rapidly-falling 10-year treasury yield ($TNX) is not only suggesting that inflation problems and worries have eased considerably, but these lower rates are now beginning to fuel the growth story.
Do you think we're heading for a nasty economic meltdown? Then please explain why Wall Street is driving growth stocks to the moon right now?"
http://d.stockcharts.com/img/articles/2023/03/16/c6c4e2aa-4851-4b21-9257-d781f8c1aea3.jpg
"As the media has a blast with yet another negative news story and panic sends more retail traders to the sidelines, Wall Street has been buying growth stocks hand over fist! You don't position into growth ahead of an economic storm. Folks, I listen to the charts, not the lips, when I analyze the stock market. Let the naysayers say what they want, this market is poised to move higher.
In tomorrow's EB Digest, our FREE newsletter, I'll provide one of my favorite technology stocks, one that I expect to soar heading into its next earnings report. To subscribe, simply CLICK HERE to enter your name and email address. There's no credit card required and you may unsubscribe at any time."
Happy trading!
Tom
Skipping over all political statements,
I'm more interested in Pretzel Logic's view of the market:
Therefore, as of yesterday, March 15, PL's opinion:
"Since last update, SPX captured its 3820-45 target (from March 8), exceeded it by about 10 points, then bounced. That's potentially 3 waves up off the 3808 low (to 3937), so bears can take it back below 3808 from here if they want.
Given where we are in the big picture, this market is very possibly hanging by a thread, so countertrend trading (i.e.- bullish trades) should be kept on a very tight leash unless and until there are more bull signals. The most bearish case is that we've already entered Blue 3 -- and frankly, there's nothing currently in the charts to suggest otherwise. That can, of course, always change tomorrow, but this is what's in front of us right now."
http://www.pretzelcharts.com/
My position? I don't like to trade bear markets as one of their characteristics is that they are always too volatile and it's too easy to make the wrong trade (AKA getting myself caught in the bear trap), therefore I am 100% cash and sitting on my hands until a new bull market is confirmed (and I don't care how long that takes).
Why? Because It's Really Important
http://www.pretzelcharts.com/
"Before I start, I'd like to clarify something about Monday's update: When I said that SVB's collapse can be laid at the feet of the Fed, I didn't mean to imply (by omission) that SVB management is entirely blameless. Of course SVB's missteps also played a role. I felt that was self-evident, so my point was that when the Fed fills a room with gasoline, you don't solely blame the guy who struck the match when the whole place goes up in flames.
You blame them both. Because both parties acted irresponsibly. And, in this case (and most cases that are still to come) you can't have one party blow up without the other party setting the stage.
Before we forget... the stage, as set by our leaders, was:
The Fed kept rates too low for too long, which created numerous asset bubbles
The Fed pumped $8 trillion of QE into the market, which created numerous asset bubbles
The Fed and Federal Government flooded the economy with stimulus, thereby diluting the value of existing dollars and contributing to inflation
Both the Fed and the government failed to even foresee the looming inflation (remember "it's just transitory"?)
They failed to foresee it because they operate from a flawed philosophy (Keynesianism)
They then had to abruptly stop the free money party and reverse course.
Five years ago, I warned about all this. Warned that the Fed was distorting the market and sending false signals to the economy, which would naturally drive businesses into unsustainable excesses (often through no fault of their own), which in turn meant that when the Fed finally stopped, collapses would be inevitable. Five years ago, I argued that. As I wrote then:
And through all that, we've learned this: The problems never seem to come while the Fed is running the pumps; the problems come afterwards. Everything booms when the cheap money is flowing -- but this "false boom" is, in fact, exactly what plants the seeds for the future bust. It seems to be an endless cycle of the current Keynesian economic policies.
So no, it wasn't "deregulation" (as some are now claiming) that set the stage -- otherwise, how could I have seen it coming before that deregulation even happened? The stage is much more complex than that. In fact, the complexity of the environment is exactly what makes simplistic one-word narratives ("deregulation!" etc.) so appealing for our leaders to deploy against a population that doesn't have the time to dig deeper.
For Monday's piece, I chose to focus on the role of the Fed/gov't instead of SVB because (in theory, anyway) we're supposed to be able to course-correct our own government. (Though many of us feel this is an increasingly futile effort.)
