4 replies to this topic

[Douglas]

According to my risk summation system, this coming week is a mess with fairly decent risk window signals for just about every day.  The highest signal is on Wednesday May 1st and Thursday May 2nd, but that is just the hot spot in a fire.  Not much help I know, but as I'm fond of saying, it is what it is.

 

As seen below, last week the Tuesday risk window tagged a nice top.  The afternoon Thursday thru Friday risk window last week may have tagged a top too, but the jury's still out on that one.  Trading early this coming week will seal its fate.

 

 

 

Of course, May Day Wednesday this coming week is also Fed day which is befitting since May Day is also the real labor day also known as the international workers day and the Fed has been shafting labor by lowering the value of what it's paid in by 95% over the last hundred years.  But you have to pity Powell who is now nailed in a box of his own making by promising interest rate cuts but now smelling the rank odor of the still smoldering embers of inflation.  What to do, what to do?  Of course talk tough, but just wagging his tongue and doing nothing has been the losing play book strategy now for many months which has done nothing to turn the nasty ole inflation that is still stubbornly stuck above target. 

 

The shrieking sirens of Wall Street want the interest rate ship on the rocks and the POTUS, behind in the polls, wants lower rates too as does every other debtor across the fair land, but that surely will turn the inflation embers into fire which is the last thing a guy trapped in a wooden box needs.  Going full Volker and surprising everyone with a rate increase would probably kill inflation, but it would also probably crash the stock market, not something you really want to do right before an election, so chances are he's just going to settle in to that cramped box and make it home until after the election and again talk tough and do nothing.  I'm sure Arthur Burns would be proud, but I suspect Volker would just puff on his stogie and frown.

 

Regards,

Douglas

Edited by Douglas, 28 April 2024 - 01:45 PM.

[Douglas]

After I posted the above, I realized that many of the readers of this are too young to remember Volcker and his "stogie" which he was so famous for, so I've included a picture below of him so you young'uns can be in on the joke too:

 

 

Regards,

Douglas

Edited by Douglas, 28 April 2024 - 02:01 PM.

[redfoliage2]

I agree on your comments on the Fed's awkward situation .......................

[Douglas]

Another way to escape the Fed box is to simply adjust inflation out of existence.  The latest champion of this approach is Truflation which calculates inflation based on a large survey of prices.  They (truflation.com/dashboard) say that the current rate of inflation is only 2.48%, not far from the Fed target, happy days.  Trouble is, apparently, my insurance company didn't get the memo and raised my policy price by 15% this year.  Also the Truflation model and the BLS one for that matter completely ignore asset inflation where stock buying, property buying consumers like the ones on this web site spend a lot of money.  I'm sure the BLS is planning new adjustments in the very near future based on the magic number system at Truflation.  Ahh the joys of the world of alternative truth.

 

Regards,

Douglas

[Douglas]

As a certified sucker for symmetry, the SPY plot below caught my eye after the close today.  A measured move shown by the red arrows is triggered if the green channel is broken to the downside.  The measured move down at roughly 480 would also hit the 38% retracement of the move up since the October 2023 low.  Both are marked by an "X" on the plot.  Fed days like tomorrow have been known for some pretty big swings.  Alternatively if Powell goes dovish and talks rate cuts in the presser, then a move up toward the top of green channel to new highs is likewise not out of the question.  

 

 

Regards,

Douglas

Edited by Douglas, 30 April 2024 - 05:45 PM.