Tuesday, December 5, 2017

How soon can we re-test 1810 on the S&P 500?

I found a real gem in Value Village this week, a signed 1st edition of a classic critique:

James Burnham, Suicide of the West, John Day, 1964
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If Congress shanks President Trump (damn, that still feels so good to type) this week, we get a brief market crash comparable to the impulses that took us down to the 1810 lows in mid-2015 and early 2016, a decline of about 12%, to support around 2336.

Congress adjourns for Christmas break next Friday, 12/15, so it's likely they patch things up by then, hopefully without Trump cucking on DACA, but with the result being a fierce rally into EOY.

With the ^IRX at 128 bps, we may also witness the incredible event of the Fed hiking next week during the government shutdown.  The policy wheels are already in motion, so why should they change course due to some infighting over fiscal policy?  What a sight this will be!

But the damage will have been done, and we can start finding our way back to the 1810 level by mid-February, with a bounce into March FOMC.   When the Fed maintains their course, it will set into motion the hellishly-bearish market events for the rest of 2018.


SPX steep decline to 1810 support

15 comments:

Anonymous said...

"Suicide Of The West" More like a homicide. If you purposely beat a man repeatedly, filled his mind with lies, kicked him while he was down, handed him a bottle of opioids, and a loaded pistol, would that really be suicide?

Christian Gustafson said...

With a pub date of 1964, this book comes just ahead of the full bloom of the New Left in 1968. But the ideas were born in the 1950s, so it will be interesting to see how much of it Burnham has observed and absorbed.

This joins another signed book I found at Value Village a few years ago, from V. S. Naipaul.

Bryan Franco said...

Commodities and emerging markets have started to not like the prospect of this next rate hike.

Kevin Wilde said...

Semis still look to be way ahead of everything else, and offer the TA "tell" as what happens next. I'm still seeing SMH finishing up a 5 wave down move here, which suggests at a minimum (if we have indeed begun a new bear market) a rally to SMH 104/5 area. Such a 5%+ rally would likely see new highs for most other stock indexes, as those indexes have not fallen as hard as SMH so far. If that 5 wave down is a wave C of a correction, then even SMH is destined to rocket to new highs, though I believe that 5 waver to just below 50 day moving average is a first wave of a new bear. Hard to imagine SMH rallying to 104 area while indexes continue to slide, so if I was a bear I'd wait till SMH nears 104 to add shorts, and if I was a bull I'd being buying tech stocks here, and if I was a short term trader I'd be buying SMH here and selling and shorting at 104. This should all play out going into next week, thus we should have a good idea of how 2018 starts by the end of next week.

Christian Gustafson said...

We do have 5 waves down from the ATH on the S&P 500 -- actually counts very well as a "leading-diagonal".

Market waiting now for its impulse lower, most likely on news of a breakdown in Congress.

Kevin Wilde said...

Christian, if we have 5 waves down, then surely we would expect a corrective bounce here, before we impulse in a third wave melt-down?

Anonymous said...

Here's where the hippies went.

https://en.wikipedia.org/wiki/The_long_march_through_the_institutions

Christian Gustafson said...

Yes. We are in it now, IMO. But it could be just a sideways move, no big bounce, basically just a chart "corner" in the big picture.

The theory behind leading-diagonals is that they don't look like a standard impulse -- their legs are all triplets, showing indecision at the turn. So no one thinks of it as a turn, until we break some support and it's obvious to everyone. Agh! too late ...

They had the 1st 5 seasons of "Oz" on DVD at Value Village last night. I did not buy, but I did group them together for anyone who would.

So who shanks POTUS this week, his enemies or his friends (also enemies)?

Anonymous said...

Could Bitcoin be the new canary in the coal mine? 2018 is going to be a very bad year for Bitcoin. Wouldn't be the least bit surprised if 70% is shaved off in the next couple of years.

Anonymous said...

Nothing to see here folks.

https://grist.org/article/bitcoin-could-cost-us-our-clean-energy-future/

"By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today."

T.Berry said...
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T.Berry said...
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Kevin Wilde said...

Skip to the "recession risk" section about half way down. Great and timely stuff:

https://realinvestmentadvice.com/no-risk-of-recession-12-08-17/

rotrot said...

"The U.S. Is Entering A Recession Right Now. Here’s Why."
https://suremoneyinvestor.com/2017/12/the-u-s-is-entering-a-recession-right-now-heres-why/

rotrot said...

https://twitter.com/saxobank/status/939137658198118400

https://www.home.saxo/-/media/documents/campaigns/outrageous-predictions/outrageouspredictions2018.pdf