The Market Perspective

A High in New Lows

Thursday June 16 2022

The NYSE New Lows hits a new high while the NYSE hits a new low, go figure

Bullish Percent NYSE, lowest since the Covid Low of March 2020

considering the DJIA went to 8,000 in March 2020, we may see further drops

NYSE Advance Decline Line

 

This indicator is lagging the overall market, we expect a low this next week

 

% stocks over 50 day moving average

 

This indicator is now back to believe it or not, its March 2020 Covid low, and it is early in the bear market

 

Only 10 stocks of the spx are still over their 50 day MA, collapse, a low looms

 

It is not month end but XLI Industrials fallen below all four moving averages on the monthly graph

At bottom notice the PMO is just now rolling over so a final low lies way way off in the future

The Low is Not in Yet

Wed June 15, 2022

The XLI ETF is a great proxy for the Dow Industrials. ONe can see the double top of Nov and January and now the gaps from maximum mood nearing the end of the sell off.

PMO is folling over atain and it may well take until sometime next week to start bottom fishing for a ocunter trend rally.

Check out page B 11 in today's WSJ, it is the list of new lows, wow. Again we are getting to a bottom.

I am going through my list of major ETFs and they all show gaps the last four days. FANG has been cut from 8,00 to 4,750 since November.

NYSE new Lows are getting to the extreme that has marked previous bottoms

Here is a comparison of new lows going back to the covid sell off March 2020

Looks like the covid extreme was around 2,000. and we are at 850 now

Eight Waves Complete

Wed June 15, 2022

 

The Dow Industrials’ Big 8-Wave Cycle is Incomplete
"We finally understand our full Elliott wave position"

By Elliott Wave International

The Wave Principle's basic pattern includes five waves in the direction of the larger trend, followed by three corrective waves, as illustrated in both bull and bear markets below:

Keep in mind that the stock market is a fractal, so this pattern unfolds at all degrees of trend, whether the timeframe is 3 months, 3 years, 3 decades or 3 centuries.

As you might imagine, the size of countertrend corrections are in proportion to the size of the preceding five-wave move. In other words, a five-wave price move that took 3 decades to unfold will sport a much larger correction than a five-wave move that took 3 years to complete.

Here's what you need to know: Elliott Wave International's publications shown subscribers the complete, eight-wave cycle at all relevant degrees of trend, including the Grand Supercycle trend which began in the late 1600s.

For instance, after showing a price chart which began in 1697, the February 2021 Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and cultural trends, said:

[The chart] shows the market at the highest scale for which we have data. It comprises countless individual Elliott waves that have taken many generations to play out.

At this scale, we finally understand our full Elliott wave position.

Less than a year after that commentary, the Dow Industrials and S&P 500 index topped in January 2022.

As implied, that top may be far more significant than marking the end of the bull market which began in March 2009 and far more significant than many market observers believe.

Indeed, the sentiment expressed by two recent headlines from major mainstream publications is "buy the dip":

• Stocks Have Been Falling. I’m Still Buying Steadily. (The New York Times, May 20)
• Don’t Panic. It’s Time to Be Bold and Buy Stocks. (Barron’s, May 13)

However, Elliott Wave International is emphasizing financial protection and safety.

The main reason for that stance is that the Dow’s centuries-long eight-wave bull market cycle (which, as you’ll recall from the illustration, includes three corrective waves) is incomplete, according to our analysts’ best interpretation of the wave structure.

Get more insights into Elliott waves by reading Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here’s a quote:

[R.N.] Elliott himself never speculated on why the market’s essential form is five waves to progress and three waves to regress. He simply noted that that was what was happening. Does the essential form have to be five waves and three waves? Think about it and you will realize that this is the minimum requirement for, and therefore the most efficient method of, achieving both fluctuation and progress in linear movement. One wave does not allow fluctuation. The fewest subdivisions to create fluctuation is three waves. Three waves (of unqualified size) in both directions would not allow progress. To progress in one direction despite periods of regress, movements in that direction must be at least five waves, simply to cover more ground than the intervening three waves. While there could be more waves than that, the most efficient form of punctuated progress is 5-3, and nature typically follows the most efficient path.

If you’d like to read the entire online version of the book, you may do so for free once you join Club EWI, which is the world’s largest Elliott wave educational community (500,000 worldwide members and growing).

