The Market Perspective

Market Topping

Tuesday May 7, 2024

 

ON the 30 minute chart the DJIA is running out of steam. Note the gap up last Friday and then the slowing  of momentum.  There can always be a few points left but the seasonal of after May go away is upon us.  The Transports have not made a new high with DJIA so a non confirmation Dow Theory.

The NASD hit  16.397 today but ended closing down 16.69 at 16,332.

On the two hour chart the bear fund HDGE looks to be making a bottom, check PMO at bottom.

 

Crude Oil June

In Friday's newspaper column I allowed that crude could bottom around $78 and rally again.. Notice the blue screenshot letters, for some reason the charts are not posting but this sort of url appears and then later defaults to the chart, this just happened with the oil chart.  Apache APA has had a small bounce to the upside.  Transocean RIG has been rallying from its unexpected low at  5.10, now 5.72

TLT 20 year bond  ETF looks like a  buy here

The 30 month T Bill yield divided by the SPX average dividend yield is now  higher than in  1929. It is said that the overall market is not a buy until the dividend yield is  6%. It is now  1.44%.

I am accumulating SH short SPX, PSQ short NASD, Hedge HDGE short stocks in general.

 

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Social mood is trending right back to  1968. Universities with  their lush Presidential salaries, not to mention all those  kissing his or her ring finger, and are ripe for revolt, by  protestors and parents.

Harvard's Claudine Gay has the shortest Presidency in Harvard history.

Rutgers Presi dent on the hot seat.

Columbia's Presidenet says it is an impossible situation.

Uh no the Alamo in  1836 was an impossible situation.

The Bear Market Gets Underway, Seriously

Tuesday April 3, 224

I suggested that we would  know if energy stocks would hold up if the overall market tankes, now we know, they have not.

I sold APA, HAL, DIG this morning at slight profits. RIG really tanked even though they made money the first quarter and have over  $8 B worth of future business, a nice backlog. So I  held on to it.

I began buying HDGE overall stock short, SH S & P short, PSQ NASD short

Social mood wise it is as though the switch has been thrown, the President of Columbia won't hold a line she announced and now the students have captured a building, as I said it is 1968 - 1973 all over again.

RIG

Write these phrases down and paste all over your house and office.

In a bear market all news is bearish.

In a bear market, all  surprises are to  the downside.One would think an offshore rig blew up but no.

PSQ short NASD

Here is what to expect between

now and August, short funds will make money.

OXY - Buffet owns 27% of this company, no doubt he thinks this is only a correction.

SPX dropped 157%, OXY over 3%.

More to follow, relize your financial planner will never tell you to exit stocks, there was a story about a fellow telling his client just that in the morning WSJ, I wonder if his phone is ringing even now.

More to follow

Gas Prices Set to Soar

Friday April 12 2024

I Did This-Gasoline Prices Set to Soar

Jamie Dimon. CEO J P Morgan, predicts interest rates could reach 8%  in a few years.

In a few years, how about, say, two years? Eight percent is not a high rate, it Is about the historic norm. Mortgage rates in 1981 reached 14%, West Texas Intermediate WTIC soars $2.00  today to $87.06.

What’s going on?  As a college professor my research interest is how varying social mood drives social change. Positive mood results in stock and real estate investing, pleasantly themed music and movies, and politicians who appear successful. A rising stock market results in movies like La La Land and recently, Barbie. Now the stock market has peaked and a decline has begun. While there is always a mix of mood, we can say social mood is trending negatively.

The ultimate negative mood is war. We have two ongoing right now in the Ukraine and the Mid=East.  The U S Navy tells us Taiwan is a matter of when not if.  Crime is  up in big US cities.  Mood towards white collar crime has reached a new zenith.  Ivan Boesky received three years for his insider trading in the late 1980s. Sam Bankman Fried just received 25 years for FTX. Now a Vietnamese woman has received a death sentence for stealing $44 billion, a first for a white collar criminal. A third iteration of the horror movie X debuts July 5. Godzilla and King Kong took in $80 M on its debut weekend. Civil War opens in theaters today.  This negative mood is surfacing in the markets as well.

The chance of a rate cut evaporated when WTIC crossed $80, now up over 10% in the last month!  Our recommendations of Apache APA, DIG, Halliburton HAL, Transocean RIG, and Hedge HDGE are doing well.  And this is just beginning.  May gasoline futures are $2.82, set to cross $3 in time for driving season. This will make Biden’s re-election bid a steep, uphill climb.    

These events mirror the 1970s. That was a period of rising oil prices, interest rates, and near everything else.  The positive mood of the bull market resulted in two term Presidencies for Clinton, Bush, and Obama. The 1970s resulted in short term Presidencies for Nixon, Ford, and Carter. In periods of negative mood, politicians appear unsuccessful. Polls indicate a majority want neither Presidential candidate.