I wanted to clarify that -- but please bear with me a moment longer, because I believe this is important.
Last update predicted:
So ultimately, [SVB] is yet another collapse that can be laid at the doorstep of the core Keynesian philosophy (top-down central "management" of the economy) that has long captivated and motivated the leaders of our institutions. As the trouble snowballs, you'd better believe they will not want to take the blame for any of it -- so the history-rewrites and propaganda will start any minute, if they haven't already.
That prediction has, unfortunately, since come to pass. Because luckily for America, the Fed and the government have never ever made mistakes or mismanaged the economy, and thus not one single problem has ever been their fault. Quite the opposite, as it turns out! The fault, we're always told, is actually that those entities were given too little control.
Kind of a win-win for the powers that be, when you think about it. Even when they monumentally screw things up, they simply point the finger elsewhere and claim it's because what they really needed was even more power to screw things up.
You may be under the impression that I'm beating a dead horse here -- I am not. I was around before, during, and after the 2008 crash. In 2008, I diagnosed the problems before the crash happened (as did many others), then carefully observed those problems catastrophically unwind in real-time... and then watched the Fed and our government tap-dance right out of taking any significant blame for the bubbles and problems they themselves created.
And this is exactly why we're doing it all over again.
Because no real accountability ever occurred, since most of the public remained blissfully unaware, and hence no lessons were ever learned, and no core changes were ever made. And that was only possible because the general public was effectively duped into believing it was 100% the fault of everyone BUT the Fed/gov't. So, when the 2008 crash was all over, we passed banking laws that addressed the symptoms but completely ignored the disease.
I'm going to try to do my part to help keep people from falling for it again this time around. If we want to have any hope of rebuilding on solid ground, then we'd damn well better learn the real, and painful, lessons this time. Not the false "lessons" they spoon-feed us.
Speaking of, let's quickly glance at a few "charts," to see how Monday's prediction of "immediate blame-shifting propaganda incoming" fared:"
"And that's just a smattering of the propaganda that's been rolled out since I published on Monday. I could have posted a dozen more.
So why did I say this was "important"?
Well, given that we seem to be going down this road for the second time in only 15 years, as I see it: We cannot afford to fall for the false narratives again, or this path will be repeated forever.
Of course, that's assuming we even make it back this time. And I'm not 100% certain we will.
Trade safe."
I have a setup for the next 4 trading days BUT it needs to follow a script that is very defined over close today and tomorrow.
3720 is the target I see now on March 21. IF that were to occur I am expecting a HUGE spike up of some 400 SPX points in days.
Have no idea if it violates the EW rules but this scenario is looming large right now.
"....this is market is very possibly hanging by a thread, so countertrend trading (i.e.- bullish trades) should be kept on a very tight leash unless and until there are more bull signals."
http://www.pretzelcharts.com/
"Since last update, SPX captured its 3820-45 target (from March 8), exceeded it by about 10 points, then bounced. That's potentially 3 waves up off the 3808 low (to 3937), so bears can take it back below 3808 from here if they want.
Given where we are in the big picture, this is market is very possibly hanging by a thread, so countertrend trading (i.e.- bullish trades) should be kept on a very tight leash unless and until there are more bull signals. The most bearish case is that we've already entered Blue 2 -- and frankly, there's nothing currently in the charts to suggest otherwise. That can, of course, always change tomorrow, but this is what's in front of us right now."
"Probably the front-runner for the "bull" options (not long-term bullish) would be the expanded flat discussed on March 1:"
"One can at least envision a world where the Fed announces at its upcoming meeting it's going to pause rate hikes and the market gets excited, leading to the option above.
NYA has continued to track SPX:"
"And finally, we haven't update BKX in a while, but it has confirmed my long-term bearish outlook and finally officially captured its 90 target from way back on May 1, 2022 (bottommost annotation). Also, I'm getting flashbacks to the 2008 bear, where BKX often led the way down:"
"In conclusion, we can come up with a scenario where BKX completes the blue 5 potential and SPX runs the expanded flat (2nd chart), but those are best-case bull scenarios, and the worst-case bear scenario is a third wave waterfall lower that erases 1400-1500 points from SPX's current levels. In both cases, the long-term outlook remains bearish, as it has for over a year now. Trade safe.
