ES Double Tapped at 3820

Gold At Supports

Gold will open a move towards the $1675 area if it loses ground from here, about 7 percent lower. The rounded base will give way to a right-triangle.

How Low Could Platinum Go?

About 18 percent downside to around $730 if it replays the early 2000s move.

The End of the Baizuo

Whom do you serve? Who are you loyal to and who is loyal to you? Who are your people? Russia is fighting for the preservation of humanity
Before we talk about the image of our future, I would like to draw your attention to the patterns of long-term socio-economic and political development. We – I mean a group of scientists from the Academy of Sciences who work in long cycles of economic and social development-first of all, we managed to foresee this particular war in 2022. Back in the 14th year, it was clear that the challenge that we faced and the result of which was reunification with the Crimea, will necessarily affect the entire Russian world, including the territory of Ukraine. I even published a book, "The Last World War: The United States Starts and Loses."

Somewhere, what we see today was absolutely and almost precisely formulated, including the number of Ukrainian Armed Forces and the role of the Americans and the British in this occupation of Ukraine, as well as the cultivation of Ukrainian Nazism. All this was predicted almost to the last detail. We are continuing our research. According to which the peak of the confrontation falls on 2024. This is the forecast that my colleague gave 10 years ago, even before the current military operation and even before 2014. And then there were no new political seven-year cycles.

Why 2024 and why are we in such a situation of hybrid warfare? The fact is that the modern period is characterized by two simultaneous revolutionary events. The first is the technological revolution, which used to be talked about a lot. It is called differently, we say that it is a change of technological structures. And always this change in technological patterns occurs through the economic depression, which in this cycle began in the world in 2008 – with the beginning of the global financial crisis.

After the collapse of the Soviet Union, which was the first to fail to meet the demands of scientific and technological progress, we now see the collapse of the United States. The United States is no longer a world leader. In an attempt to overcome the global financial crisis by pumping money, the United States eventually led the situation to the breakdown of the entire financial system and increasing inflation, which is already reaching 30% at enterprise prices.

We saw the self-discrediting of the American system in the last presidential election, which was virtually rigged. America is not a more attractive image. In addition, compared to China and India, which have been doing brilliantly over the past 15 years, both the US and the EU, despite a fourfold increase in the monetary base, have not been able to embark on sustainable economic development. The efficiency of the Western management system — here, if we take the efficiency - the money issue is 20-25%. Only every 4th or 5th euro that is issued gets into the manufacturing sector.

In China and India have developed a fundamentally different management system that combines strategic central planning with market competition, where the state plays a dominant role in organizing money circulation and provides private businesses with unlimited access to money if this leads to an increase in public welfare.

All forecasts show that by the end of this decade, the old world economic structure will be reduced by more than half by now, and the core of the Asian accumulation cycle - China, India, Indochina, Japan, and Korea - will already be absolutely dominant in all macroeconomic indicators.

This process is irreversible, but the closer this obvious transition is, the less forces remain in the core of the old world economic system, the more aggressive they become. This is where the same hybrid warfare mechanism that the British used in both World War I and World War II works. We called them hybrid wars because they were fought over territory.

The bit about China and India reminds me of how I'd like to see credit reformed. There should be unlimited credit, as the market can bear and with no bailout provision, for self-extinguishing debt. That is, companies should be allowed to take on unlimited amounts of debt provided they pay it back, as in borrowing to repay funds is illegal. If a company borrows to build a factory, profits from the factory must repay the debt. Consumer credit is outlawed. Mortgages would have to be strictly regulated if they are allowed to exist at all.

The piece also compares Chinese, Russian and Western concepts of profit and goal of the economy. It is a fair criticism of the West that is now extractive in its pursuit of profit, but this is also a result of the planned diversity. By making the country diverse, it breaks communities that are tied by religion, ethnicity and so on. The link between worker and owner is severed. The owner doesn't care for your welfare because he doesn't have to, but also because in many cases, he isn't you. He is, effectively, a foreigner. Whereas is homogenous communities, one can still find smaller scale industries that treat their employees like their family. The piece touches on this:

That is, the main ideological vector is the deprivation of people of any collective identity. National identity, gender identity. In general, the human identity even. People begin to perceive themselves as anything-cyborgs, animals, plants.

Dehumanization is underway, and this kind of posthuman material is embedded in easily manipulated and artificial intelligence, replacing ideologues, in general, imposing their own behavior models on this posthuman world and forcing people to behave as the world's artificial oligarchic management needs.

