Here in Deflation Land, we make it a point to take our half-dozen or so readers seriously.
|
Mackay, FSG 1974 reprint of the 1841 classic |
So when very-bearish reader Scott asks:
I was asking how you formulated your rising "channel" as it seemed constructed to validate your price target rather than based on price history.
We owe him an explanation.
Here's our rising channel on SPX. 2135 is both a new high and a point at mid-channel on a very special day ahead of us. It also corresponds to an earlier wave up in the cycle, from 1158 to 1422 on the SPX.
|
SPX 11-6 |
IMO, we have plenty of room to move sideways for a bit before putting in a final high, preferably at mid-channel and accompanied by lows in VIX and volatility ETFs like UVXY that visit their lower daily Bollinger Bands.
Those are nice to have, but the 11/18 release of the October FOMC Minutes is the next important event on the boards. As much as we can speculate as to how the Fed will or will not act based on economic statistics, here they have a chance to
tell us themselves. And the Fed will hike.
What I am proposing, however, is that as much as the Fed thinks it has the Fall volatility season behind it, the quants and algos may prove them wrong, and we will get something much more serious -- more truly vicious -- than they or anyone but us deflationary doomer Austrian cranks ever imagined.
|
SPX 2Y |
And we
are Austrians. We believe in reality and in the "long run" of the adults in the room.
|
Ludwig von Mises, ed. Greaves, 1978 |
And we are not afraid of the future, of revisiting the lower support of the old Jaws of Death.
|
SPX 10Y |
|
Klemm, ed. George Allen & Unwin, 1959 |
For the thesis of the deflationist is that we get a deflationary debt crisis
first, which shatters the remaining faith in the powers-that-be, in The System and in The Man, which is necessary before the final hyper-inflationary currency collapse.
|
SPX long-term |
In that case, I recommend having a few
good books on hand, and maybe some candles.
|
A Conrad Argosy, Doubleday, 1942 |
Have a good weekend!