The Market Perspective

Target DJIA 33,250 Met

Wed August 10 2022

Today's close of 33,309 met our target of 33,250. We suggested a higher high is possible in this second wave up. taht will occur just above the  34,000 level. This is still early August and we have plenty of time into a Sept high to go higher. Expect it.

Silver will pull back under 20 and be a buy there.

Bond prices are also likely to pull back before going higher in their own counter trend rally. Note that both stock and bond prices are headed higher in tandem.

IRS Buys 5 Million Rounds of Ammo, why?

Wed Aug 10 2022

/click here to learn the breakdown of pistol, shotgun, and rifle ammo

Why?

And just this week the FBI raids the Trump home, goes thru Melania's wardrobe, what are they looking for?

Trump takes theFifth in response to elected NY AG

Goldman J P Morgan stick it to clients again

Wed August  10 2022 

Front page WSJ goldman J P Morgan debt deal Goes Bad

 

and how, this is a record in terms of time

 

Goldman placed a  15.5% $350 M oan for the firm

 

socio point, who would buy such a thing when the 30 year T Bond is 3%

 

and of course who would sell it, well Goldman

 

I was not kind to either of them in my original ppt but this makes the case that these guys are always first out the door

 

Avaya is already having a going concern issue, I mean  45 days after the bond sale, some due diligence!, see stock chart attached

 

A $600 million debt deal that Goldman Sachs Group Inc. and JPMorgan Chase & Co. recently arranged for Avaya Holdings Corp. went bad within weeks.

The two banks sold new loans and bonds for Avaya, a cloud-communications company, in late June. Investors included Brigade Capital Management LP and Symphony Asset Management LLC, people familiar with the matter said.

A few weeks later, Avaya said it would miss by more than 60% its previous forecasts for adjusted earnings in the third quarter, which ended June 30. It gave no explanation. The company also said that it would miss revenue targets and announced it was removing its chief executive officer.

Prices of the newly issued debt plummeted, hitting investors who lent Avaya the money with paper losses exceeding $100 million, according to analyst commentary and data from MarketAxess and Advantage Data Inc.

Avaya said Tuesday that it "has determined that there is substantial doubt about the Company's ability to continue as a going concern." It also said the audit committee of the board of directors had opened an internal investigation "to review the circumstances surrounding" the most recent quarter. The committee is also investigating a whistleblower letter, but it didn't give details.

Avaya also tapped law firm Kirkland & Ellis LLP and turnaround adviser AlixPartners LLP as it considers its options, The Wall Street Journal reported Tuesday.

New CEO Alan Masarek held a conference call on Tuesday to discuss third-quarter earnings and declined to take questions from Wall Street analysts. Mr. Masarek attributed Avaya's poor performance in part to clients signing up for smaller and shorter software subscription contracts than expected, potentially out of fear about the company's debt load.

"I understand very clearly that there is disappointment, there's worry, there's concern out there across effectively all Avaya stakeholders," Mr. Masarek said. "I'm going to thank you in advance for your patience. . . . Give us some time to demonstrate a better future."

Avaya's 6.125% bond due 2028 fell as low as 48.50 cents on the dollar after the presentation, down from a close of 56.25 cents on Monday, according to data from MarketAxess.

Some analysts were already skeptical of Avaya's financial forecasts.

"Why [are] your projections always faltering when you report quarterly results? Why can't you have a stable outlook?" asked Hamed Khorsand, an analyst at BWS Financial, after the company's last quarterly earnings report in May. Avaya undershot that quarter's adjusted-earnings targets by about 10%.

Then-CEO Jim Chirico attributed the fumble to Avaya's adoption of a new sales strategy that forced the company to recognize revenue more slowly. "We believe we're over that hurdle," he said at the time.

Avaya emerged as a telecommunications-equipment supplier to corporations in 2000, when it spun out of Lucent Technologies. Private-equity firms TPG and Silver Lake Partners bought the company in 2007, but it struggled to transition from selling hardware to selling software, and with servicing debt from the buyout. The company filed for bankruptcy protection a decade later before reorganizing. Mr. Chirico took the helm in 2017 and shifted to developing cloud-based software for enterprises.

