In bull markets, bear patterns reliably fail. In bear markets, bull patterns fail. Asuming this is a bear market, there is probably not much upside left. My head tells me the market could start falling almost immediately because I expect a pullback here, and that could in hindsight be the start of a larger move to new lows. My gut says that bears are coming out again and maybe that's a sign there's one last squeeze left before the reversal. Is started taking profits last week and looking to position for the next bear move.
2022-07-31
How Much Rally is Left: Bull Patterns Fail in Bear Markets
2022-07-29
Very Dead Cats
First Atlanta Fed Forecast: 2.1pc Growth
Korean Won Chart
What's Going On With TLT vs ZB?
Apple Pop, Prepare for Drop
A September-October Crash Scenario
The main assumption for this crash scenario is the economy declines as expected, but crude oil remains high. The stock rally also eases financial conditions. This keeps inflation and inflation expectations high.
The Federal Reserve, which has dragged its heels on inflation the whole way, stops dragging its heels on QT. When the QT amount doubles to $95 billion in September, the Fed starts actually doing QT. The combination of higher than expected inflation plus the Federal Reserve getting serious about inflation again triggers a far larger market collapse than the one in mid-June.This is not the only possible crash scenario, only one of them. As I've been saying for months, there are only two real "free lunch" policy available for the government: peace with Russia and doing anything to increase confidence in energy markets. Ease the sanctions, let energy costs plummet and economic pressure will lift. Sans that, their only hope is that the economy collapses enough to kill oil demand without triggering something like the 2008 market crash because there is no known scenario where things get better without getting worse first.
Indexes: Breakout or Pullback
A breakout above that line is the more important event because it will cause more short covering. A pullback is a normal test, and I'll be looking to buy the dip.
Having said that, now is the time to start hunting for new short targets. I will be looking top down, from macro trades in FX, bonds and commodities down to sectors and then individual targets. VIX will hopefully return to April levels, providing cheap puts.
For the Records: German Greens Vote For More Coal over Nuclear
WSJ: Germany’s Nuclear-Power Implosion
The West is gripped by a suicidal, depressed, self-loathing people who fall for any foreign criticism. The same pattern of decline in seen in many regimes. The U.S. shares parallels with the late Qing dynasty, complete with the drug abuse, lack of confidence, and rule by invaders. Upcoming will be the Boxer rebellions (expelling of foreigners; Muslims in Europe and who knows who in the USA), followed by the political volatility, low level to full blown civil war, then religious/cultural revival. Enjoy the decline!
2022-07-28
Indexes Based and Silver
Amazon Almost to Gap Fill
Japan Stocks
When Does the Bear Rally End and Ethereum Breakout
I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15….. Bye, bye bear market. Say hello to the bull and don’t let the door hit you on the way out.The linked post is bearish, he was only noting Cramer's call. Notably, the same guy is temporarily bullish today: The Lows Of The Year Are In– Jim Cramer, last night (Wed July 30), on his “Mad Money” program on CNBC
The bear market is not over. That was simply chapter 1. We’re a long way from home. This is a tactical call for the next few months.
Ethereum broke out. This initiates what should be the final leg of the bear market rally.
Meta Kills XLC
It's a Recession! Job Losses Have Only Begun
No special insight was needed for the call since the Atlanta Fed GDP Now model showed this was likely. The only insight I added was that I believe whatever number is reported was going to be rosier than reality. Even if GDP was positive in Q2 and technically not a recession, I would not have retracted my recession call because I believe the future data revisions will show a deeper contraction. Things are also poised to get worse.
It is true that this recession is rather mild thus far if looking at jobs and economic activity, but the outlook isn't a soft-landing. The odds that this is only the start of something much larger are much higher than anyone in government or Wall Street would care to admit to themselves, let alone in public.
Federal Reserve Bank of NY Model Projects 2 Years of Recession
It's Not a Recession. It's a Depression.
The good news on jobs is that unemployment might remain low for people who want to work because poor education, substance abuse and welfare have permanently reduced labor supply, particularly skilled labor. If you're willing to learn a skill and show up to work everyday, you are probably at low risk for job losses outside of the worst case scenarios. Notice how low claims are below. That chart isn't population adjusted either. Claims are very low compared to the population because many people are no longer "in the labor force." They live on welfare, disability, or retired. While it's great for skilled labor, it isn't great for overall economic growth.
Having said that, job losses started ticking up in June. Below is the 4-week average of continuing claims for unemployment. History shows turns on this chart shouldn't be taken lightly. Continuing claims started rising in April, the average turned up in June. Everyone in a political position (government, media, Federal Reserve) are all talking up jobs. They are betting their reputations and their careers in some cases, on the uptick below being a wiggle rather than a trend change.
As for the markets, initial moves on recession news were: long-term treasuries up, stocks up, gold up, oil down, dollar down and yen up. Expect some chop, but many of these moves can continue for a few days.