6 replies to this topic

[Douglas]

My risk summation system predicts that the days most likely to see a turn in or acceleration of the current trend in the DJIA this coming week are Monday July 29th which is an extension of last week's Friday the 26th risk window and a window from Wednesday July 31st through the morning of August 1st.  

 

The importance of last week's Friday the 26th risk window will be determined by trading on Monday the 29th which completes that risk window.

 

 

Of course, Wednesday the 31st is Fed day.  According to the 2 year note shown below which historically leads the funds rate, Powell should cut the rate by at least a half percent.    

 

 

The little triangle below that I showed a few weeks ago came to a focus on Friday the 26th which was also a risk window, so you'd think that a turn would be doubly likely by Monday.

 

 

Regards,

Douglas

[Douglas]

There's an interesting article at Zerohedge this morning (The Downside Of Complacency | ZeroHedge)  about symmetry in bubble markets like the current one, which, as a sucker for symmetry, I read with enthusiasm.  However, my take on the symmetry is entirely different. 

 

The article postulated that the current super bubble will lead to a very long bear market stretching out into the 2030's.  I believe the author incorrectly focused on the wrong aspect of the 2000 bubble.  I believe he should have used the point at which the rise changed from linear to parabolic to age the bubble's rise.  This means the bubble's length (plot 1)  was about 8 years.  Since the bear market lasted about 3 years, they were related by a Fibonacci 0.382. 

 

 

Assuming, as the author of the article did, that the current bubble (plot 2 below) has ended, it's parabolic rise was about 11 years, so if the 0.382 time ratio holds, the coming bear market, in my way of looking at things, should only last about 4 years or until roughly 2028 or so.  Note exactly a cake walk, but definitely better than way out until the 2030's.

 

 

Regards,

Douglas

[Bearingly]

My risk summation system predicts that the days most likely to see a turn in or acceleration of the current trend in the DJIA this coming week are Monday July 29th which is an extension of last week's Friday the 26th risk window and a window from Wednesday July 31st through the morning of August 1st.  

 

The importance of last week's Friday the 26th risk window will be determined by trading on Monday the 29th which completes that risk window.

 

 

Of course, Wednesday the 31st is Fed day.  According to the 2 year note shown below which historically leads the funds rate, Powell should cut the rate by at least a half percent.    

 

 

The little triangle below that I showed a few weeks ago came to a focus on Friday the 26th which was also a risk window, so you'd think that a turn would be doubly likely by Monday.

 

 

Regards,

Douglas

 

I believer if Powell cuts the rtate by .5%, then that would be a panic move and the market should crash in response IMO.   If they cut .25% now, that in of itself be a sign of panic and bearish.

[Douglas]

Bearingly, my 50 basis point cut comment was a bit tongue in cheek.  I doubt they'll even do a 25 basis point cut in July.  I don't think that there's a snowball's chance in hades that they'll do a 50 basis point cut.  You are correct in that the real bear market damage to the stock market in the past has come after the FED starts cutting rates which it only does after the damage to the economy is pervasive and obvious.  The stock markets then responds to the Fed rate cut panic by going down as shown below (orange line FF rate, blue line S&P 500).  

 

 

Regards,

Douglas

Edited by Douglas, 28 July 2024 - 05:10 AM.

[Douglas]

Puttering around looking at indexes this afternoon, I spotted the nice triangle below in the IWM Russell 2000 ETF.  Its focus is at about August 19th or 20th.  It will be interesting to see if the focus coincides with a turn since both days appear to be candidates for a risk window based on a preliminary look into August using my summation system.

 

 

Regards,

Douglas

[Douglas]

After I posted the above, I realized this would be another nice test of whether the candlesticks or the close is better at defining these turn triangles, so below is the close version which points at August 26th or 27th.  Is the better predictor the candlestick, the close or neither?  What do you think?

 

 

Regards,

Douglas

[12SPX]

HAve to read that article but in 2000 I declared that after the Nasdaq hit 5000 when it went below it, it would take years and years to get above it again.  It touched it again in 08 and then down again.  In the big picture I see that happening again likely as you say, once the Fed starts cutting to help the slowing economy but of course they'll be to late and will have a hard time helping the everything bubble continuing its implosion happening.