Thursday June 4 2020
9 45 AM CST
The KJIA market exhibits a throwover to the .618 FIB retracement. NASD pretty much came all the way back to Feb 12 and a 100% re trace is allowed under Elliott rules.
Notice the arrows show the gaps that were filled on the way back up.
So here it the big picture of 2020 so far. A few high Feb 12, a one-third loss of value in five-six weeks, then a whew am I glad that is over Wave Two of reassurance. That sets the stage for the next sell off.
DJIA last Wave Up
SPX last Wave Up
Can't Get Enough Tech Stock!
Tech stocks put on a final stunning rally from +6750 to 9698. It is said that if one wants to learn a topic, attempt to teach it to someone else. After decades of following markets, this year has certainly been instructive to me. I apologize for getting so caught up in Wave One that I did not see the possibility of re capturing years of advance in just over two months in Wave Two.
And the importance of hedging a new position is also paramount, In taking short positions on the way up, those should have been balanced with equal long positions assuring no loss until the new direction was clear. I promised to remember that in the future.
The next big question is how low this next Wave will take us. Theory has it that DJIA 18,000, see below, and NASD 6750, see above, should fall. But given the involvement of the government I am definitely in the wait and see camp. I am not going to assume any targets!
Gold and Silver
Again I missed a terrific rally in gold form the March low. Let's remember bear markets display stunning rallies which turn into failures. I think that is the case here. MACD and RSI are trending down. For the moment euphoric mood over the re open of America and the world has investors shunning Gold. The return to a deflationary environment may be the next reason not to own gold. And I expect the US Dollar will soon rally diminishing gold's allure.
Silver - an even better percentage rally
Like the NASD silver returned 100% to its February high but not higher. The reversal at these levels suggests a return to the March low. And if in fact cash is king in a bear market, why own silver.
So now what?
HDGE
Hedge is not only dirt cheap, about the price of a near term option on a $100 stock, with no expiration, it is the cheapest it has ever been. We can watch 18,000 on the DJIA and $8.00 on Hedge for just how far the next Wave may take us.
Prudent Bear BEARX
One can start easing into these two bear market choices which advance as the market declines.
Anecdotal
So how and why will markets turn down as all are so positive on opening the economy back up?
Well the realization that
many small bbusiness will not survive or have already been lost. See the WSJ today on black owned business in Minneapolis and elsewhere destroyed by rioters
I just went to Lowe's for some salt for the RO machine. One cannot roam the aisles. Instead tell the cashier what you want and they ring it up and bring it up front. This slows shopping and eliminates iimpulse shopping.
Two thirds to three fourths of the tables have been removed from the 50 Bill Miler bar be que restaurants in SA. This will result if fractional sales for most restaurants laboring under such constraints.
And 40 Million are out of work. This is an incredible strain on the unemployment coffers. Then add in the Zombie municipalities of CA, IL, NY, NJ and their cities with unfunded pensions et al, and you have a real mess.
Thee City and County here have announced 're training' programs for displaced workers. When has that ever worked? And you are going to train the female waitress to do what, operate a fork lift? This is a feel good band aid. What is needed is a re thinking of high school so that all exit with some real skill other than carrying luggage (tourism here) or waiting tables (all over SA and other tourist spots).
It is unlikely that many will learn a new life long skill in a few weeks. My experience is that sure the top 15-20% of students are motivated and have study skills, the rest, not so much. Most of them being 're trained' never liked school to begin with which is another reason they are now floundering, Sorry but that is reality.
Eddie Lampert is an Idiot
Years ago Lampert was hailed as the next Warren Buffett. He bought K Mart out of bankruptcy for about the price of the land and got the business for nothing. He then managed to snare Sears and formed SHLD. He then ignored every rule of god retail management, failing to improve the stores. it now trades as SHLDQ, bankruptcy underway or near by.
As mentioned I just went to Lowe. Lowe bought the brand name Craftsman to add to its line of Kobalt tools. Now the traditional red Craftsman grand is all over the front of the store. Consider the ad campaigns that established
Craftsman tools
Sears Weatherbeater paint
Sears Die Hard Batteries
Sears Radial Tires
One would have to work hard to go out of business while offering such successful products, but Eddie managed to do it. Adding to the irony Sears created catalog shopping back in the 1990s remember the Sears good better best branding? And really that was the print version of Amazon on line shopping. An American icon, gone, shame on you Eddie.
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