I believe the stock market, reflected in the DJIA, SPX, and NASD, peaked in late March. Prices are experiencing back-to-back negative days. The advance decline Monday had six stocks down for each stock up. The Magnificent Seven have become the Fab Four and that won’t last much longer.

All the things discussed here for months are now coming to pass, prepare accordingly.

Socionomic InterviewWith Bob Prechter

Friday

April 5, 2024

hClick here for interview

You Can't Say I Have Not Warned You

Thursday 4/4/2024

My latest comment was that March 31 was the probable high of the market. Today the DJIA had a whopping range of  862 points, high to low.

Yes the sell off started at  2 00 PM CT when Biden's phone call was released. But there is always a real world event to validate the technical picture, in this case, the market has completed five waves from an Elliott perspective dating to  1932, 1948, 1974, 1987, 2002, 2009.

The DJIA rolled over to a PAR SAR sell signal on a massive sell off.

As stock markets tanked, one market rallied, oil. This rally in oil and decline in stocks will dim Biden's chances or re election.

 

Everything we have told you has come true, more this weekend after the weekly close tomorrow.

 

Markets at Major Trend Change

Wed 4/3/2024

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Metals and oil are at or near the completion of the first move up. Above SLV displays from the mid Feb low wave one up, then two down then three up, four sideways to down and now

a vigorous fifth wave u[. Maximum mood occurs at the end of a wave and that is seen here. A pullback should be contained at the wave four low 22.25-22.50.

DG Ulta Oil and Gas Shares

The pullbacks here are hard to see as this is

a leveraged play on oil and gas shares But MACD at bottom looks toppy. RSI at top is way over bought and above the  70% level. 44 looks like a pullback target.

I have hesitated to recommend more buys since the initial entry as the rally has been so strong. The period between now and mid month, April 15 shoud provide our best added buy.

I believe this is all a replay of the  1973-74 era if not that entire decade. The first oil embargo in  1973-4 kicked things off. Oil rose to $9 by 19778  and then a second embargo took it to  $36 by  1981. That was also the  39 year peak in interest rates.

The world is awash in debt. All the debt taken on at historic low rates will now roll over at higher rates. The US interest is already more than the Defense budget. Gold and silver are still the only real money politicians cannot print from trees. The action in SLV is a sign of things to come.

SPX

The SPX gapped up March  21. Since the top last Friday at 5260, it gapped down in roughly the same price range. The rally today filled the gap, and then quickly reversed.

My working assumption is that the highs seen last wee on DJIA SPX NDX are final highs dating to major lows of  1932 1987 2002 2009.

Long term since  2009

Five waves complete. MACD and RSI peak with strongest third wave.  Distance from MAs is maximized. This is text book stuff, also note MACD histogram at bottom is maxed out.

Hedge a bear fund, long term

Hedge is the converse of SPX and dirt cheap at $20.

Short term Hedge moves opposite SPX.

Market are at extreme long term trend change. But the extremes are plain to see.

Look to add at lows into mid month we will be updating.

 

Frothy Valuations

Friday March 8, 2024

Frothy Valuations

It is the end of the Chinese growth miracle and leader Xi seems fine with that. Wall Street Journal

The Magnificent Seven s tocks had a market cap of $13.2 Trillion at the end of January, 3.4 times the value of the entire Japanese stock exchange.  Valuation

Hermes has raised the cost of its Birkin Handbag to $11,400 before sales tax. Birkin’s handbags,  made with exotic skins, like crocodile, have increased 20% . Prada’s Galleria handbag is 85% more than in 201,9 now $4,600. Wall Street Jouranl

There’s no fear  in the market. People really don’t seem worried about any downside. – Cantor Fitzgerald

All markets do not top at the same time.  f they did, investors might notice. The Shanghai topped in early 2021 at 3,700. It has fallen to 2,700 and now bounced to 3,000.

Major indexes in the US and other western countries topped first in late 2021, dropped, and are now at new highs.      NYC and Florida condos are trading at new highs as are the handbags belonging to the realtors closing those deals. Social Mood is high regarding just about everything.

Meanwhile, a North Carolina restaurant which priced its cheeseburger at $8.50 in 2018 now must charge $12.50.  Take outs cost the owner another dollar for packaging. Plastic forks are optional. This is why Bidenomics has not resonated with the public.

Team Biden is choosing to run on the Walter Mondale’ 1984 platform to raise taxes.  Team Biden seems to think corporations will absorb the 15- 21% proposed tax increase, decreasing bottom line for their stockholders and creditors. No they won’t, corporations do not pay taxes, their customers pay them. He complains of their price increases, and then suggests  raising taxes.