(Incidentally, I published another piece earlier this morning: Why? Because It's Really Important)"
https://www.reuters.com/article/us-usa-trump-fed/trump-to-nominate-quarles-to-be-feds-top-banking-regulator-idUSKBN19V2U5
YUP the regulators. Didn't MOODY's the most dysfunctional entity on the planet JUST announce a negative report on many banks with DOWNGRADES? What timing. Like having a fire truck come to a home already in ashes.
The really worse part is the CEO and many officers of SVB cashed in millions before the collapse, was on the San Francisco Fed Reserve Board.
Now for the really scariest part of them all. I warned using Common Sense when i stated weeks ago that the mindset of all is ingrained in the last 40 years of disinflation. it still is! proof is in the current assumption by everyone that inflation will not be a problem past this summer. I mean EVERYONE agrees to this? WHY? What do they know?
So with that mindset this problem goes away soon. Not a single analyst or scholar has projected no way a 6% Fed Funds rate will ever hit again. If they are wrong compound the current situation 100 fold.
And most see a BULL MARKET lasting another decade or more. The news on all fronts are so incredible and scary in politics and economy over these last debacles we become immune to it and declare the FED is our savior till it goes wrong and we use them as scapegoats.
I will repeat my many claims for 2023. it will go down 40 to 50% this year alone.
Banks this and that ...
I'm a retired electronics engineer that focused on wireless communication technology (because I'm curious about things invisible), but I took a couple elective college courses in economics and banking while in college and developed the belief that there are more than enough regulations and regulators and computers that know everything, and have all the data they need, such that if current regulations are followed then that would guarantee a robust banking system that could not fail.
With that in mind, when a bank fails I would blame the regulators and not the bank itself. So I'm thinking that a good number of regulators (government employees) are spending too much time going to parties. I know for a fact that all bank activities during each working day are transmitted to its assigned regional federal bank overnight. So there is no excuse for regulators not having sufficient data to complete any of their assignments.
While I was still working as an electronics engineer a technician and I had to go to Washington DC to talk to some standards group about wireless communications standards and regulations. During the evening we went to some of the local bars. That's were we found a good number of our public officials getting drunk as a skunk. That state of mind probably interferes with their regulating, and that might be where they cook up some of their excuses.
clarify misconceptions. ONE the FED is not waiting to reverse course and is NOT late to do so. in fact it is BEHIND the CURVE on inflation. TWO the Bank debacle was predictable and I predicted it weeks ago. it was a result of two factor, one being that 40 years of disinflation created a mindset for future investing, and two the rules and regulations that would have prevented this was disbanded in 2018, the height of TRUMPISM. It's called a repeat of the roaring 20's from new Paradigm to total collapse in the blink of an eye historically.
How do i know these things? Based on historical patterns and glaring truths. JOBS market on FIRE! Inflation pressure not letting up. 40 years of disinflation and expecting a continued new paradigm where disinflation lasts forever? Environment of extremes in greed and complacency. From housing debacle to Crypto to Bank failures. Stripping RULES and Regulation in place since the last great depression is because we are now back to the same place we were 100 years ago. My proof? look no further than a pandemic that was seen, had a past history, past charts and known scientific certainty on it's deadliness. How long did the market hold up? I mean in a BULLISH mode. Hello, anyone home.
Now we rally from really bad news. WHY? because human nature finds excuses to view all things, no matter how bleak in positive light. TWO opposing reasons to rally on two asset classes and they both do so together? Stocks and Crypto. Now you know that BIAS, extreme bias, is always used to justify an optimistic outcome. THATS THE ADVANTAGE individuals have at these times. Understanding the irrational behavior and reacting ahead of the behemoth slow witted stock market.
TIME FOR A RALLY! OK maybe on March 22. Ridiculous arguments. these problems was known and expected, at least by me. I even predicted it. As for the Banks it was Trump that squashed the regulations that would have prevented this. But hey we had Crypto Mania with all politicians getting their payoffs.