Club EWI members enjoy free access to a wealth of Elliott wave resources on financial markets, investing and trading. A Club EWI membership is also free.

Just follow this link to get started:Elliott Wave Principle: Key to Market Behavior – free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline The Dow Industrials’ Big 8-Wave Cycle is Incomplete. 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.

 

The Slide Continues

Tuesday June 14 pre market Open

All the thiings we have discussed here for months are now coming true, and faster than most expected.

Selling accelerated into the close yesterday

The NASD NDX have fallen the fastest recording a  4.6% decline just yesterday.  An article in the WSJ describes how this is robbing retirees of what they thought would be a comfortable period.  No kidding.

NDX has much further to fall before PMO on the  4 hour chart bottoms.

Ditto for the SPX

 

William DeVane has been touting gold on cable tv as a hedge against everything but that bet is not working out.

Gold

The double top is making for big resistance around $2,100. the MAs are converging which happens prior to a trend change.

Higher interest rates make the cost of carrying gold expensive, and it pays no dividends.

Silver made its double top earlier and is now in a clear decline already approaching the  200  week MA at 20.42.

the sell offs in so many  asset classes is quickly deflating what investors thought was a store of value. Cohen and Steers reIT is down form its January 0eak of  76 to 58 in just five short months.Iron ore producer CLF has dropped form 34 to 18 since early April. While one might think inflation would keep iron ore prices high, this is telling us to expect extreme economic weakness in in the near future, the lack of demand for basic metals. Interest rates are nearing a peak and will then retreat giving a fase sense of hope for the clowns at the FED.

 

 

30 Year Yield - the reversal of the 39 year market in falling yields has been swift, apprently no one at the fed has a long term chart of yields.

Refiner Valero dropped 6.3% Monday. We suggested two weeks ago that energy prices might weaken and this is a sign that may be finally underway.  

Long Term Perspective

The overall bull market since the  1982 low has had numerous setbacks like the dot.com and sub prime mortgage sell offs. But those were relatively short term,say three years in the overall trend. Most investors today have not experience a prolonged period of stagnation like 1972-1982 where the DJIA never returned to its 1,000 high. Hence most will not sell to avoid the huge losses which lie ahead. This  will further  the econoomic hardship and finally destroy the buy the dip mentality.

 

It's worse than You Think

Monday June 13 2022

Curise Lines are headed back to the covid lows. an article inthe WSJ today notes lots of low ball priced cruises,

the Caribbean for 100 bucks a day but as the author speculated, will those taking the low buck deals come back for hi

her priced deals

1973-74 Analogy Continues

Monday June 13 2022 10 00 AM CST

The  1973-74 50% two year melt down never had an extreme one day crash, say  10% or more. That said, Bitcoin is down  21% today, so much for the currency of the future.

Again the various averages topped between early November and early January. That market a five of five wave top dating back to 1932 and even 1788.  While the media struggles to explain this via current events, the better idea is that five waves of various fractal degrees are now complete, the new direction is down.

In an earlier post this morning we suggested the next two one weekly one monthly support levels for the DJIA of  29,000 the pre covid high and then the covid low of  18,000.

the weekly 200 bar MA for Transports is at 12,096 and that looks like the next support level with TRAN already at 12,957..

Please note that I said the bear market is just getting started. The monthly TRAN chart makes this clear.  The monthly PMO is just NOW crossing over in the lower panel.The potential for lower prices is high. Note the  monthly  200 bar MA is 7,599.  again as with DJIA that is about the covid low of March 2022. TRAN could be there by November.

Chuck Schumer to Cavanaugh on the Roe decision

You will never know what hit you

we might say the same about crypto investors, note Andy Kessler's column on who will pay for that fiasco in today's WSJ

 

Support Levels

Monday June 13, 2022

The  200 week MA is now at 29,298. The pre covid high was also about that level. that is only 2,00 points lower so it may be a logical support.

 

200 Month MA is at 18,000 which is about the covid low March 2020. That would make another logical lower target. Could that happen by November?

 

Russia has apparently re gained the advantage in the Ukraine by literally blowing the country to bits with  long range artillery. I read 30,000 rounds a day are pounding Ukraine into submission. Western support has been late and timid, France seems to be  angling for a negotiated end to the war. With grain shipments halted, food prices rising, further weakness is not out of the question. PMO has broken over on the monthly cart at bottom. So it is when not whether such a low should be expected.

