The Market Perspective

Top Tick

Wed Jan 31 2024

 

After recording a new high the SPX gapped down i n a reversal

This is how market tops are formed. This is within the idea of a 2 adn 4 year cycle high in this time frame, January 2024 + - 3 weeks

Qualitative factors - Houthi attack kills three and wounds 30, immigrant thugs attack NY police,

Hedge  a bear fund

This is the  opposite of the SPX chart, time to go long HDGE

 

Bonds Rally

 

This is what I have been expecting, as stocks sell off   investors buy bonds

 

 

Have We Seen the High?

Weekend Jan 27 2024

Okay it printed twice but looks like momentum in the bullish percent making new highs peaked last month. But the index made a new high this month

New Highs New Lows, same thing

This indicator also peaked last month while the index made a new high this month.

It is hard to call a top or bottom precisely but it looks like a top occurred in NDX and SPX but not the other i ndexes.

TLT is still bouncing trying to put  in a low.

 

 

What Could Go Wrong

What Could Go Wrong?

Technical analysis consists of recognizing patterns on charts oof stocks and bonds as well as their indexes.  We are at or near a pattern completion for the stock market dating back to the low of Summer 1932 at Dow Industrials 41, not a typo.  This January plus or minus three weeks is both a  2 and 4 year cycle high.  The Dow Transports have not given a Dow Theory confirmation of the new high for Industrials as Transports are below the November 2021 peak. The same is true for small cap Russell 200 and S & P 600 Mid Cap.  The NASD 100, NDX, the top tech stocks, are far outpacing the overall NASD index. A ratio of NDX to NASD is a near vertical line to the upside, or a parabolic curve Such moves near always end I n a big retracement.

A low is expected by April. April 19 has an interesting history of

occurring numerous times during historic events so be mindful of that date.  Such analysis cannot however predict any particular event which might cause  a market sell-off. And in some cases, the cause of such an event remains a mystery. What were the exact causes of the sell-offs of 1929 and 19807, both in October. No one really knows.

We can list a few reasons to worry and ere are a few.

North Korea’s Kim dismisses the idea of peace with South Korea.

President Xi, with property values falling and developers missing payments on loans and bonds, eyes Taiwan as a way to draw attention away from domestic troubles.

US credit card debt soars as money saved during COVID has been spent.

Unemployment is low but coffee   houses and fast food chains close their lobbies due to lack of help, drive through only.

Two wars drag on in the Mid-East and Ukraine.

Student debt exceeds one trillion dollars as the interest rate rises.

The Axis of Evil, Iran, Russia, China spawns numerous proxy fighters to promote terrorism.

We have no idea who is coming across the Southern Border.

The fact that markets are at all-time highs buoyed by seven stocks is a warning not a celebration.

House sales slow due to higher rates.

Elsewhere, crude oil pr ices remain in the 70s. Team Biden seeks to freeze natural gas production as well as shipments of LNG overseas. .  NG production makes for US energy independence and reduces EU dependence on Russian energy.   What on earth are Sullivan and Blinken thinking?

Any of these potentials could be a problem. And markets could sell off simply because social mood switch ed from buy to sell, stay tuned.

TLT Update

Tuesday Jan 23, 2024

TLT 2 Hour

TLLT had a nice pop on Monday but by today Tuesday it had re filled that ga=upward gap.  It is now tracing a pattern similar to the first part of the month.

The ratio chart to TBF is pretty much the same.

TBF

No clear signal here either

Nustar common popped from 18 to  21 on the news Sunoco was buying NS for a premium.

Patience

Bond Update

Weekend 1/13/2024

I exited the TBF TBT trade Friday, This was a bet on higher rates short term as a B wave. I think that wave has ended.

Here is the ratio chart of TLT versus TBF, it will turn up as rates fall and TLT advances in price.

This is a two hour chart and perhaps TLT is beginning to bottom.

The two hour chart of TLT looks the same.

tbf 2 Hour

A ladder of orders at lower prices for TLT might be a way to bottom pick.

All but Tesla of the Mag 7 are rallying or put in a new high. This will be a stock top to remember.

Update on Bond Strategy

1/18/20224

I suggested moving between TLT, a fund of  20 year long dated bonds, and TBF and TBT funds that rise as bond prices fall

TLT TBF TBT trades
TBF
	Buy		Sell		Gain	% Gain
	1/2/24	20.11	1/18/24	23.39	3.28	16%
TBT
	Buy		Sell		Gain	% Gain
	1/2/24	30.74	1/18/24	33.79	3.05	10%

 

This is a nice gain in  just 12 days and avoids any and all stock market risk or analysis.

