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This Week's Risk Windows, Inflation and a Long Cycle of Note


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#1 Douglas

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Posted 06 June 2021 - 05:01 AM

According to my risk summation system, the day this week with the highest risk of a turn in or acceleration of the current trend in the DJIA is Monday June 7th.  

 

Last week's Tuesday risk window which saw what looked like an important shooting star candle in the DJIA could only drive a measly two day sell off.  By Friday's risk window it was off to the races again.   Neither risk window last week was much of a risk to bears or bulls.  

 

Given the release of the latest inflation figures by the Helen Keller School of Economics economists at the BLS on Thursday the 10th and since it also hosts a new moon, it probably should be on this week's risk window day list as well.  Supply chain problems, pricey commodities and a strangely tight unskilled labor market driven by more generous government handouts should produce eye popping inflation numbers even given the normal BLS fudging.  I'm sure the first word out the mouth of every talking head on the business shows Thursday morning will be  "transitory", so maybe they'll be able to assuage traders' fears.

 

This coming week and the week of the 28th of June are also potential important turn weeks in a 72 week cycle that I track courtesy of Tom Hougaard. Even though many of the long cycles that I track have recently had somewhat checkered performances, this particular cycle has had a few important hits over the last couple of years including the February 2020 top.  By the time the fireworks have faded, I should know if this cycle also has a flat tire.

 

Regards,

Douglas



#2 linrom1

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Posted 06 June 2021 - 11:38 AM

For the first time in a very long time, I am seeing price increases in manufactured consumer items. For example, I recently wanted to reorder sunscreen from Walmart I purchased in 2019 for $8.93. Its not only out-of-stock but same item on ebay or Amazon is now listed for +$35 including shipping.

 

We're going to hit a wall soon on consumer spending and they won't be able hide inflation from consumers anymore because cycle of lower prices driven by China and technology of manufactured goods is finished.



#3 pdx5

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Posted 06 June 2021 - 12:12 PM

Eye popping inflation? The condo I bought in 1970 for $24,800 just sold for $160lk.

More than 6 times in 50 years. In another 50 years it could be at $1 Million.

 

https://www.redfin.c...6/home/18000216


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#4 Douglas

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Posted 06 June 2021 - 01:52 PM

pdx5, the way I calculate it, that works out to about 3.65% inflation per year for your condo.  At the peak last month the lumber that condo was built from had risen that six fold in the last twelve months.  That's eye popping for you.

 

linrom1, the BLS can adjust away that change in sunscreen price if the manufacturer just changed one ingredient calling it a value adding improvement.  Remember, figures can lie if only liars are allowed to figure.  

 

I'm a fool for symmetry on charts.  The intersection of the horizontal trend line across a couple of tops with a trend line under a couple of rising lows may be pointing to a turn on June 10th possibly reinforcing my concern about the reaction to the inflation number that day.  

 

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Regards,

Douglas


Edited by Douglas, 06 June 2021 - 01:52 PM.


#5 da_cheif

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Posted 06 June 2021 - 05:23 PM

hardly surprising....inflationary economic boom of unparralleled proportions      ,......like watch the sky  675ono



#6 Douglas

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Posted 07 June 2021 - 01:17 AM

Don, if the FED and its sister foreign central banks hold rates at zero for the next two years as this "transitory" inflation works its way through the economy, you are dead right, stock prices will soar as will the price of everything capable of being used as a store of wealth.  Short term, deeply negative real rates will juice the market just like a maxi pipe full of crack cocaine, but heck nobody thinks long term anymore.  As I understand it, the current average holding period for a 30 year bond is now measured in days not years.  ZIRP caused by the amalgamation of the FED & Treasury will give you your beloved high stock prices, but it will also  cause distortions in the "real"  economy with unimagined longer term consequences.  To quote the Bard, something wicked this way comes.  

 

Regards,

Douglas