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[Douglas]

The risk summation system's forecast for next week is in a bit of a muddle due to the disperse distribution of the turn risks.  There is a cloud of risks with no day really standing out stretching from Monday the 27th through Wednesday the 29th and quite a sharp peak in risk stretching from Friday July 1st through Tuesday July 6^th, so maybe something of interest will occur at the front half of next week and at the very end of the week trailing into early the following week.  The days with the highest system signal over this period are Friday July 1st and Tuesday the 5th, so they will constitute the "official" risk window.

 

 

Last week the Tuesday the 21st risk window did catch the low for the week and a turn up from the malaise at the end of the previous week, but the actual turn began the previous Friday, so this risk window was a bit of a dud.  The higher risk non-risk window that I also  noted running from noon on Thursday till Friday morning caught a very sharp rally.

 

 

The next turn window for Brent Crude based on the intersecting trend line chart that I posted a few weeks ago shown again below  roughly stretches from this past Friday till this coming Monday the 27th depending on how you eyeball the intersecting trend lines.  It will be interesting to see if this turn works as well as the one on June 8th.

 

 

 

The end of the day turn up in the popular indexes this past Friday may have been quite telling since traders appeared to be suffering more from FOMO than arkoudaphobia in front of a weekend.  This new bullish behaviour is completely understandable given that interest rates have been falling now for a little more than a week and due to the FED increasing their balance sheet, not draining it, as can be seen in the broken trend line in the plot below from their website.  As I said in a post this week, they are still pumping like crazy.  To bastardize the words of Teddy Roosevelt, they talk tough and carry a big bag of money. 

 

How this is going to reduce inflation is beyond me.  I continue to believe that the FED still thinks the surge in inflation is transitory, but they are afraid to say it out loud.  Talk tough, drag their feet on actually tightening credit and hope that inflation magically goes away due to some sort of cessation in the war would appear to be their current secret, not for public consumption, strategy.  Due to reduced demand caused by price increases, the next inflation numbers should be better looking than the past few.  This may be all the excuse the FED needs to pause in the fight.  The next real test of the FED will be at the end of next month when they are expected to bump the Funds rate another 3/4 percent to a still anemic 2.5%.  The plot below and the recent fall in leading market interest rates appear to be forecasting a lower bump in the rate, if any bump at all.

 

 

 

Regards,

Douglas

Edited by Douglas, 25 June 2022 - 10:07 AM.

[pdx5]

Good analysis of the feckless FED and Powell.

[Douglas]

My current Elliott Wave way of looking at the DJIA is shown below.  As I've noted before, I do Ewave more for grins and giggles than trading, but sometimes it does bear fruit.  I assume the first large leg down (shown in the plot below) of the current bear market ends this fall, say in October or so as a large "A" wave.  Then there is a large "B" wave rally into early 2023 as the FED cranks up the pumps again at which time it becomes painfully obvious that the inflation dragon has not been slain and down we go again in a big "C" wave as the FED finally channels Volker and seriously tightens for a final bear market low in the fall or winter of 2023. 

 

My alternative count (every Ewaver worth his salt has a diametrically opposite alternative count that he can pull out in case(when) his primary count goes to crap) is that the first leg down finished last week in three parts instead of five, still as a large "A" wave with the large "B" wave up now underway with the final large "C" wave low sometime in 2023.  

 

The chance of the DJIA following either of my roadmaps is somewhere between slim and none, but, hey, you got to have a plan A as long as you are willing to quickly drop it and embrace plan B, C, etc. , or to roughly paraphrase Mike Tyson, everyone has a plan until the market hits them in the face.   As I've said before, never do Ewave in ink and always have an eraser handy.

 

 

Regards,

Douglas