According to my risk summation system, the windows this week with the highest risk of seeing a turn in or acceleration of the current trend in the DJIA are a window stretching from Tuesday December 19th through about noon on Wednesday the 20th and Friday the 22nd.
Last week the big noon Monday to noon Wednesday risk window shows what can happen when a risk window fails to catch a turn. Folks that are positioned against the trend based on some of same turn risk tools that I track are caught short and are forced to quickly cover creating an acceleration. Whether the Friday the 15th risk window amounts to anything will depend on action early this coming week.
I think that Powell spiking the inflation fight football on the one yard line on Wednesday constituted a good black swan event. All the business show talking heads that I saw on the tube we're scratching their heads in utter amazement at his pivot despite even the BLS inflation figures earlier in the week still solidly above his 2% target. The explosive bond and stock rally that followed created a trillion bucks in new "wealth" and swung sentiment hard to the happy side both of which should stimulate spending which should drive prices higher.
Why would Powell risk snatching defeat right back out of the jaws of victory like that, Santa effect, electioneering, prescience, blind optimism, who knows? He might have simply extrapolated the good inflation trend linearly into the future which would project a sub-two percent reading in only a couple of months. As someone who loves his trend lines, I can say with fairly good conviction that trend lines work like voodoo. They only hold if folks believe they will. Any doubt and that lovely up line is quickly broken. Of course Powell may turn out to be right and I'm just too pessimistic, but I paid $14.30 for a stinking hamburger and a soda pop yesterday. There's some serious underlying inflation out there, and I have a hard time believing that happy talk at this particular point in time is going to make it go away.
Regards,
Douglas