This so called crisis reset all high flying assets that damaged the stock market. Dollar, Bonds, and the future Fed Funds.
I kept hearing that a decade more of this nonsense before a super cycle bear comes. Np it is here. It will start in earnest this year with a 40 to 50% haircut.
GOP refuses to even acknowledge the evils of White Supremacy as they themselves plunge into the new paradigm. FOX being attacked by the GOP for going so far as to show video of a peaceful January 6th. If that isn't the most hilarious thing. It is all right to walk back blaming trump and now they refuse to see anything wrong with that day but to be ridiculed by FOX? To pretend these cowards didn't scurry like scared sheep as the DEMOCRATS TOOK CONTROL of the situation that day. NANCY and CHUCK at their finest.
So no we don't have another decade of this without ramifications.
blame the fed for everything
2008 republican slogan- bank regulations hurt profits
20 trillion in new debt 2016--2020 and interest rates should be negative
just mild 2008 all over again.
one thing is certain QT has been over
watch xlf/ dollar and interest rates
"....it's finally starting to feel like the market is waking up to the realities that we've been discussing here for over a year now."
http://www.pretzelcharts.com/
Lots happened last week, most notably, the collapse of Silicon Valley Bank (SVB), which is the second largest U.S. bank collapse in history, second only to Washington Mutual in 2008. Silvergate and Signature Bank have also both gone the way of the Dodo.
Not quite a year ago (May 2022), I penned a piece titled "Not Even the End of the Beginning," in which I discussed the Fed's intentions as I was interpreting them at the time, and wrote:
My personal theory is that the Fed won't bail out the market until it's too late and too much damage has already been done. I base this speculation largely on the charts, but even if I had no charts, I would probably speculate the same thing, because the Fed always overshoots, in both directions. Thus, I suspect that by the time the Fed tries to reverse course, it will be too late to stop several large entities from collapsing under the pressure (the market is not ready for this environment, and most humans do not adapt to change quickly enough to make the adjustments they will need to make to save their organizations).
SVB collapsed because it did not adapt to the changing conditions quickly enough and was caught with too much negative exposure to bonds. Which crashed because the Fed had to hike rates quickly, which it had to do because inflation was (/is) out of control, which in turn happened because the Fed and the US Government both printed way too much free and easy money for way too long.
Remember that when these same entities who have completely mismanaged our economy try to shift the blame elsewhere by insisting that they (yes, the very same government that blew up the economy!) could have stopped this (and the rest of what's coming) if only they'd had even more control/"regulation."
This is akin to an arsonist insisting that he could have saved a building that he himself lit on fire -- if only he'd been allowed to light even more fires.
So ultimately, this is yet another collapse that can be laid at the doorstep of the core Keynesian philosophy (top-down central "management" of the economy) that has long captivated and motivated the leaders of our institutions. As the trouble snowballs, you'd better believe they will NOT want to take the blame for any of it -- so the history-rewrites and propaganda will start any minute, if they haven't already.
Let's get to the charts. Last Wednesday, I wrote:
Bear v, were it to materialize directly, only needs to break the low at 3928, but if it can sustain a breakdown there, then 3820-45 would certainly be within the range of possibility for bear v.
SPX came within a point of that target on Friday, and should reach it at the open today:"
"Big picture, blue 2 is of course still very much on the table:"
"NYA remains in lockstep with SPX:"
"In conclusion, it's finally starting to feel like the market is waking up to the realities that we've been discussing here for over a year now. There are still options for complex second waves here (variations on Red 2 on the second chart), but for now, the trend is our friend, and we won't discuss those in more detail until the market gives us reason to. Trade safe."
"... last update's lean toward another new low proved correct and bears have again done what they needed to. While I can't entirely rule out all the near-term bull options just yet, they appear to be considerable underdogs."
"Last update noted that SPX turned where it needed to, and within 8 points of its upside target -- and the bear count for the decline to make another new low was given as a "slight favorite." That new low has since happened, so things are looking as rosy as they can for bears at this point."
"Everything looks pretty good for Blue 2, but I always look for other potentials in case of error, which we'll discuss on the next two charts. First, SPX is back to the red trend line:"
"Second, the black diagonal can't be entirely ruled out just yet, but it's probably a heavy underdog:"
"In conclusion, last update's lean toward another new low proved correct and bears have again done what they needed to. While I can't entirely rule out all the near-term bull options just yet, they appear to be considerable underdogs. Trade safe."