NASD 50 day MA chart is not posting for some reason. The rally from late May has erased the oversold condition and PMO is poised to roll over again. NASD is leading the charge downward.

PMO has peaked and the strong sell off Friday has left a gap on the e chart.

 

A third of a thiird wave

Weekend June 11, 2022

Even after two big down days, the PMO for this indicator has not rolled over!  Third waves can go as far as they like.

Most investors are still in the buy the dip mental mode. As noted the percent decrease in NASD is much worse than SPX, the bloom is off the tech rose.

NASD this 3.5% drop in one day looks like it is just getting started

how ever we count this, the extreme collapse can only be a three of three wave. Of course the media cites the  78.6% CPI number but that was hardly unexpected.

A WSJ article remarked on the enthusiasm for the big rally in ARKK 35-45, those same headlines will appear all the way to the bottom wherever that eventually may be

the so called rally just relieved the quite over sold condition of PMO at bottom.

Junk bonds like HYT will suffer the most.

and indeed Hedge, a bear fund which advances as stocks decline is just getting going again

Just for fun

Tony Parker is an 18 year veteran  and multiple national NBA champion here retired from the SA Spurs.

He is showing his Hero and Villain collection at the SA Art Museum.

https://www.samuseum.org/artwork/exhibition/tony-parkers-heroes-and-villains/

Super heroes are a socionomic event, here is an update on their history from yours truly

Tony Parker’s Heroes Arrives Right on Time

San Antonio Spurs basketball star Tony Parker’s Heroes and Villains collection arrives right on time. It will be on display at the San Antonio Museum of Art until September 4. T is a film buff and has a collection of sci-fi and Super Hero sculptures from Harry Potter, Star Wars, and the Marvel Comics. Let’s take a look at how and why this exhibit arrives at an ideal juncture of social mood generating social action.

While history records super dating back to  Hercules and Beowulf, the modern incarnation began in various forms in  the early  1900s.  Zorro appeared in 1919, Buck Rogers in 1928, the Shadow in  1936, and Flash Gordon  in  1934.    Olympic swimmer buster Crabbe portrayed Flash in a movie serial form in the  1930s.

The stock market made a remarkable recovery from its 1932 low of  41 to a 1937 high of  188.  The continued failed attempts to conquer the Depression led to the creation of new Super Heroes.

Superman appeared in Marvel comics in 1938.  He was followed by Captain Marvel in 1939 as well as Batman. Superman had Super Hero characteristics such as the ability to fly and a literal bullet-proof skin.   Batman however would rely on his athletic prowess as well as a great collection of whatever accessory on his utility belt the current crisis required.

Adolf Hitler came to power near the exact low of  the Depression, negative mood created the ultimate negative event.  Even more Super Heroes were created to oppose the evils of the Axis Powers. Flash, Green Lantern, and Captain America quickly followed.

Our point is that seemingly impossible situations, Depression and WW II,  resulted in the creation of Super Human Heroes.  How does that link to Tony’s display at the SA Museum of Art?

My take is that we are already experiencing a bear market in stock prices. The seemingly unstoppable NASD has fallen 25% just since last November.  Netflix (what could go wrong?) has lost 71% from its top value of 700.   The FANG stocks look like a dot.com echo. Add to that the Ukraine conflict, high gasoline and food prices, baby formula shortages and random violence.

And so as in 1938, we have an interest in the recent history of the revival of Marvel Super Heroes as well as other movie favorites. Social mood dictates social action.  The mood is exactly right  for a re-emergence of Super Heroes.  Even more fitting is Tony’s Super Star Status as a multiple national NBA champion team.

Thanks Tony, just what we need at just the right time.

Dennis Elam is an Associate Professor in the College of Business at Texas A  & M University San Antonio.

 

 

 

 

Natural Gas continues Advance

Friday June 10 2022

Energy Prices Continue Advance

Prices for natural gas notched a 14 year high amid low inventory reports and a fire at an LNG export facility.