The future is going to be more religious, whether it moves in a Christian socialist direction or in a Christian capitalist direction:
The question is, what should be the ideology here? Obviously, it should be based on traditional values. In short, this should be the image of Christian socialism that has already been largely vulgarized in Europe. With the understanding that we have not only Christian socialism, but also Islamic socialism, Buddhist socialism. I would call this ideology a socially conservative synthesis. A combination of traditional moral values that grew out of the great religions, with the demands of social justice, the social state and the development state.
Russia is very open about what they are opposing. As I said many years ago at the start of Russiagate, I can see how Baizuo would imagine an alliance between Russia and a subset of right-wing Americans because we share the same enemy. And many who were anti-communist, but not anti-Russian, have been horrified by the U.S. conduct towards Russia since the fall of the Soviet Union. An era of great change is underway. Decades are about to be compressed into years.

H/T: The War for the Future of Man

Silver Enters the Buy Zone

Accumulation time. Not "all in" time.

IICS Recession Call Looking Good, Getting Ready to Call a Tradable Low

After seeing Wall Street banks debate whether a recession will start in Q4 or early in 2023, and after discussing for a couple months how a recession could already be underway, I decided to make a recession call backdated to January 2022. We're in the recession now and the second quarter GDP report will confirm.

The latest Atlanta Fed reading says it might be a great call:

I have had a rough month trading as the market chopped from bull to bear, but I think the tradable low is really taking form now. I'm almost totally long except for some doom puts on utilities (XLU). I still have XLC on, short oil, long TLT and looking to go long biotech again in size. I went long NQ with a call overnight, sold out in the morning and got back in near the low of the day.

I don't know if the low is in yet, and if I'm wrong, the low could be 10- to 20 percent lower from here. Yet, I'm a skittish bull here.

That said, let's go to the charts.

It has been a brutal couple of days in the market, but IBB has held its 50-day MA.

XLC still holding for a potential bullish squeeze.
TLT looking good here, but not out of the woods yet.
Here's USO, the crude oil ETF. It is at support.
XLU has a very bullish candle. Dumping that position as I type.

Must Read: Missouri Market

The market's crash window is open and that's also the conditions in which a bear trap or tradable low will happen. With that context, here's a Rorschach test for bulls and bears: 1-month and 3-month T-bills. According to Countdown to FOMC, the odds of a 75 bps hike are 80 percent and 50 bps is 20 percent as of today, June 30.

The 3-month treasury yield is only pricing in about a quarter point here.

Back in June, the market suddenly priced in 50 more bps in the span of 3 days, coincident with the stock market plunging. My sense is the market could suddenly price it in again. If it doesn't price that hike in, it's possible a market crash would cause a Fed pivot. A potentially bullish (for stocks) condition exists, but it only becomes bullish in fact once the Fed pivots, once the market has the confidence enough to price the pivot in, or after all the selling ahead of a pivot completes. I'm thinking the stock and bond bulls have an edge right here.

The spread between the 3-monnth and 1-month treasury has also been widening. Last time it was this volatile was around the 2008 crisis.

The U.S. 1-month yield is down to 1.06 percent. It is effectively pricing in a 50 bps cut from here. It has been lagging most of the hiking cycle since March by about a quarter point.
The bond market is very much in a Missouri mood. (For foreign readers: Missouri is the Show Me State.)

The Long and Short of It: Crash Time

The crash window is open. It needs confirmation from high-yield debt. Once that goes, we'll have a credit event in addition to the stock market event, and then we can get free falling moves in stocks. Technical indicators are extreme as well. The crash window can also slam shut and trap the bears. My highest confidence trades are in treasury bond calls (TLT) and crude oil puts (USO).
BTC is busted again, but off the lows. HYG hasn't busted a support line, but it has a similar h-pattern forming.
All the pieces are in place for a rally, and a big one. After days of relatively even put/call buying by one ratio I follow, puts surged this morning. It looks like the opening of the collapse in SPY to new lows that kicked off on June 9.
Barring a bear trap here, the XLC trade is in the shitter.
NQ broke the megaphone. There is basically no downside support except the prior low.