West Texas Intermediate is still trying to have a weekly close over  $81. Apache APA and a leveraged energy ETF, DIG, are also trying to break resistance.  Let’s examine a few other energy plays.

Transocean RIG is trading at 40% of book value. Warren Buffet likes companies with a moat around them, meaning it is near impossible to match their assets  or market share. No one else has the experience or number of offshore rigs like Transocean.  Current price is $5.18, down from $8.75 last September.

Patterson PTEN has more workover rigs in Texas than any other company.  It has been trading at book value since March, 2023.  From last September at $16, it dropped to $10. It gapped up in February and is now $12.06.

Energy service giant Halliburton HAL in the same period dropped from $43 to $34 and is now $36. Volume is increasing.  

I continue to expect the stock market to hold up past April 15. I am patient on the energy sector.

A Look Back at Tops of 2000, 2007

Tuesday 2/27/2024

The top in 2000 measured by NDX

As tech drove the market now and in 2000 thee NDX seems the best choice as it is the tech heavy stocks

A strong run up followed by a dramatic reversal

2007

Again a strong run up followed by a collapses, after the first wave down we got a bounce in each case  which failed just at the bounce into  1930 failed.

Today

The look is pretty much the same, a low, a strong rally, and then a reverse.

The WSJ has been consumed with NVDA stories the past few days.

Ain 2000 and  2007 PMO has topped out.

Bear Fund Hedge HDGE

HDGE is not at a new low, it tested the December low and found buyers in Mid February. This is what should be happening in a bear fund if the markets are topping.s

 

Class Lesson Magnificent Seven

Weekend Feb 2/25

Here are literally the most active stocks right now commonly referred to as The Magnificent Seven.

Alphabet / Google

Amazon

Apple

Meta  / Facebook

Microsoft

Nvidia Daily

The market capitalization of NVAD is now $ 2 Trillion. The value of the money supply in the US is $7.5 Trillion . So rational investors are telling us this one company is worth more than 25% of the US money supply. Apple is worth $2.8 Trillion.. MSFT is 3 trillion. Those three companies are now worth literally more than the entire money supply of the US.

Direxion 1.05x NVDA

Nvidia Weekly

Nvidia Monthly

Tesla Daily

Tesla Monthly

 

 

 

 

Russia Finances Its War

2/23/2024

How Does Russia Finance Its War?

Meet Etibar Eyyub, oil trader from Azerbaijan who founded Nord Axis in Hong Kong nine days before the Russian invasion of Ukraine

Nord Axis partners with Coral’s founder, Tahir Garayev. The two find buyers for Russian oil all over the world. The transactions route through various shell companies across the mid-East.  The result is that despite so called sanctions by the US on Russia, a steady stream of  income to Rosneft, Russia’s main oil producer. 

Only the US State Department seems surprised.  Mr. Putin knew the West would impose all sorts of sanctions against his invasion. He constructed an conduit to sell Russian oil when he would most need the revenue. One has to wonder how James Bond author Ian Fleming would    have 007 deployed to countries his unknown to his readers in the  1950s and 1960s.

West Texas  Intermediate has not traded over $80 since last November.

The percent of S & P energy firms in bullish chart position hovers around 50%.  Last week I suggested the attraction of Apache which has fallen from $45 to then $31-32. Today it is on sale for $30.15.  This is deflationary not Inflationary. 

Speaking of deflation, have readers checked on the latest Chinese ghost city videos?  Evergrande, the largest China developer, is no more.  A Hong Kong court ordered its final liquidation leaving thousands of unfinished multi-story buildings. Elsewhere unfinished mini-mansions form entire ghost neighborhoods.

And then there is Nvidia NVAD.  This maker of chips for Artificial Intelligence is the latest mania. To be fair, it does make money, lots of it. Revenue for its data center chips is five times what it was a year ago Market cap now approaches $2 trillion. NVDA has soared from $675 to $802 in the last three days. Investors are buying call options with a $1,300 strike price, requiring a share price of that level to exercise.  That translates to a $3 trillion valuation.

But the headlines are incorrect.  Nvidia Shares Ignite Markets Across the Globe.  This is backwards. Rather it is frothy social mood towards stocks that has launched prices higher. Short term this has been happening since last October 30.  Now the price of NVDA has gone vertical thanks to   investor mania for tech stocks.  Markets in vertical position, further analysis not possible one might say, at least for a top t tick in NVDA.

It is not the start of a new bull market. Rather we are entering that final period of October 1929, 1987, March 2000, and summer 2007. Teenagers are  investing, households have own their largest share of stocks ever.  Margin debt, borrowing to buy stocks, is at record highs.  As finishing flourish, the US is back  on the moon, first time since the  1970s.

Seasonally the fall rally lasts through tax day, April 15. I expect this one extends into May and June. We will re-evaluate then. Until then party like Spuds MacKenzie is back again.