We've Only Just Begun

I am strolling through the charts and seeing areas of the market that haven't even completed tops yet. It took 5 minutes of looking at charts to find these, this is the top of my giant pile of charts. And by top, I don't mean the best, though some are great. I mean I made it through only a sliver of all my watchlists and had enough charts for a short video.

Boeing and FedEx Remain Near Lifetime Support

Hottest CPI Since August 1982

That'll do it.

Here's BTC on the verge of collapse. I think it gets going sub-$18,000. Holding on right now along with stocks. I'm always paranoid about rallies and one could come in the morning, but I think the market will be busted from here into the tradable low that could be days away.

I'm keeping an eye out for all the stocks sitting on major support lines such as Boeing, FedEx and so on.

EEM lost final support in premarket. I drew a line just in case that cuts through the $32 area, but after that the only thing I see is the March 2020 low that is 16 percent lower. That isn't really support, but it could prove to be considering that's about the max decline I expect for the market here.

Boeing, FedEx and BTC

All three sitting at their lifetime support lines.

Trendlines Breaking or Soon Will Be

BXMT is giving me financial crisis vibes. It is one of many commercial lending and mortgage REITs out there, all getting blasted today.

Boring areas of the market start breaking in bear markets.

Financially-engineered (read leveraged) makes of spices. Many of these types of companies are out there. They lived by QE and now will die by higher rates.

BOeing and FedEx are sitting above very long-term support. If they break, there is no support until far lower.

I'm adding some energy shorts here with it outperforming today. I expect this will all reverse quickly barring something unexpected in geopolitics over the next few weeks.

Rally or Crash Charts

I have a zoomed out view of FedEx, the rest are zoomed in, but have broken long-term support lines. FDX faked lower and then rebounded. That's what it possible with the rest of the market here. The alternative is that like Nike, the market freefalls from here. There are divergences that suggest we are in "buy mode" for markets. The problem, again, is that crashes can happen with these divergences. Additionally, a massive short-term rally could be followed by much lower index values as it was in 2008. To say rally here doesn't say if its a day, days or a significant tradable low similar to June. I strongly lean towards former rather than the latter here on October 2 though.

Never a Worse Chart Setup: FedEx and UPS

Worst for the economy, not the bears. FedEx is at long-term support and UPS has a giant top that has never been seen before.

Seen this before in Canadian National Railway though...

JB Hunt looks toppy too.

FedEx Drops the Bomb

The moment of recognition approaches. FedEx issues ominous warning about the global economy, shares tumble

"Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S." FedEx CEO Raj Subramaniam warned in the release. "We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations."

Economic data is going to fall off a cliff.

Predictions are hard, but I expect FDX will get to long-term support. I think long-term support could also break and enter a free fall. That's the scenario where the bear market is worse than anything seen since at least the early 1970s.

Events always take longer to play out in time, but bear markets are when time accelerates. The extreme bear scenario includes several possible tripwires. One is the Federal Reserve loses control. Everyone expects inflation, which is why losing control means uncontrolled deflation. Everyone, even deflationists such as myself, assume the government would print money in that scenario. 

What few have contemplated is what happens when its say August 2023 and inflation is back to 5 percent and the Biden admin is pushing a big spending plan because the recession is going on six consecutive quarters. There are easily imaginable scenarios where some combination of the Fed funds rate, inflation and U.S. budget deficit conspire such that the Fed's choice is massive dollar devaluation and exchange-rate driven "hyperinflation" on the one hand and deflationary collapse on the other. The GOP only needs one house of Congress to block any type of crazy spending plan from Biden.

Additionally, read Ages of Discord. The indicators point to civil war, political violence and depression. The setup for an economic depression that exceeds the 1930s is there if enough dominoes fall.

FedEx Rips

I noted that FedEx (FDX) was an important stock to watch yesterday. It had put in what looked like a possible reversal candle. Today it gained 14 percent.

The firm raised the dividend 53 percent to a 2.1 percent yield after pressure from activist investor D.E. Shaw. A move of that magnitude doesn't strike me as solely a news event, but also reflective of sentiment.

Capitulation Day 1 or Economic Collapse Incoming

There's not much to say because in these situations, the selling stops when it stops. Anytime is a good time for a low. Since the market closed near the lows, the final low might be as soon as tomorrow, or tonight in the futures. The first resistance area is 3820, once that falls then a low may be in. If the market goes lower, it could go a little lower and bounce at 3700 support line or it could go way lower to 3400. The Fed meets on Wednesday and that might mean bears don't press and bulls don't pounce until later in the week. Having said that, the three black crows on the daily chart is indicative of exhaustion coming at the tail of a long down move.

Individually, many charts look ugly. Here's my favorite bank because it is loaded up with crypto risk:

New 52-week low for Facebook.

FedEx, an important, economically sensitive stock, put in a favorable candle for a bottom.

Who's up for a 2008 or 2020 style collapse before the Fed even seriously tightens? Imagine those crashes without any bailouts and you have some idea of what is coming. Or imagine if those bailouts caused oil to shoot to $200 per barrel and gasoline to $10 a gallon, and you have some idea of what could be coming if they try a bailout before consumer price inflation drops.

I watch boring, stable stocks that invest in things like commercial and residential real estate. BXMT is the commercial side. It plunged 7 percent today, a massive drop that speaks of an economic calamity.

High yield bond spreads are surging towards the point where financial markets give up the ghost and implode. I think it speaks to why the market will probably bottom out fairly soon even if it means a quick 10 percent plunge first. Things are getting out of whack so to speak, and my sense is the faster moving markets will bounce a bit while the economy deteriorates and sets up the next leg down. Otherwise, if markets are accurately signaling a depression, then stocks are headed below the March 2020 low fairly quickly and we'll be talking about my 1500 target on SPX before year-end.

I don't have a good read on public sentiment. The public is upset about gas and food prices, but it seems like the ruling class' Trump obsession, declaring guns and Trump voters the enemy, the Roe vs Wade decision etc., are all giving the media good excuses for not covering the economic devastation unfolding in the markets. One can only imagine the non-stop apocalyptic reporting if Trump had been re-elected and something similar was unfolding. To some extent, the media is beside the point, but psychology matters for markets and the media can massage it for long periods of time.

At some point, the public will realize the depth of the economic destruction, but not yet.  

Various Charts of Assets that Will Tell The Tale

Here are some charts that should see explosive moves from here. FedEx, mortgage bonds.

What the h?

The h-pattern is hell for bears in bull markets and hello new lows in bear markets. Some h-patterns are at their moment of decision right now. Others are at various stages, some bounced where a bull would want them too, some broke, some are still early in formation. The most important and imminent two are ARKK and FB. Both are near their 52-week lows.