Data Boos Natural Gas Prices, Wall Street Journal Today

Our analogy to the disastrous 1973-74 period continues unabated.  Then we had steadily falling stock prices, lines at the gasoline stations with rationing on odd/even license number days, and a huge political split over Watergate.   At least this time we can still purchase gasoline though it is expensive. The real disaster occurs when supply is so restricted that rationing occurs.

Crude oil has about doubled from its low last December around  $65 to the current $121.   US producers are reluctant to increase drilling and production for several reasons. The memory of the  20008 rise and fall ($140 to $35 in six months) still haunts those who binged on production in  2014 only to see prices collapse again. Team Biden asks for more production but once the mid-term elections pass and if prices do decline, the War on Fossil Fuels will begin again. Oil and gas investors seem to prefer share buy backs and dividends to risky ventures during triple digit oil prices.

In the same time period unleaded gasoline futures have soared from  $2.00 to  $4.20.   Last weekend in the Wall Street Journal two females attempted driving an electric car from New Orleans to Chicago and back. The results were a disaster.  The car took longer to re-charge than advertised. They encountered long lines and broken or llow charging stations at every promised stop.   The EV enthusiasts are way ahead of reality. And the electric grid that may or may not support our air conditioners this summer is surely not capable of such demand.

Reports of the death of Exxon Mobil and the Board shake-up seem overblown. Again from last December to now, the stock has soared from $60 to  $102.   Energy service has likewise rebounded.

The ultimate negative human mood is war. Wars usually start amid economic hard times.    Putin launched the Ukraine invasion February  24 as the Russian  Trading System Index feel from 1,500 to 600, the lowest since 2008.  Likewise our NASD had fallen from  16,000 to  12,500 since its November high.

The Transport Index leads the sell-off.  It has fallen 22% since its November high.

We expect continued decline in overall stock prices interspersed with seemingly strong, short rebounds over  2,000 points. That is how the bear market keeps bullish hopes alive.   Only energy and utility sectors  are showing strength, the rest are melting away.

Far greater downside potential exists for stocks.

Ukraine War Began at Market Low

friday June 10, 2022

 

 

Economic "Hurricane": Here's a Take on a Bank CEO's Warning
Here's what reached a nadir as the war in Ukraine broke out

By Elliott Wave International

On June 1, a CNBC headline said:

[Major bank CEO] says 'brace yourself' for an economic hurricane caused by the Fed and Ukraine war

Yes, the U.S. central bank is engaging in so-called "quantitative tightening" and the war persists in Ukraine.

Yet, those cited "causes" of a possible economic "hurricane," like a severe recession or even a depression, are results themselves. For instance, the war in Ukraine resulted from a shift in social mood -- going from positive to negative.

The April Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and cultural trends, drives the point home regarding the war in Ukraine with this chart and commentary:

The outbreak of the war coincided not with the start of a decline in U.S. stock prices, as so many investors feared it would, but the exact low prior to a rally that persisted throughout the fighting. The rally is not due to the bizarre formulation that war is bullish; it is due to natural waves of social mood that had reached a nadir when the war broke out.

Regarding Fed tightening as a contributor to a possible economic crisis, realize that the Fed merely follows the market, it doesn't lead. In other words, investor psychology is the true cause of the rise in rates.

Interest rates (or bond yields) began to rise well before the Fed started to raise its fed funds rate this year.

Fed officials voted to start lifting rates on March 16. Yet, the yield on the 10-year Treasury note bottomed back in 2020 and has been climbing since.

Of course, rising bond yields mean lower bond prices.

Getting back to the economy, the 1.4% decline in U.S. GDP in Q1 was recently revised downward to 1.5%, so an economic contraction may already be underway.

Returning to that mention of "natural waves of social mood" in the April Elliott Wave Theorist quote, you can get insights into these "waves" by reading Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior.

Here's a quote from the book:

The Wave Principle is governed by man's social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.

If you'd like to read the entire online version of the book, you may do so for free once you become a member of Club EWI, which is the world's largest Elliott wave educational community (approximately 500,000 members worldwide and growing).

A major benefit of a Club EWI membership is complimentary access to a wealth of Elliott wave educational resources on financial markets, investing and trading.

There's no cost involved in joining Club EWI and no obligations.

Get started right away by following this link: Elliott Wave Principle: Key to Market Behavior -- free, unlimited and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Economic "Hurricane": Here's a Take on a Bank CEO's Warning. 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.