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[Douglas]

According to my risk summation system, the days this coming week or so which have the highest risk of a turn in or acceleration of the current trend in the DJIA are Monday April 25th and Monday May the 2nd.   

 

As I noted a month or so a ago, the next crash risk window is centered around this coming Wednesday April 27th.  This risk is typically something on the order of one in twenty or so, but it will become substantial if the buy-the-dippers don't relieve the current oversold condition on Monday or at the latest Tuesday of this coming week.  I take some comfort in the fact that Wednesday was not flagged as a risk window by the risk summation system. 

 

Last week's risk windows in red below did a reasonably good job of identifying the week's turns and the ~1000 point down day on Friday which may also turn out to be a turn depending on the action this coming Monday.

 

This past week I posted about my Invisible Hand Reverse Robinhood theory which describes what the FED is up to.  True to form the FED Head again this past week talked tough and yet did nothing with no action on rates or the still expanding balance sheet.  It's amazing that he can still spook the market by just saying boo.  His Chicken Little moment is coming week after next when it's put up or shut up time.  If he doesn't go large, my theory will definitely gain some credence. 

 

I also posted a chart of the action of the II sentiment numbers during the last serious bear market between 2007 & 2009.  I opined that market reaction to the current very low bullish sentiment numbers hinge on whether we are in a bear market or a bull market.  Given the uncertainty around the FED and the war, both still would appear to be possible.  I currently believe the lines in the sand to determine which beast is in charge  are shown in red and green on the plot below.  Just tickling one of the lines doesn't count.  To satisfy me, the DJIA will need to rip through the winner like a dose of salt.  Currently the DJIA is sitting slap bang in the middle of the lines.  I seriously doubt if we'll have to wait too long before Ms. Market hikes up her skirt and crosses the Rubicon one way or the other.  

 

 

Regards,

Douglas

 

 

[Douglas]

I didn't think it would happen, but the crash set up is in place -oversold going into the fairly wide crash risk window that I noted above.  All (and that's a lot) that is required now is some black swan event such as Joe or Vlad or Jerome doing or saying something really stupid for example to trigger the cascade although getting across the East River to Wall Street is tough for those black emissaries of decline.  That tributary is littered with the rotting corpses of black swans that just didn't have the umph to wing it across to Wall Street, and if you think the FED's pumped in the past, wait till something like a crash tries to get rocking and rolling.  They will absolutely fire everything in their arsenal at that black feathered beast to send him into the drink with his compatriots.  

 

I still think the odds are against a crash primarily because I said it could happen, and my luck at calling crap like this is abysmal.  I post the risk windows for these events periodically here which I really shouldn't because as my sainted mom used to say, it's OK to think something ridiculous, just don't open your mouth and prove to everyone that you are.

 

Regards,

Douglas