"Avaya squandered a lot of money and time and has little to show for it," independent enterprise communications analyst Dave Michels wrote in a recent report. "Many of us have wondered why the board didn't act sooner -- years sooner."

A spokeswoman for Avaya declined to comment on analysts' critiques.

The financial crunch hit this spring when Avaya's cash reserves shrank to $324 million -- down from almost $600 million a year earlier, according to company filings. The company tried to raise new debt to refinance a $350 million convertible bond that was coming due in 2023, according to company filings.

Goldman initially proposed a $500 million loan with a 12.6% yield but found few buyers, according to data provider LevFin Insights. The bank ultimately placed a $350 million secured loan yielding 15.5% with investors. Lenders included Symphony, which invested in Avaya since before its bankruptcy, the people familiar with the matter said.

Avaya approached JPMorgan in late June to raise additional funds, according to one of the people. The bank placed a $250 million secured convertible bond. Investors included Brigade, the people said.

During the marketing process, Avaya executives told lenders that the company was on track to hit its earnings guidance, some of the people familiar with the matter said.

The company had set guidance on earnings before interest, taxes, depreciation and amortization at about $145 million for the quarter ended June 30 but cut that to between $50 million and $55 million on July 28. Avaya reported $54 million of Ebitda for the quarter on Tuesday, a figure that barely covers the quarterly interest expenses it disclosed in recent reports.

"It is a surprising outcome for a company that priced $600 million of fresh capital. . . just four weeks ago," said Lance Vitanza, a stock analyst at Cowen Inc. "It may be too late to accomplish much without radically restructuring Avaya's balance sheet."

The newly issued loans were quoted around 65 cents on the dollar Tuesday, down from 87 cents in late July, according to Advantage Data. The new convertible bond is likely to trade at similar prices in the near future, Mr. Vitanza said.

Losses have been heavier for owners of Avaya stock, which fell to as low as 82 cents last week from around $2.50 in early July and about $10 at the start of May. Avaya shares fell 46% on Tuesday to 61 cents.

---

Alexander Gladstone and Andrew Scurria contributed to this article.

 

Cash is King in a Bear Market

Monday Aug 8 2022

This article makes the point that 98% of investors hold thru a bear market.

I am looking forward to scaling in shorts in mid Sept and finally all the way.

 

Severe Bear Market: Will You Be Among the Prepared 1.5%?
"Oftentimes, rallies will end with an inter-index non-confirmation"

By Elliott Wave International

A long-long time ago in a galaxy far away... errr, on the heels of the year 2000 dot-com crash, to be exact -- which is ancient history for many investors today -- the February 2003 Elliott Wave Theorist, a monthly publication which has covered financial markets and major cultural trends since 1979, published an interview with Elliott Wave International President Robert Prechter.

Prechter was asked if he was surprised by investors' lack of capitulation since the bear market started in 2000.

Prechter replied:

I read a statistic that said no more than 1 to 1½% of investors actually got out. This is utterly typical. The average investor stays in. [emphasis added]

This is mentioned because the patterns of investor psychology tend to repeat, which is the entire basis of Elliott wave analysis, which helps you track those patterns on the scale from intraday to multi-century.

So, with that in mind, consider what the July 2022 Elliott Wave Financial Forecast, a monthly publication which focuses on major U.S. financial markets, says:

Even as stocks fell hard into the middle of June, the bullish resolve of investors remained on display. On June 14, for instance, Bloomberg reported that "Undeterred Retail Traders Piled into Stocks."

The chances are high that many of these investors will hold onto their stocks into the worst part of the bear market, if indeed the January top in stocks marked the end of the long bull market.

By one measure, investors know that the S&P 500 had already suffered at least a minimum bear market because in June, the index had declined 25% from its January all-time high. Of course, a 20% decline is widely considered to be the "official" entry into a bear market.

Since June 17, however, the index has rallied.

The question is: Is the bear market over, or is the price climb since June 17 a countertrend rally in a bigger bear market?

