Thursday, June 4, 2020

Halfway home

We are right at the midpoint in time from where equities first rolled over at the all-time highs, to the September FOMC where I am proposing that the Fed will announce its direct support via purchases of $SPY.



It is a very exciting moment, if a 5-wave C impulse lower is due.

SPX C down, log indexes
SPX C down, linear

46 comments:

christiangustafson said...

So we retraced all of c of A down. Because recovery and it's all priced in?

christiangustafson said...

Uh oh, rough rice.

Bryan Franco said...

Remember what happened right before the crash of '08. Food riots in Asia spurred by a surge in the price of rough rice. There will be limits to easy money. Rice can be hoarded and stored. So while there may be excess capacity in other sectors of the economy that renders QE not inflationary, hoarding and supply disruptions throw a massive monkey wrench at the fed. Forget the zero lower bound of interest rates. That was never binding. The binding constraint might ultimately prove to be food prices.

christiangustafson said...

Yeah, Bryan noticed the rice crisis brewing this morning.

I would guess it's because the PBoC is creating all sorts of wild credit and fake fun things to hide the NPLs in their neck of the woods?

christiangustafson said...

Leading-diagonal off the high?

Lady S said...

Nothing can stop trump and the fed

christiangustafson said...

Yes, sadly atm the RICE indicator is about all we have got.

christiangustafson said...

We have rice, and we have this green trendline that contained the insane rally today.

cdude said...

With passage of the latest 'stimulus', they'll have a total of 5.8 trn to drop over the next 6 months. 2009-11 QE's etal pales by comparison.This time more of the stimulus is actually going into to real economy. This IS helicopter money. I was shocked that the street bought the BLS's BS today. 20 million not working being counted as employed because of PPP dole.
Sorry but, these shenanigans trump any "technical analysis". Just cant see the SM doing a major dip any time soon. Maybe never if the Fed starts buying equities ETF. Hey, isn't there a name for when governments own and controls companies.

Bryan Franco said...

If asset price inflation temporarily spills into critical food staple inflation (rice),and if this spurs unrest, globally, the Fed will be forced to keep itself in check. That means it will not buy stocks.

Randall Beehomes said...

I will defend my rice with my bump stawks

Unknown said...

I am in agreement with cdude and have had this mentality for a while now. Money printing overrides any technical analysis, period. Any Nasdaq elliott wave count from February is now thrown out the window, it has made new all-time highs. Money printing distorts TA. People expecting deflation and DOW 2,000 probably force their minds to come to this very unlikely prediction because the alternative is much worse, stagflation and a collapsing dollar.

christiangustafson said...

We still have the 10Y T breaking out and a Fed meeting on Wednesday.

christiangustafson said...

Northy has some good charts.

john said...

Cue dingleberry in 5...,4..........

umdengineer said...

Hey CG since you're near Seattle can you tell us if the city is still standing?

I'm seeing on Twitter protesters have stormed city hall.

Kevin said...

Northy's charts are good, and tell the story that the only thing that can stop the bubble from imploding is a larger bubble. And there lies the rub of top calling.

The way I'm playing it - like I play all markets, all the time - is to follow the trend with most of my money, then try to play the contrarian extreme swings with smaller funds I deem an hedge (although sometimes it follows the trend; sometimes bets against the trend.

Years where trend following works the biggest part of my portfolio grows, while the hedges shrink to nothing.

Years where trend following fails to work and end up being a dude overall the contrarian hedges grow in influence (due to portfolio sizing increasing with each new win) to deliver a good year out of a blah one for everyone else.

Big bad bear years work great for both the trend following side, while the hedge side grows dramatically, perhaps so much so that as the year progresses the big money trend following side turns into a hedge against the bet against the trend hedge size which as the year progresses is making even bigger bets on a rapid swings up and down as overbought turns to oversold, and so on.

Here? I'm 94% in QQQ, 5% TZA, and 1% TVIX.

Would love to hear the plan of others and how allocating for these tricky and treacherous times.

christiangustafson said...

I'm on the north end of Seattle, have not seen any violent activism up here. The Ballard neighborhood, and the nice shops along Ballard Avenue, has been boarded up since the start of the stay-at-home order back in March. This shocked me at first, but now seems prescient. They had some problems with homeless and tweakers in the neighborhood, but actually sent them away so it's fine now.

The new Paris Commune is taking place in Capitol Hill, a neighborhood just east of downtown. I had an apartment up there maybe 18 years ago when it was more gritty than today. Since then it has become very opulent due to the free-flowing tech money, particularly $AMZN. There are high-end restaurants on Capitol Hill on blocks hedging into the Central District, where you need to watch your six.

As a ex-Nordstromie, I am still shocked that the city let the flagship Nordstrom store downtown be looted by these punks. The political leadership is completely useless, imagine how demoralizing it must be to be a Seattle cop today. Progressives in government are clueless and probably corrupt.

$HTZ off 30% so far this morning -- party's over, or a good entry?

cbasten said...

@cg, I tried another AMZN put today at the top $2670. Also, in regards to HTZ, I was holding (bought in April) 15 $3 October calls that I sold yesterday and 50 $10 Oct. calls I sold yesterday and today for a small gain. If history repeats itself, Hertz equity won't survive. The law firm doing their restructuring also did Chrysler's and Visteon both of which had their equity wiped and were automotive companies. I don't see a differen't outcome for HTZ and see the stock dropping back down to $1 or less.

christiangustafson said...

fwiw, Martin Armstrong thinks a violent plunge in the price of GOLD is imminent.

umdengineer said...