SPX VIX at 19? complacency. 10 year note can't break above 4% still. US Dollar has a possible gap up once 106 is reached BUT that also can't seem to get there. Stalling in 105 range. Bitcoin is also holding up at major support.
Obviously a hot market in JOBS is still here just based on what was already shown. No surprises likely. Will Wages keep up pace with inflation? Big question mark. Will the CPI/PPI be in line with expectations? Once we have all the data leading up to the Fed Fund decision will we have a good idea if it is 50 or 25 basis points higher?
Tricky market and one that can still go either way and go there for a multi-month directional move. Any canaries in the coal mine seen?
"....bears stopped the market just a few points beyond my eyeballed 4070 target, now they just need to push below 3938 SPX to complete a probable impulsive decline."
http://www.pretzelcharts.com/
"In the last update, I wrote: If the current rally is a micro fourth wave, then bears would probably like to see it end shy of 4093. (There's a gap near 4070, we'll see if the market wants to aim for that or not.)
SPX then ran to 4078 and reversed, right in the range bears needed it to, which keeps the micro fourth wave very much on the table:"
"Bear v, were it to materialize directly, only needs to break the low at 3928, but if it can sustain a breakdown there, then 3820-45 would certainly be within the range of possibility for bear v.
NYA is in a similar position with its micro count, and a new low there would strongly hint at the decline having become an impulsive turn lower from the proposed (C) wave high:"
"In conclusion, bears stopped the market just a few points beyond my eyeballed 4070 target, now they just need to push below 3938 SPX to complete a probable impulsive decline. Trade safe."
Any chartist out there want to look at what the stock market did in the past with a Fed Funds rate of SIX PERCENT or higher?
The next 2 weeks will be brutal with a new leg down or wild swings before a crash event. if Powell was FORCED to acknowledge Inflation you know the data isn't pretty going forward.
The Crypto Trader was warning for weeks. Bitcoin today is still holding within the support zone. I hope it goes forst to warn me of an immediate crash possibility. we are getting closer.
Powell actually told the truth? Shocking. I do believe we should slip/slide till we crash. Every time there i a spike move up all assume the bull is here to stay. The Crypto trader had it right. With the slew of data coming out and the fed rate Hike i don't see how this sucker holds up.
The Chart has a picture perfect recovery here to establish a new wave up. Hit almost exactly support and bounced. It is now up to the street to determine if they no longer care about inflation. Perhaps they see resilience in the consumer with added borrowing and wages? One Fed Governor opened his mouth last week and declared over his dead body will they raise rates 50 basis points. We have a brutal economic calendar over the next few weeks. if it comes in as expected we should rally thru this month. Jobs, Jolts, CPI, PPI will determine if the street has factored in higher inflation or on the off chance we see a slowdown in inflation. Now if you base it solely on earnings and projections this market is already at very high valuations and needs a near perfect scenario to pull it off. Estimates have gone down, not up as of today. A 6% drop expected in Late April/early May quarterly announcement and another 4% drop for the quarter after. We are already at 18 plus P/E. Doing the math if over the next 5 months we rally 5% from these levels and drop 10% on earnings that places a P/E ratio over 21. So a market at ONLY 4275 with an expected drop of 10% earnings hits 21 P/E. This is ONLY if the price of equities rises just 5%.
The valuations are INSANE projecting out. I mean project 6 months or even 2 years out. You would need for disinflation to take hold as it has in the recent past and at a pace that is steep.
Lets add China to the mix. Impossible they contract over next 6 months as their lockdown was recent. Latest data showed the same result as we had when we got out of lockdown. The Chinese is NOT going to add stimulus to the problem since they know just how inflationary it is. BUT the Chinese have been cooped up longer and with very strict consequences.
Commodities should be the first sign of a spiking inflation again. the dollar should exceed 110 if the stock market stays afloat. 10 year yields should easily hit 5% this year and possibly 6%. Housing will determine when this bubble bursts.
A PERFECT STORM for run-a-way inflation this year!