The Universe Speaks: Seattle Genetics

I posted SGEN on March 22, 2020 in: Coronavirus & Markets Potpourri: Economic Phase Change and Yuan Deval Incoming. That was one day before the bottom.
With coronavirus, I see far too much panic these days. It's partially why I think the long-side will see incredible short-term gains. This sounds nuts even to me, but I think the market is primed for 15-20% upside in one day if there's a combo of good news and a short-squeeze. I'm becoming less confident in this forecast though. Monday might be the breaking point.
The Fed would announce its bailout and away the markets went. Yuan did not depreciate as expected, but here we are again with yen tumbling and the yuan would follow if it keeps going...crisis points keep rhyming and all the prior crisis points have been contrarian buy points...

Biotech is another rhyme. It was bouncing around long-term support levels. I posted on ABBV, BLUE and SGEN right as the bottom was coming in. I checked in on SGEN again yesterday and look here:

I have an alert on the resistance line. Perhaps it will break before the broader market rebounds.

Bears Strike Overnight, NQ Megaphone Gets More Mega

The conditions for a rally are coming into focus, but that doesn't mean a new low isn't reached first.
ZB is challenging its high from June 23. A breakout should take it towards 141, or about $117 on TLT. Update: ZB took out the June 23 high moments ago.
Crude selling off again this morning:


Why the Stock Market Boom Was Fake in One Image

If you understand socionomics, you get it just by looking at the chart.

It's been obvious to me for years that the market was detached from mood. Cultural trends such as transgenderism were found in Weimar Germany, a society that collapsed about as far as a civilized nation can go outside of war. All sorts of societal and cultural signs point to a deeply depressed populace.

There is a slight general rise in unhappiness, with fluctuation, after the 2000 peak in mood. Vast amounts of money creation and manipulation of finances, economics and information have gone in to keeping the illusion of a stable, prosperous and happy populace alive. Reality is now bursting in. Equities will give up all of their gains since 2000. There will be incredible backlashes on policy. First abortion, but soon gay marriage and anti-sodomy rulings could be overturned by SCOTUS. By themselves meaningless because powers will devolve back to the states, but my hunch is states will also go in for new bans. Open borders will give way to mass deportations. WWIII is already on the docket. The past 40 years or so of "progress" will be erased in under 10 years. The economic collapse will fuel a political and cultural backlash that will echo for decades. This won't be like the 1980s reaction to the 1970s, this will be cultural evolution in a different direction. Think religious revival, collapsing divorce rates, much higher fertility rates, anti-diversity/assimilation policies, manufacturing onshored, etc.

Restoration Hardware CEO is Back With Another Warning

Back in early April, I posted Wall Street Ignores Margin Collapse Warning. The CEO of RH talked about how dealing with inflation involved a number of bad choices, that collapsing margins were coming and that it reminded him of the scene in The Big Short, when people are listening toa speaker say the company is fine while the stock price is imploding. Now he's back...

ZH: US Consumer Implodes As RH Cuts Guidance For 2nd Time This Month, Warns Of Cratering Demand

Well, fast forward to today when moments ago RH - aka Restoration Hardward - just pulled a Snapchat and just three weeks after the company with the outspoken CEO saw its shares tumble after it guided lower for Q2 and the full year despite sold Q1 results, RH just cut guidance again with CEO Gary Friedman saying that “the deteriorating macro-economic environment has resulted in lower than expected demand since our prior forecast, and we are updating our outlook, particularly for the second half of the year.”

Taking into account the macro-economic conditions and our current business trends, RH provided the following outlook for the second quarter and full year, which assumes demand will continue to soften during the remainder of fiscal 2022:

Fiscal 2022 net revenue growth in the range of (2%) to (5%), with adjusted operating margin in the range of 21.0% to 22.0%.

Previously the company had seen revenue growth of 5% to 7% and operating margin of 23.0% to 23.5%, so a huge hit to both the top-line and profit margins.

For Q2, RH sees net revenue growth in the range of (1%) to (3%), with adjusted operating margin in the range of 23.0% to 23.5%. The second quarter outlook remains unchanged versus our prior forecast due to faster backlog relief offsetting lower than expected demand.

Friedman's catastrophic forecast continued, “With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year end, our expectation is that demand will continue to slow throughout the year.”

The economy is imploding and RH is first in line because they report weeks before the rest of the market, plus have high exposure in the housing market.
While the past week or so have been focused on technical warfare between bulls and bears, the macroeconomic picture is rapidly deteriorating. It's a matter of if, not when, the Fed pivots now, and from what level of SPX. After the pivot, then we'll get confirmation on whether a cyclical turn to inflation is underway or not.

