The Market Perspective

INDU third wave extends

Monday Jan 24, 2022 9 00 AM CST

the INDU is extending its third wave to the downside this morning and in impresessive fashion

 

I thought we might turn up in a  4th wave today but unless we see one big rally does not look like it.

Stocks fall seven times faster than they rise and this bear market is living up to that statistic.

NFLX  Apparentlythe sellers are not all out of NFLX yet!

Down another 7.5% this morning

 

Short Term Third Wave Ending

Weekend Jan 23, 222

 

This analysis assumes the early January top was THE FINAL high for various bull markets dating to  2009, 2002,1987, 1982, 1932 low of 41.  My friends at EWI suggest this is a final top dating to the founding of the USA in  1788, a  233 year bull market.

The markets have quickly collapsed displaying three waves thus far. The oversold condition shown in the PMO suggests some sort of bottom. As Wave 2 was sharp to the upside the fourth wave is more liable to be a sideways affair for a week or two. Then a final fifth wave should take indexes to a new low, taking out the December Low.

Dow Theory Non Confirmation

The purple line is the Industrials. The new high in the Industrials was NOT confirmed by a new high in the Transports, a classic dow theory failure.'

The converse side of this is the bear fund HDGE.

 

A pullback or sideways move should occur here in the next week or two allowing for a short term entry.

Remember bear markets can exhibit strong rallies, and after a low in late February or March I would expect just that.

 

NDX

the NDX shows the same pattern Note it is falling much faster than the INDU NDX is already down  12% just this month!

NASD shows the same pattern as well.

 

This Chart Says it All

Weekend Jan 22 2022

global Social Media is the ETF for FB et al

Amazon

Sudden reversal of Fortune across all these stocks

FB

NFLX Tanks

Friday Jan 21 2022

The Bear Market Gets Underway

Friday Jan 21 2202

First go back to Tuesday Jan 18 and see our posts that day, all suggest a slowing economy from NFLX to HOG

Cleveland Cliffs - Iron Ore

a 25% drop in one month

 

SLX Steel Producers gap down

 

A drop in iron ore adn steel producers suggests a slowing economy if not an outright recession

Lower Lows Lower highs, it's a bear market

Most of the comments by experts in quoted in the WSJ are that this is how a bottom is made but prices just keep dropping

NDX

Cohen & Steers REIT

the sudden reversal in January speaks for itself, it is 1973 all over again

I do think we are close to some sort of a short term bottom in major stock indexes, it is too late to enter HDGE but look at the ratio of short HDGE to Long INDU

this probably tops out near the last high in early Dec, maybe Monday a reversal, then a couple of weeks of weak rally and a good set up for HDGE should be at hand

Jeremy Grantham Sees Bubbles All Around

Friday Jan 21 2022

Jeremy Granthan calls a market top

Grantham is famous for good calls and this one is a classic.  Bubbles across all asset classes as he says

More Evidence of a Market Top

Friday Jan  21 2022

We have simultaneous bubbles across all major asset classes. He estimates wealth losses could total $35 Trillion should valuations return to two-thirds of the way to historical norms.

 

Jeremy Grantham co-founder of GMO investments

What does Mr. Grantham mean by two thirds of the way to norms? One of Bob Farrell’s ten market rules is that all averages eventually revert to the mean or average. The last time the Dow Industrials touched their 200 month moving average MA was during the sub-prime melt down in 2009. That level was below 10,000.   From its present level of 34,715 a two-thirds loss would put it at 11,455. The current 200 month MA is 17,469 about half the DJIA level now.

But the eye-popping returns have bee in the NASD. In the 2000-2002 melt down it fell from 5,000 to about 1,500, a loss of 70% or about Grantham’s 2/3. Today the NASD trades at 14,1544. Its 200 month MA is at 5,020. A tenet of social mood is that past events are unremembered and that fits the scenario now. In 2009 the NASD fell below 2,000. The NASD is already down 10% just this month from its high. Only 15% of the NASD stocks now trade over their 50 day MA . Now that the selling has started in the FANG stocks, this the bottom is literally dropping out.   The NYFANG index has dropped from 8,000 in November to 6,836 yesterday.

For those that scoff at such bear markets consider what happened just yesterday after the market closed.   Covid darling Peloton dropped 24% after announcing it was pausing production of its bikes.. Netflix fell 19% after reporting 8.3 million new subscribers. In a bear market, all news is bearish.

We have repeatedly warned in this space that the internals, breadth or overall participation, was much weaker than the new highs would indicate. All indexes have made their final highs between early November and this January.

The good news for the Permian Basin is that energy prices seem to want to vault over the recent highs of $84. We need a weekly close over $84..50. Crude trades today Friday at $84.91 so that could happen today.

The correction in natural gas was larger than I expected.  It dropped fro $4.75 to $3.65. Today prices have edged up to $3.90.   It needs a daily close over $3.95 to get going again, t hat could happen.

The wild card is whether Putin will stage as Team Biden put is this week, a minor incursion to the Ukraine. As the Ukraine President noted in response, there is nothing minor in the deaths of his citizens.

Such action would surely boost the price of oil and gas theorizing that Russia would cut back on EU natural gas to throttle any attempts at armed opposition.

UH OH NASD 100 515 point Intraday Drop

Thursday Jan 20 2022

The NASD  100 has been o fire the last few years. it peaked in mid November. It needs a weekly close over 15,545 by tomorrow or its weekly trend turns down.

Today started positive an it looked possible, by the end of the day, not so much

 

30 minute

the day range is huge 515 points

15347-4832

Hard to see it coming back to  15,545 tomorrow

 

if that is the case

evidence continues to mount the BEAR MARKET is ON

 

NASD drops below  200 day MA

1973-74 looks like it is returning

UH Oh

Wed Jan 19 2022

My friends at Elliott Wave Intl are trying to call a top in a market they date back  233 years, okay so they were off a year, not a big oercentage mistake.

SPX a weekly close bellow  4572 turns the weekly trend down, today we closed 4532.

NDX NASD 100 a weekly close under 15,545 turns this one down today was  15,048

Markets are oversold, so this could turn around in two days

and rally into early November,  lower highs than we saw in November when most indexes topped, will be more evidence that the long bull market from you name it

1788 1932 1948 1982 2002 2009 has ended

 

UNG dropped 80 cents today

that looks like an extreme 4th wave low

 

Biden New Conference

 

He thinks the supply chain causes inflation

Go read Milton Friedman, the money supply versus productivity drives inflation, the FED has injected three trillion, and your Congress has added to the gasoline fire, not to mention more regulations, no wonder inflation is up

Tech Turns South

Tuesday Jan 18 2022

This is looking more and more like 1973. Tech is falling just as it did after March Year  2000.

Ferrari, the best known logo/ trademark in the world, chart now gapping down

/disney

Netflix

 

.Facebook, Apple, Netflix Google and probably MSFT

HOG Hrley Davidson down near 5% just today

Given the height of PMO this could fall a very long way in the near term

Junk bonds are stock by a different name and they are finally getting their due note the gap down, JUNK peaked just before the NYSE index