Well, if indeed the rally is countertrend, the August 1 U.S. Short Term Update, a thrice weekly Elliott Wave International publication which offers near-term analysis of key U.S. financial markets, provided a clue on how to possibly ascertain the end of the rally:

Oftentimes, rallies will end with an inter-index non-confirmation, where one or more stock index will fail to confirm the final rally high in the other indexes.

Elliott Wave International's analysts show you where the various related indexes are right now in relation to each other in EWI's publications. EWI's analysts also show what the Elliott wave model is revealing about the price pattern of the main indexes.

The whole idea is to make sure you're among the 1.5% of investors who are on the sidelines if a bigger bear market has yet to unfold.

If you're new to Elliott wave analysis, you are encouraged to read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here's a quote from the book:

After you have acquired an Elliott "touch," it will be forever with you, just as a child who learns to ride a bicycle never forgets. Thereafter, catching a turn becomes a fairly common experience and not really too difficult. Furthermore, by giving you a feeling of confidence as to where you are in the progress of the market, a knowledge of Elliott can prepare you psychologically for the fluctuating nature of price movement and free you from sharing the widely practiced analytical error of forever projecting today's trends linearly into the future. Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

Good news: You can access the entire online version of the book for free once you become a member of Club EWI, the world's largest Elliott wave educational community (about 500,000 worldwide members and growing).

You can join Club EWI for free, and members get complimentary access to an array of Elliott wave resources on financial markets and investing, which includes videos and exclusive interviews with Elliott Wave International's analysts.

If you're already familiar with Elliott wave analysis and you love "free," the chances are high that you'll love Club EWI.

Jump on the Club EWI bandwagon by following this link: Elliott Wave Principle: Key to Market Behavior -- get instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Severe Bear Market: Will You Be Among the Prepared 1.5%?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Stocks Hit First Resistance

Monday August  8 2022

Muy target for the INDU asz  33250 and we hit 33,109 for a high today, I also alloed for ahigher high at  34,000 and I suspect we now pull back and attack 34,000 in late August or early Sept, notice PMO is maxed out in lower panel, time for a pull back.

 

Crude oil is probing for a bottom, USO could hit 65  intraday and then rally nicely along with stocks.

Reality of the Inflation Reduction Act

Monday August 8 2022

Taxes are going up.

https://www.atr.org/list-of-tax-hikes-in-democrat-reconciliation-bill/

Stocks Complete Wave A

Weekend August 8 2022

Berkshire is as good a proxy for the markets as any index, It peaked after the major indexes. But it completed a textbook five waves down, ending in June like the other indexes. Now  A Wave A up is complete in a smaller a b c pattern. Wave B down has begun. Stand by for the final Wave C up into September. Then a third Wave should begin. This will be a combination of various cycles all ending in  2022 as we have shown before. The big cycle being the founding of the USA 233 years ago.

 

Silver

The first wave up in silver is done and now the correction sets in. I am more optimisitic on silver than my friends at EWI, William DeVane may finally be right. World banks want their onw digital currency and silver is a boogey man to that idea.

 

 

 

Gold

here is the same pattern as silver

Methane

Does Venezuela Emit Methane?

The Environmental Protection Agency says it will conduct helicopter overflights to look for methane “super emitters” in the nation’s largest oil and gas producing region.

 

AP also compared the estimated rates at which the super emitting sites were observed gushing methane with the annual reports the companies are required to submit to EPA detailing their greenhouse gas emissions. AP found the EPA’s database often fails to account for the true rate of emissions observed in the Permian.

Washington, Associated Press

No doubt there is some truth to this but…Will the EPA fly over Venezuela, Iran, or Russia to determine their role in ‘observed  gushing methane?’

And this is the whole problem with John Kerry and company continually criticizing the USA while Chinese citizens must wear masks in major cities. The USA will not conquer climate alone, all the other violators need to be called to the table as well. So, rev up your jet John Kerry, I am sure Vladimir Putin will be anxious to discuss his gushing methane emissions with you. 

Meanwhile the Fed’s 2.5% over-night rate is still well below the  9.1$% inflation rate, so don’t expect much to change.

