I’d started this posting on the 3rd. Now it’s the 10th. Time flies sometimes… I’d intended to get it up then, but “things happen”.
In terms of the market, not much has really changed in the intervening week.
FWIW, back in October I’d said:
But, to me, it looks like that has run as far as it can. The drug no longer gives the high and we are shooting up just to feel normal for a while.
So that’s my view of things. Dismal, I know. But IMHO more time to hunker down in a ‘risk off’ mode than play ‘risk on’ when things are blowing up and melting down at the same time and The Fed will not be spiking the punch bowl.
In September I’d made the rather strong statement:
So that’s our context. “Topping” on the decadal time scale. Bear / falling on the annual scale.
Even as early as last August I’d said:
All the indicators clearly saying “time to be out” with red on top in DMI / ADX and MACD Neither ADX nor DMI- inflected yet, so more to come. MACD well below the zero line and no crossover there yet, either (blue over red when the down tends toward ending).
I also expect we won’t see any Fed tightening any time soon. They are kind of stuck between collapsing the property bubble they have just reflated and crashing an already wobbly stock market and killing a barely happening general economy struggle to neutral (hard to call what we have ‘recovery’ or ‘growth’ when it is more like “well, we didn’t die!” yet…)
All in all “not good”. But wealth can be preserved in “risk off” assets and potentially in shorts and options covered positions.
For short terms, use a 10 day chart and trade fast. With the kinds of drops we are having, there will be some rebound up days. That’s a good time to sell over-held long positions and a good time to buy downside protection. Once the longer term trend is clearer then longer term trades and investments can be on deck.
So it isn’t exactly like I didn’t holler about it already.
I’ll put a new chart up down at the bottom, but for now, here’s the bit I’d done on the 3rd:
From Jan 3rd
Well, it’s a new year, and all the Talking Heads will be busy pontificating. Sadly, one of my favorites will no longer be with us.
Wayne Rogers was “Trapper John” on MASH, and went on to a career in finance with appearances on Cashin’ In. His direct no-nonsense calling of bias in other’s positions will be missed. Stickler for facts over preference and a direct understanding that “what you want” must never cloud “what you see” and “what will happen”.
Sad news for fans of the television show ‘M*A*S*H.’
FOX’s Rich Denison explains:
Wayne Rogers, who played Trapper John McIntyre for three seasons of ‘M*A*S*H’ died Thursday in L.A. of complications from pneumonia. He was 82.
After leaving the hit TV series, Rogers had a recurring role on ‘Murder She Wrote,’ and later became a successful money manager and investor, he was a regular panelist on “FOX News’ “Cashin’ In.”
Rich Denison, FOX News.
He would sometimes have little to say while others argued some irrelevancy, then step in with a simple ~’Thats wrong and you know it’… and then pony up the facts to back it up.
The general ‘trend’ is a continuation of the ‘wobbling down’ we have had for a while now. Some time back I’d said the run up was over, this pattern continues in that way. At this point it is pretty clear that we’re headed into more than just a quick sharp ‘correction’.
Now back to Jan 10th and a new chart
This is a 2 year daily chart. I think you know how to read the indicators by now. If not, holler and I’ll interpret in comments.
Things continue to fall apart. Money is to be made on the short side of things, but I usually don’t trade shorts, just use them as hedges and I’m pretty much hedged out already. One of my weaknesses, I don’t like trading the short side even though there is more money faster there.
Oil USO continues to slide. Next up from the bottom JJC is trying to make a flat bottom, but looks to have failed. EEM Emerging Markets and EZU the EU continue down while GLD, Gold, has had a slight run up this week or so on horrid geopolitical news in an overall down drift of months (years?) duration. RUT and SPY S&P 500 continue too fall apart in a rush downward in a strengthening trend. TLT bonds are wobbly-flat when they ought to be rising more in a stock market fall ( due to the overhanging threat of ongoing Fed Rate Hikes that kill bond values for existing bonds) while QQQQ the Nasdaq 100 (heavily weighted to Apple, Google, and the other major players) has decided to leave the flat-to-rising club and join the flat-to-falling club.
Overall, it is still a mess. Still not seeing any investment worth the name.
With the present geopolitical context and with the Idiots On Parade at the White House and in the Pretenders To The White House, not seeing much hope for a rescue either. Stir in a Congress that can’t find their brains OR their balls with both hands and there is little to engender hope.
Maybe North Korea can put a nuke on their sub, run it up the Potomac, and end the pain and misery… Or perhaps a river near the UN in NYC or EU in Belgium would do better. Frankly, with the rank stupidity by the train load coming from government globally, just about anywhere might be an improvement… (All said in strongest political satire, with sarcasm and NOT as an actual suggestion of violence. It really wouldn’t do any good so why waste a perfectly good nuke…)
How about a longer term view, using the SPY proxy for The Market?
SMA lines gone flat into an inversion. Price below that. MACD below zero AND with “red on top”. DMI- (red) on top and with clear trend strength (ADX over 20). All the indicators in place to say this is a confirmed bear market now and bear market rules apply. Rallies will be fast and short and hard to make gains (returning to the SMA stack from below, then falling again). Best trades are to short at the top of those rallies until the bear market is indicated as over. If you are still “long” stocks, protective measures ought to pay off best (sell covered calls at the SMA stack and buy put options then too). No “long trend trades” only “short trend trades” or long “counter trend day trades” on short fast rally days. Those kinds of rules.
Me? I’m happy too sit in cash and have a nice hot chocolate while waiting “for that day”… when it is time to ‘pull the trigger’.