I would think with all the money printi g gold should be OK, even with the manipulation.

Silver is the metal that's way undervalued.

Kevin said...

I read that Armstrong believes food prices are headed super high, with shortages coming, so stock up on food, with 2024 the peak for this pending food inflation spike. This was before Covid, before anything on the horizon to explain such a prediction. I studied the best way to profit from that - as a hedge, in case he was right - and the price correlation I found to food prices was silver. For anyone looking to dabble on the long side, especially if we get a hard correction in silver that offers a lower risk entry point.

Kevin said...

Yikes, did you see the massive Island Reversal for the Dow Industrials - an 800 point gap above the 200 day MA on the Jobs report and now an 800 point gap down below the 200 day. Classic! Though never saw one that big.

christiangustafson said...

10Y yields collapsing.

Remember, the point and purpose of the tape for the next 3 mos is to prompt the Fed to announce a $SPY support facility at the September FOMC meeting.

It only has one job.

Kevin said...

I heard it is against the law for the FED to buy stock ETFs.

Bryan Franco said...

So, I contacted the FOMC because the public used to get detailed transcripts (not just minutes) of their meetings. They replied with a link, and it appears there are no transcripts after 2014. If this is true, what happened to their effort to increase transparency? There used to be really good information in there.

Dear Bryan Franco:

Thank you for your recent correspondence in which you sought assistance in obtaining historical FOMC transcripts.

For historical FOMC transcripts and other materials, please access the following link: https://www.federalreserve.gov/monetarypolicy/fomc_historical.htm

I hope this information is helpful.

Sincerely,
Board Staff

Deeznizzuts said...

Update?

christiangustafson said...

iii of 1 of C down, of course. Now did the wave i finish at 2964 or 2984? If the latter, you have an irregular flat for W2 that finished at a phi retrace today.

At 2.618x the iii has 2475 in its sights.

News overnight?

Randall Beehomes said...

Take those statues down! And the marketz with them. 1492 on S@P before I accept a long

Kevin said...

We could be in the process of completing wave B of a bullish Wave 2 correction. If so, once the pending C drop completes 5 waves down we head to major new highs. The depth of the 5 waves down wave should dictate whether the pending next drop is a bear market Wave 1, or completing the Wave 2 bullish correction. Remaining open minded and following the trend is called for, as odds of a Dow 40,000 are just as likely as a Dow 4,000, and either will one of them will deliver the desired profits so long as one is positioned right.

christiangustafson said...

Thursday (tomorrow) we trip the 2nd level circuit breaker.

Market needs a 20% flush.

christiangustafson said...

🍿🍿🍿🍿🍿🍿🍿🍿🍿🍿🍿

christiangustafson said...

If this channel holds on the /ES this should be an exciting week.

christiangustafson said...

W2 count still on the table -- if c of 2 is a 5-wave megaphone. Dangerous ...

christiangustafson said...

Looking like smooth sailing until at least the July 4 holiday. 3270 by then? There's a reasonable count on the S&P for that. Calls priced out of this world, nuts.

Deeznizzuts said...

Does this action fit your original count?

christiangustafson said...

It might, yeah. We need to break through the obvious channel support today.

christiangustafson said...

No one is talking about 3GD ... yet.

el mar said...

https://s12.directupload.net/images/200628/8j68rp5w.jpg

Deeznizzuts said...

Not looking good huh. How do you reconcile the techs hitting all time highs?

christiangustafson said...

It's nuts, isn't it? Sheer insanity, of course.

All this while a true Sword of Damocles hangs over the world. There are numerous dams upstream of the Three Gorges Dam; if any of them fail, they become dominoes, overwhelming everything downstream.

We may be right on the brink of the worst human tragedy in history. The dam failure would trigger shocking casualties, famine, civil war, and likely international war as India, Vietnam, Japan, and even Russia now step forward to protect their interests in the demise of the CCP.

The CCP could just lash out everywhere, desperate to hold on to power.

There are numerous nuclear power plants along the Yangtze -- will they wash out and poison the ocean?

And the CCP might not be able to warn and evacuate the vulnerable, because doing so would admit failure. It would be a supreme loss of "face". How's that for a Catch-22?

I urge you to follow the TGD threads on /pol/, and, if the dam does fail, immediately run to the grocery store and purchase a few months' food. The magnitude of this potential catastrophe cannot be overstated; it is the blackest of black swans.

Deeznizzuts said...

Looks ominous. Wonder if today is the day.

Bryan Franco said...

Panic buying of "virtual everything". Yet the banks and the energies and everything real are not participating. The bifurcation is ominous.

Bryan Franco said...

Will the gainfully employed robots be customers of $ZM? Disclosure: I shorted it today with a tight stop.

christiangustafson said...

Agreed, today's move felt very deliberative, like the S&P was trying to figure something out.

We exited one channel -- we'll test the larger one around 3070, and it's free-fall after that.

If the rally from the March low was "B", then we still have a 5-wave monster "C" down impulse looming, which just may have started today. Should get confirmation soon or blow up yet another bear play.

cdude said...

OMG..how long have been calling "the top"? Get out of your head- man!!! This is a new game.