The FED FUNDS will hit and exceed 6% this year and depending on when we CRASH it will stay above till then. There is zero other options.
Based on The Crypto Trader this current rally should stay in a pocket between 4070 and 4110. 4160 is the absolute top (IF) his projections are correct. His track record is the best i have seen on Bitcoin. He uses SPX as a correlating chart.
"If the current rally is a micro fourth wave, then bears would probably like to see it end shy of 4093."
http://www.pretzelcharts.com/
"If you've been finding this market somewhat frustrating, this is to be expected given that SPX has now been stuck in a trading range since May of 2022. On the plus side, you can at least be thankful you haven't had to write about it three times a week for every week of those 10 months. It's the little things in life that make it all worthwhile!
So, not surprisingly, there's still not a lot to add to the last ~125 updates or whatever it's been. Last update noted:
SPX did officially capture the red trend line, so it can bounce up to break last month's high from here, or it can bounce in a small fourth wave and then go on to form a fifth wave, which would give us a larger impulse down.
SPX indeed bounced but gave no indication yet whether this is a fourth wave or the start of a return to last month's high. If the current rally is a micro fourth wave, then bears would probably like to see it end shy of 4093. (There's a gap near 4070, we'll see if the market wants to aim for that or not.)
We can express both counts on one chart (below):"
"Not much to add beyond that. At some point, the market will get beyond this trading range and things will get interesting again, but until then, trade safe."
The Crypto Trader
https://www.youtube.com/channel/UC7AQQ3I02_5D6uShK96MeiA
He has ben spot on with chart formation, timing and support/resistance points. Correlates Bitcoin to SPX as they have been running in sync for a long time now. Minute 30 on of the 45 minute post shows where we are with the SPX.
Just give it a look and you can then dismiss it. Without even bothering suggest a closed mind. I tried to convince at start of pandemic with actual charts but was soundly rejected.
A really good chartist for Bitcoin as he sees a huge correlation with the major indices like SPX. he has been the most accurate and timely of anyone I have yet to review. he posted late Wednesday his latest call. I urge all to review his YouTube post. The Crypto Trader on YouTube.
SPX just announced either a short spike move or a longer one on Friday. A 5 day affair that stays below 4250? A full month affair and who knows how high it gets. March 22nd is a done deal and 25 basis point move regardless of the data. The 10 year note will hit and exceed the 4.2% ceiling of last 6 months. It should also promptly correct off and within 10 trading days easily exceed the 4.2%. WHY? Simple, the FED has decided to stay way way way behind the curve and hope and pray things work out. They know with certainty a Fed Funds that eventually hits 6% will destroy this economy. China will make sure inflation exploded right here. Their first full month after lockdown was exactly as I predicted, explosive. Tomorrow the 5th they announce their economic plan.
Labor market is so extraordinary it defies past performances. It will force the FED to (eventually) catch up with inflation. Housing already is on the cusp for a bad recession. The piggybank for homeowners will be closed. China is the perfect storm. It opens its economy at exactly the wrong time. it will spike all commodity prices and make the world suffer the consequences. There are known defined cycles for inflation. we had a glorious 40 year disinflation cycle that placed a whole generation on the assumption it stays that way. The investments and borrowing practice relied on disinflation. ONCE the 10 year yield exceeds the 4.2% ceiling of late it should spike higher.
For now i see an unusual event building up. March 22rd should cause an up spike in stocks and unusually high spike at that. Within 2 day after reality bites! An event that is truly impossible to predict but I am trying anyway. A LONG SHOT prediction.
"SPX is still within the inflection zone that it reached a few days ago. Bears need another new low to have an impulsive decline, but there's no guarantee they'll get one, so it's not a bad idea to stay nimble until this resolves."
http://www.pretzelcharts.com/
"As I wrote on February 27, the "easy" part is over for now. While the near-term pattern was pretty clear for a while there, it has reached its inflection, and inflection points are a little tougher when the larger pattern is also unresolved, which is the case here.
SPX did officially capture the red trend line, so it can bounce up to break last month's high from here, or it can bounce in a small fourth wave and then go on to form a fifth wave, which would give us a larger impulse down:"
"Since inflection zones present a sort of crossroads, last update talked about the potential for a complex correction; today I want to mention one more option, just because it's there. We won't worry too much about this just yet."