I exited the TBF TBT trades today, I think the move ip is about done. PAR SAR  is well below current price and waiting for a cross to the downside would  lose some of the gain.

PAR SAR is a better indicator of when to buy. Balancing the  195 minute and daily charts seems to be the ticket.  I am in  meetings tomorrow and class Saturday, next update Sunday

 

EVs Stall out

1/18/2024

EVs Freeze in Their Tracks

Thousands of Electric Vehicle  owners in northern states got a reality check amid the ultra cold weather. A fully charged battery that night had lost one-third by the next morning. Other drivers found batteries losing charge fast amid long lines at the chargers which were  still working.   This polar event amid climate cooling  is on the heels of Hertz dumping 20,000 of its recently purchased EVs due to high maintenance and depreciation.

Memo to John Kerry, Climate Czar

I suspect Team Biden’s embrace of EVs for all will be another drag on his campaign as the realities of EV ownership sink in. Even a small collision can require a new expensive battery.  Body parts for Teslas are near non-existent.  And many are now noting that the $7,500 rebates were just a ‘tax cut for the rich’ but from Democrats.  Will Republicans pick  up on that  in this campaign year?

Energy prices are  unchanged from last week.  Crude oil remains in a  $70-75 tight range.  Despite Secretary Blinken’s claims, the Mid East war is widening with Suez Canal shipping now routed around the  Cape pf Good Hope in South Africa.  That extra distance will raise prices on everything shipped. Team Biden just now put the Houthis back on the terrorist list after removing them his first day in office. No one fears the  present day USA.

At least for now, the SPX topped December 28, 2023 and the Dow Industrials on January    12, 2024.   Markets are rallying today Thursday  after several falling for several days.

Never mind speculation about a rate cut by the FED. Higher rates and more inflation lie I store.

Here is a suggested strategy that does not require stock market analysis. Interest rates bottomed March, 2020 and have risen since. The market is now correcting the fall In bond prices and rise in interest rates. Bonds rallied into the start of this year but have fallen since January 2. A purchase of TBF, a fund that rises as bond prices fall on January 2 has gained 16.5% in a mere twelve days.  Bond prices should be bottoming short term by early next week which suggests a move into the long bond fund TLT. I continue to expect a decline in stock prices for this year.  Track the bond trades at www.themarketperspective.com

Real Estate

1/17/2024

 

U.S. Real Estate: A 24% Problem
"...24% of U.S. single family homes are owned by investors."

By Elliott Wave International

A big reason that U.S. home prices have skyrocketed is that big investors like corporations did a lot of buying.

As a Redfin.com headline noted nearly two years ago (Feb. 16, 2022):

Real Estate Investors Are Buying a Record Share of U.S. Homes

Redfin defined an "investor" as any institution or business which purchases residential real estate.

As Elliott Wave International has said, when houses are treated like stock certificates instead of shelter, prices can rise and fall just like with the stock market.

The February 2023 Elliott Wave Theorist, a monthly publication which provides analysis of noteworthy financial and social trends, explained that what occurred with the housing boom 15-20 years ago has been happening again:

Today, real estate prices have reached absurdly high prices because corporate investors have taken over the housing market from individuals in a program encouraged, once again, by the federal government.

Robert Prechter's book, The Socionomic Theory of Finance, drives the point home in a nutshell:

When the bulk of participants in the market are consumers who think of houses as shelter, prices are stable. When a significant portion of participants in the market are speculators who think of houses as investment items, prices soar and crash.

So, we know that prices have already soared. Is a crash just around the corner?

Here's a chart which shows the portion of U.S. home purchases made by landlords with 1,000 or more houses and commentary from our December Elliott Wave Financial Forecast, a monthly publication which offers analysis of major U.S. financial markets:

The chart [reveals] the percentage of U.S. homes purchased by landlords who own more than 1,000 homes [and] shows the unrivaled extent to which homes became financial assets. ...

The sharp decline from 2.5% of all home purchases to less than 0.4% represents another light-switch decline for the economy. At this point, ATTOM Data Solutions, a provider of U.S. property data, notes that 24% of U.S. single family homes are owned by investors. If 10% went on the market in the next year, 2.4 million homes, the inventory of homes for sale would triple from current levels.

One thing we do know is that the median price for new homes sold in the U.S. is beginning to decline.

