Saturday, December 3, 2016

Charts 12-03: Italian referendum weekend

The ECB announced on Monday that in the event of the Italy referendum failing this weekend, that they would be ready to keep things stable with increased bond purchases.  So the market has been sanguine about this all week.  We haven't seen the march into hedges like VIX calls and volatility ETFs that preceded the Brexit vote.

the Fred Beckey

A "no" vote on the referendum essentially is the true beginning of the end of the EU, so I suspect that the reaction will not be so muted.  Of course, we don't want to see a lock-limit down on the overnight /ES Sunday, but a 30-handle gap open to the 2161 area of SPX would work nicely.  We would then sell off the entire week, eventually reaching an interim low at the December FOMC, for a couple of weeks of Santa rally.

But the larger goal for the next couple of months is to cross the big pink megaphone, then bounce into Spring with a phi retrace and backtest of the old rally channel.

Since the Donald won't be using the legacy media during his reign, I have added a free plug-in for his Twitter feed down the left panel.  A couple of ads are tacked onto the block, the impressions of which benefit the authors of the plug-in and not this blog.

I still can't believe that the financial press has advanced the idea that Trump spending will be inflationary.  If anything, you could start with the idea that they are taking a fiscal instead of a monetary route in all of this.  But the results will be the same, inescapable debt-deflation and an eventual spiral.  Globalism was the last act in a grand effort to expand credit, by exporting inflation throughout the world.  There is simply no easy or safe way to dismantle what we have built here.

SPX 12-03


Christian Gustafson said...

Mad panic in Vancouver for the bubble RRE.

I love it!

Anonymous said...

What if the Trump plan is neither inflationary or deflationary? What if it turns out to be (gasp), GOLDILOCKS!? Is that word allowed here?

Christian Gustafson said...

2008 showed us what happens if the path of credit expansion diverges even a little bit.

Which means deflation wins unless we are willing and able to double down on the debt and the Fed balance sheet in the Era of Trump.

Looks like Austria chose national suicide today. A pity.

T.Berry said...

wow 11 new ath's since don won. too bad don said to sell stocks in june ---bad call. Obama said buy stocks march 2009- possibly greatest stock call ever :)

just a bit over 3% till dow 20k! moving target date up to easter (good chance it get there before too) rather than memorial day.

hate to sound like a broken record, but we are fortunate to be investing in. strongest. secular. bull. market. ever.

dji 22k or higher by next dec 1.

T.Berry said...

the trump bottom is in.. s&p 2030. don't think we'll see it again.

Anonymous said...

"s&p 2030. don't think we'll see it again" See ya back here in February T. Berry.

Ken Barrows said...

T Berry,you LOVE sounding like a broken record.

john said...

This is not the reversal we are looking for

Christian Gustafson said...

Even the rate hike next week won't bring this down. But the one in February might.

Revise count ... nip tuck ... and some more ...

Remember the big triangle we had in November? That was a "B" wave. Triangles live in the B or W4 position. The waves count nicely since then -- we're currently in 3 of C.

The Fed will hike next week, but it won't bring down the market, just give us 4 of C. 5 of C rallies us to the end of December.

I'll post a chart tonight, and speculate on how it all plays out in 2017 (epic bear salvation).

The good news is, as things fall apart, Trump won't take your firearms.