We predicted crude oil prices would drop to the $85 level and they are $88 on the close today.  This is a result of near-term contracts being well above distant contracts. And the strong US Dollar is helping bring oil priced in dollars down

In the big picture, stocks peaked between November 2021 and January,  2022. The first wave down into June is complete. Stocks are now in a Wave Two rebound. The first part of this rebound is complete. Stocks will consolidate for a week or so. Then this counter trend move up would end in September.  This same pattern has of a high, a sell off, and then a lower high has been seen before. In 1937, 1973-74, 2000-2002, and 2007-09. In each case stocks rebounded before,  then crashing 50% over the next year. That same scenario is likely again.

Silver and gold prices are rallying. We expect this to continue into September as well.

R N Elliott's Wave Simplified

Friday Aug 5 2022 after market close

Little report, stocks are drifting into a correction from the June low, this will be a set up for a lower high, lower than January, in September

Bonds are quiet, likely to rally into Sept with stocks

CDE and HL bounced lower and closed pretty much unchanged finding buyers

 

Elliott Waves: Your "Rhyme & Reason" to Mainstream Market Opinions
R.N. Elliott's stock market observations fell together "into a general set of principles"

By Elliott Wave International

It's understandable why investors with little experience consult the market opinions of professionals.

But many of these new investors are left scratching their heads. Two headlines from July 29 indicate why:

• [Fundstrat Managing Partner] says the 2022 bear market is over, stocks could hit new highs before year-end (CNBC)
• Stock market's post-Fed bounce is a 'trap,' says Morgan Stanley's [Chief Investment Officer] (Marketwatch]

Yes, two directly opposing opinions that were published on the same day.

The date before those headlines published (July 28), happened to be Ralph Nelson Elliott's 151st birthday.

You may be interested in his discovery about stock market behavior because it offers an alternative to consulting mainstream financial stories.

Here's a brief overview: In the 1930s, Ralph Nelson Elliott (1871-1948) discovered that the stock market moves in recurring patterns that he called waves.

Elliott had led an active life as an accountant and management consultant, working at various times for railroad companies in Mexico, Central America and South America, a business magazine, and for the State Department before becoming seriously ill with pernicious anemia.

In the book, R.N. Elliott's Masterworks, Elliott Wave International President Robert Prechter describes what happened next:

Despite being physically debilitated by his malady, Elliott needed something to occupy his acute mind while recuperating between its worst attacks. ... It was around 1932 that Elliott began turning his full attention to ... finding out whether there was any rhyme or reason to the stock market. ...

Around May 1934 ... his numerous observations of general stock market behavior began falling together into a general set of principles that applied to all degrees of wave movement in the stock price averages.

Elliott's insights continue to be employed by investors today.

The basic Elliott wave pattern consists of five subwaves (denoted by numbers) which move in the same direction as the trend of the next larger size and three corrective subwaves (denoted by letters) which move against the trend of the next larger size:

When this initial eight-wave cycle such as shown by the illustration ends, a similar cycle begins.

In other words, the basic Elliott wave pattern links to form five- and three-wave structures of increasingly larger size.

An important point is that the Wave Principle helps investors to identify turning points in the trends of financial markets.

Indeed, here's a quote from Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

When after a while the apparent jumble gels into a clear picture, the probability that a turning point is at hand can suddenly and excitingly rise to nearly 100%. It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.

Here's the good news: You can access the entire online version of the book for free once you become a member of Club EWI, the world's largest Elliott wave educational community.

Club EWI is free to join without any obligations and members enjoy free access to Elliott wave resources on financial markets and investing, including exclusive articles and interviews with Elliott Wave International's analysts.

Click on the link to get started right away: Elliott Wave Principle: Key to Market Behavior -- get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Elliott Waves: Your "Rhyme & Reason" to Mainstream Market Opinions. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Silver Update

Thursday Aug 4 2022 after market close

After setting a llow at 18.12, silver had a big jump and is now consolidating.

Daily

the weekly chart however shows us that the move is just underway, weekly silver has not broken out

Nothing much to report on stocks or bonds today, stocks still below our  33,250 target at  32,726.

Crude oil is correcting to the  80s as we predicted, next support is  85

 

Weekly column will be posted here tomorrow.