"In conclusion, SPX is still within the inflection zone that it reached a few days ago. Bears need another new low to have an impulsive decline, but there's no guarantee they'll get one, so it's not a bad idea to stay nimble until this resolves. Trade safe."
As long as Powell can persuade everyone that "transitory" was a valid theme, recent spike in inflation unsustainable, telegraphing only 2 more 25 basis point rate hikes is needed, the Goldilocks scenario stays on the table. Every data point is showing just how nasty inflation can be and how insidious. We all know there are CYCLES in inflation and lord knows we experienced the best stock market because of the 40 year disinflation theme. What no one has realized, like the start of a pandemic overseas, is that logic and facts gets sidestepped because human nature prefers scenarios that are optimistic regardless of the absurdity of that assumption. February data points showed income and spending came in at half expectations as prices keeps up the inflation theme. Today ISM Manufacturing Price data for February came in expansionary. Look at 10 year yield, the Us Dollar, and OIL as a clue to where inflation is headed.
The new thinking is that Powell will raise a wee bit more to perhaps 5.25% on Fed Funds by the summer. Everyone knows that the DMZ is 6%. It hits or crosses it all is over. I mean a devastating drop in the market.
So we either continue to show inflation is here to stay but not spiking to keep the theme alive of tapering off or we decide at some point inflation will exceed 6%. 10 year, OIL and Dollar should already telegraph this first. I also look at BITCOIN. It is holding up very well. It is my one asset that tells me when speculative betting is in trouble.
A drop from here to 3500 on SPX is possible. It would actually be the sensible path and an excuse to rally off a double low. I am afraid the more likely scenario is higher highs from here for 2 more months. A second half haircut of 50%.
Just my opinion not to be taken as a betting mechanism. As i point out if in 1925 had i expected the crash and economic disaster then it would have been as bad advice as those expecting markets to rise forever. Perhaps i am way off on timing.
======================================================================
"Energy and material sectors climbed over 1% each as commodity prices rallied after data showed China's manufacturing activity expanded at the fastest pace in more than a decade."
With China post lockdown scenario working similar to our post lockdown OIL and all commodities will SURGE once again. this will KILL any thought of a Goldilocks US Scenario. In fact I am startlingly surprised the street nor the FED has factored in an obvious spurt in economic activity in China causing huge headaches for the rest of the world. To me it was inevitable and obvious, like a pandemic from China coming here..
".... bulls haven't been able to get much going so far, and if this doesn't turn into one of the more complex corrections shown/discussed in the first two charts, it pays to remember that once all the hemming and hawing is over, the market is expected to enter a third wave decline."
http://www.pretzelcharts.com/
"Since last update, SPX bounced a bit, but retraced a substantial portion of that yesterday. Whether this will evolve into a more complex near-term correction is unclear at the moment, so I want to call attention to the potential of a larger pattern. This isn't a prediction yet, just something to keep in mind if the decline continues:"
"Of course, before the above pattern can be seriously considered, bears will first need to sustain a breakdown at the red trend line:"
"Nothing to add to the next chart: "
"And finally, big picture, blue 2 and red 2 are both still on the table:"
"In conclusion, bulls haven't been able to get much going so far, and if this doesn't turn into one of the more complex corrections shown/discussed in the first two charts, it pays to remember that once all the hemming and hawing is over, the market is expected to enter a third wave decline. Trade safe."
My thoughts of the overall market?
My first thought about the current market is that it has become spasmodic.
With a market like that it's probably best to stay out of it (AKA hold cash) because any future price movement is difficult to predict.
March 17, 2023
Option Expiration (Triple Witching) St Patty's Day
SPY Options Strikes 380 tp 395
Open Interest (OI): Calls 178,372................. Puts 955,502
The Market has a floor under it through the March Monthly Expiration
Puts out number Calls up to the 400 strike
https://finance.yahoo.com/quote/SPY/options?p=SPY&date=1679011200
Pretzel :
(1) Pretzel presents both a Bull and Bear case.
(2) Pretzel gives both Triggers and Targets
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