This is not surprising because history shows that a slackening off of home sales generally precedes a drop in prices, and the peak in new home sales occurred in August 2020. Here's the latest headline on that front (Reuters, Dec. 22):

US new home sales fall to one-year low in November

What's also important to keep in mind is that real estate prices typically follow the stock market. Both are governed by the trend in social mood, which expresses itself as Elliott wave patterns on price charts. That's why, if you're looking to buy or sell a home, or simply want to get a high-confidence idea of whether the value of your home will be higher or lower in the months and years ahead, you may want to keep an eye on the stock market trends.

If you're unfamiliar with Elliott wave patterns, read Frost & Prechter's definitive text on the subject, Elliott Wave Principle: Key to Market Behavior. Here's a quote from that book:

Any dedicated student can perform expert Elliott wave analysis. Those who neglect to study the subject thoroughly or apply the tools rigorously give up before really trying. The best learning procedure is to keep an hourly chart and try to fit all the wiggles into Elliott wave patterns while keeping an open mind for all the possibilities. Slowly the scales should drop from your eyes, and you will be continually amazed at what you see.

You can read the entirety of the online version of Elliott Wave Principle: Key to Market Behavior for free.

All that's required is a Club EWI membership, which is also free. Club EWI is the world's largest Elliott wave educational community with approximately 500,000 members. Members enjoy complimentary access to a treasure trove of Elliott wave insights into financial markets, trading and investing.

Get started now by following this link: Elliott Wave Principle: Key to Market Behavior -- free access.

This article was syndicated by Elliott Wave International and was originally published under the headline U.S. Real Estate: A 24% Problem. 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.

 

Bear Market Signs

1/16/2024

Charles Payne on Fox business cannot understand why the market is not going up, implied, as it should

Motley Fool's top ten stocks for 024 are the magnificent 7 and a south american digital pay company, yeah who could lose money in South America.

Small caps and transports lead, and they are headed down.

Both are down, this is the third wave getting underway, two years ago bear market began late Nov 212 to Jan 22

Wave One ended Fall 2022 and wave two finally peaked late 2023

I entered orders under the market for Hedge, looks like it might be a bit ahead of its time

Our entries into TBF TBT are paying off I suggest you add here, looks like third wave up is starting.

SPAAC Review

1/12/24

 

SoftBank: A Possible Omen for What's Ahead
Here's what happened to the once most valuable U.S. startup

By Elliott Wave International

SoftBank, the multinational holding company which is heavily involved in the technology sector, has had a tough go of it.

Its stock price has been in a steady decline for the past few years and one has to wonder if this is a preview of what may be ahead for many other firms, especially those in the technology sector.

The December Global Market Perspective, a monthly Elliott Wave International publication which covers 50-plus global financial markets, showed this chart and said:

SoftBank's stock price followed the tech sector higher until February 2021, then reversed and underwent a three-year nosedive of nearly 60%. For investors, the regret phase is now coming on fast. Last month, the Financial Times published an image showing the lifetime performance of 25 SoftBank-funded stocks, including former market darlings like Alibaba, Uber, DoorDash and Fitbit. Just three of the 25 companies showed a positive return since their IPOs, and 12 of them were down more than 50%.

And here's a headline from Nov. 9 (AP):

Japan's SoftBank hit with $6.2B quarterly loss as WeWork, other tech investments go sour

Notably, SoftBank's WeWork -- once the most valuable U.S. startup -- filed for Chapter 11 bankruptcy protection in early November.

The Financial Times called WeWork "one of the worst venture capital investments in history."

By contrast, the FANG+ index approximately doubled in value in 2023. However, the group performance of the well-known big cap tech names early in 2024 has been a different story (Markets Insider, Jan. 4):

It's been a bleak start to 2024 for the Magnificent 7 tech stocks after crushing the market last year

And, as you may be aware, those Magnificent 7 stocks have mainly been holding up the entire market.

In other words, if those big cap tech names crater, the main indexes are likely going to crater too.

At this juncture, you may want to keep a close eye on the stock market's Elliott wave pattern.

If you'd like to learn about Elliott wave analysis, the definitive text on the subject is Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott's highly specific rules reduce the number of valid alternatives to a minimum.

Club EWI members can access the online version of the book for free!

In case you're unfamiliar with Club EWI, it's the world's largest Elliott wave educational community (about 500,000 worldwide members and growing rapidly). Club EWI is free to join and allows members complimentary access to a wealth of Elliott wave resources on financial markets, investing and trading.

You can have the book on your computer screen in just moments by following this link: Elliott Wave Principle: Key to Market Behavior -- free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline SoftBank: A Possible Omen for What's Ahead. 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.