Bears Failed, Bulls Get Next Shot

Bonds up, crude down, stocks in a trading range. NQ and ES looked like megaphones, now looking more like diamonds. The next move out will be explosive. Bears couldn't get a breakdown today. Next move is for the bulls to try their breakout. I am currently still long TLT, newly short USO as of today (I moved into much closer to ITM puts in July), and still long the XLC trade. I closed out IBB yesterday, but still have some XBI calls. Also still have some META calls. USO and TLT are my largest positions by capital, XLC the largest potential position if everything played out as anticipated.

Seasonal Analogs: Crude Oil

I lined up crude oil almost to the day, 2008 and 2022. I don't think a precise analog is in play, but I see similarities with the blow-off move in oil these two years. This is the kind of hunch that make me drop some cash on OTM oil puts.

Market on the Precipice of Greatest Bear Trap or The Acceleration

The 2018 correction ended after the Federal Reserve ended rate hikes, not when it ended QT. The latter continued until September 2019, when the repo crisis hit and forced the Fed off QT.
High-yield credit spreads are widening again. Can't say for certain how much going by the various funds, but treasuries are up today and junk bonds are down. That is a recipe for a credit event if it goes on for a few more days.
Remember when the Federal Reserve cut rates even though oil was soaring? The Fed will lose its inflation fixation very quickly.
The Russell 2000 Index went below its January 2020 peak today and made a new low. It is fighting around that level in the afternoon. NQ and ES are in broadening formations. The break out of the pattern should signal the short-term direction. NQ is also battling around the inverted H&S neckline.

Free-Falling Commercial Real Estate Finance

I'm going to do a post after this on where the market is here. I think we're on the precipice of a big move. So don't take this as a "sell it now" signal, but I do think if or when the market goes, this type of stock is going to crater, and OTM options will pay off well.

USDJPY New 52wk High

The One Weird Trick Baizuo Are Using to Destroy the Middle Class and Financial Markets

Three main indicators to watch. Sell NQ below the line, along with the rest of the stock market. If BTC breaks down, aggressively short high confidence targets. If high yield funds such as HYG and JNK drop and treasuries keep rising, (look to IEI for a duration proxy) the sell line will be hit. After that, the odds of a major credit event and financial market collapse accelerate to the upside.
USDJPY looks ugly for Japan and the world financial markets. Nothing good comes from a higher yen.
How are the Baizuo destroying the world? Via their sadistic anti-Russia obsession. Commodities are cratering, the latest being cotton:
Oil should be much lower already, but it is not because of Baizuo foreign policy obsessions. Their green idiocy already laid an inescapable recession, but their foreign policy could be the difference between recession and depression. Everything is more expensive because the oil price continues rising. As long as oil stays high, there's no escaping economic decline. The Federal Reserve has to keep tight monetary policy because if credit or spending starting taking off, it would unleash the inflation seen in the 1970s, when the Fed chickened out on controlling inflation because it though the recession was worse. There's no good option here because high oil prices are like a huge tax on the economy.
This is also feeding into financial markets. The Japanese yen is being crushed by the rise in interest rates in countries such as the U.S. Japan desperately needs a lower oil price, which would stabilize bond markets and let the Fed ease its tightening approach. If instead the Baizuo escalate their psychotic green policies along with antagonizing Russia and, no doubt, encouraging China to join in with supply chain damage aimed at the U.S., then all the pieces are in place for a deflationary, depressionary collapse in the financial markets. Wholly owned, wholly owned by the Baizuo admin and their supporters. The Federal Reserve cannot remake foreign policy and undo the green agenda. They are bystanders. They screwed up a lot, but the collapse is on the Baizuo.

Prepare for a 1929-style implosion of stock and bond markets imminent if these policies are changed very soon.


Rally on Life Support

The NQ line is the necline from the inverted H&S pattern. Rally is done if it cannot get back above.

Place Your Bets: 3400 or 4100

It does seem like most of the market is either expecting a plunge to new lows or an extended rally to the upside. If everyone is looking for it, it's unlikely to appear. Are 3000 and 4400 the possibilities? Or will it frustrate everyone and bounce around 3800-4000 for six to eight weeks?
Nomura: Everyone Is Waiting For This "Final" Shoe To Drop Before The All-Clear Signal

More on Fertility

The vaxx is a possible explanation, but don't discount that fertility could be signaling a collapse in social mood and the economy. Look at those collapses in the 1930s and 1970s and consider the worse demographics in developed nations along with anti-natalist culture.

Stocks and Sex: A Socionomic View of Demographic Trends