Weekend August 19, 2017
WTIC
Elliott waves are never entirely clear until the end of a move. But this is my take on where we are now. A fifth wave would have a final low under $23 and that is hard to see now.
Monthly WTIC
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At top RSI on the monthly chart is still below the 50% level. That suggests our analysis that this is a fourth wave is correct. If the entire move down were over, RSI would have risen over 50%.
Daily WTIC
Actually the most encouraging sign is on the daily chart. It appears we are headed for another test of the $50 resistance level which has held so far.
Friday experienced a healthy 3.3% jump. And that blip is happening at a higher low.
Bullish Percent Energy Shares
Bullish percent did not turn up in price Friday but the PMO is turning positive. RSI at top need to hold at the 50% level and then resume an uptrend.
AMLP Breaking Down
AMLP hte Alerian master limited partnership alos broke down. The current yield is 7.6%. A return to the February 2016 levels would be a gift for years to come.
This really bears watching for an entry over the next two to three months.
Stocks
Transports
IF the July high was THE high, Transports may have begun a third wave down already. DJT took out the 200 day MA Friday generating another PAR SAR sell signal.
TWM Bear Fund for Russell 2000
I suspect TWM is a buy as the reverse of RUT, it rose above its 200 day MA.
Bonds TLT
More money is likely to flow into bonds as stocks accelerate to the downside.
The Bottom Line
We are now in the midst of the sell off discussed here for months. We cannot know how significant the sell off will be but both Transports and RUT has turned down. They are the leading indicators for stock direction. As John Murphy noted, the RUT is significant as it contains 2000 stocks rather than the 30 in the DJIA.
We are watching for indications of a coming low in energy.Copper is already breaking to the upside in nice fashion.
The CRB index jumped .92% Friday. The CRB moving up, copper moving up, the 3.3% move in oil, all suggest a trade able bottom in commodities will be at hand in the near future.
Social Mood
MO State Senator hopes for Trump Assassination
Chappelle-Nadal said she was wrong but has no plans to heed those calls to resign from her colleagues, the Kansas City Star reported Friday.
"The way I responded this morning was wrong," she said. "I'm frustrated. Did I mean the statement? No. Am I frustrated? Absolutely. The president is causing damage. He's causing hate. On my personal Facebook [page], I put up a statement saying that I really hate Trump. He's causing trauma and nightmares. That was my original post. A whole bunch of people responded to that. I'm not resigning. Legislators cheat on their wives or smoke marijuana and are not asked to resign. I'm not resigning over a simple mistake."
Chappelle-Nadal is ineligible to run for re-election because of term limits.
I reprinted her comment as evidence of just how unhinged social mood has become, and this is an elected officer holder. Now that she has been asked to resign, of course she admits a mistake. (But she ws apparently in full control of here senses when she made the post). Then she blames Trump for causing hate, following with the comment that she really hates Trump. Hmm, who's the cause here? Her photograph suggests she is too young to have lived through the murders of Robert Kennedy and MLK and the shooting of George Wallace. But she is certainly old enough to understand the consequence of murder, or maybe not.
Meanwhile another of Trump's aides is out, no doubt Kelly is glad to see Bannon go. This week both Bob Corker and Newt Gingrich warned Trump just how close he was to losing Republican support.
Another racially themed 'event' takes place today in Boston after the riot in Carolina last week.
Overseas the 11th car/truck murder took place in Barcelona. A WSJ reported in the weekend WSJ reports on the recent deaths in Kabul, Afghanistan.
All of which is to say that mood is running negative around the world.
In the Weekend Journal, Dan Neil tests the latest $325K Ferrari featuring the largest V 12 engine ever in the marque. The name carries a special irony for a potential market top - the Ferrari 812 Superfast. If this is the market top that is a fitting icing on the social mood cake.
Thoughts on the Rich Way of Thinking
I have worked for a couple of rich individuals and had the chance to observe several others in action. This would include Ross Perot of EDS fame and Ken Schnitzer who built out Greenway Plaza from one exit to another on the Southwest Freeway in Houston. I observed Eddie Childs in the 1980s who owned Western Company. As a Federal Bankrutpcy Trustee, I observed billionaire Tom Hicks.
My point here is to identify common traits that apply to the erratic behavior of Donald Trump.
Assuming that Success in One Field Automatically Transfers to Another
Perot had come to own DuPont Glore Forgan security brokerage when I worked there. He had taken EDS public at an astounding 192 to 1 P/E ration but otherwise was a new comer to Wall Street. He made the comment on the Today Show at the time that the world would soon know who had the better HR department, DuPont with Ross at the helm or Merrill Lynch. Today we know.
Arrogance Precedes the Fall
Rather than admit a mistake and change direction, these fellows are more likely to double down on their current method or behavior. Why, see number one trait listed above.
The televised comment about outdoing Merrill Lynch was representative of both arrogance and a gross naivety of who the big gorilla really was in retail brokerage.
Child's Western Company ran tv ads with models in Hot Pants declaring, IF you don't have an oil well, get one, you'll love doing business with the Western Company. He began investing in theme parks, a completely different business from energy service. Today Western Company is gone, Halliburton is still around.
Distrust of All Strangers
DuPont was a retail wire house which participated in investment underwriting. It was never a lead underwriter. But for some reason,Ross fired the head of Investment Banking, a man with years of experience, replacing him with close lieutenant Mort Meyerson. He trusted Meyerson, never mind that he was unqualified for the job.
In similar fashion, Trump has installed all three of his children as official advisors. And he has gone through quite a few of his initial staff appointments. And both his business councils quit on him this week. In response two minutes later he tweeted he had disbanded the group.
The Mark of Failure
Insanity is doing the same thing while expecting different results.
Speaking as a former Chapter 7 Bankruptcy Trustee, this is precisely what happens. And it happens so frequently that very few Chapter 11 cases have anything left in them to rescue once they become Chapter 7 liquidations. Trump continues to do what worked in his campaign, tweeting, apparently thinking that will translate to Presidential success. This despite almost daily admonitions from Karl Rove and lead editorials in the WSJ.
At any rate I have been reflecting on that experience and the parallels are there. Let's hope Chief of Staff Kelly aided by Mattis and McMaster can quickly bring some order. Certainly those three would never have risen to the rank of General exhibiting the kind of behavior Trump has displayed. Heck Trump could not hold on to a job as a small town Mayor or Chamber President with this behavior.
I do remain puzzled that Melania has not been a more stabilizing influence.
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