Tuesday Oct 14 2014
It's Tuesday which is the day for Brett Stephens Global View column in the WSJ. For a look at what the nest two years may hold, I highly recommend today's column. His title is
Obama Survival Manual, Intl Edition in which he describes POTUS as
a self-infatuated weakling
Now before you accuse me of being politically negative, after all this is Brett's column, I return to my 1973-74 analogy. Markets love alternation and that is what we have.
In 1973-74 we had Republican Nixon in the White House, despised by the Press. After losing the race for President in 1960 and then Governor of California in 1962, Nixon angrily told the hostile press, at least you won't have Nixon to kick around any more. And then Phoenix like,he returned, the worst nightmare for the liberal press.
Now we have alternation. A Democrat is in the White House with as Bernie Goldberg puts it, A Slobbering Love Affair with the media. This time the internet has given rise to the cirticism of the President.
But the point as Stephens says, is that q world of rambunctious rogues have two years to be assured the US will do nothing to stop them.
From that standpoint the mid East becomes Viet Nam with refugees clinging to helicoptors fleeing the US Embassay rooftop. Come to think of it, we have already had an ambassador and his guards killed in Benghazzi.
Yesterday we speculated on the possibility of a crash. Yet crashses alwyas come at the end of a move, just as parabolic upmoves, like TSLA come at the end of a bull market.
But a crash does not have to occur. Like our frog in slowly hotter water, investors can experience a slow or fast boil. The 1973-74 meltdown never saw a genuine crash. The moves down were interrupted with occasional bursts back to the upside. The same thing occurred in the 1930-32 meltdown. It was a stair step decline with investors becoming enthused by the occcasional bounce.
A Diamond Shaped Top in the Russell 2000
RUT exhibits a diamond shaped topping pattern. We have distinct downtrend channels.
On the fourth move down this year suport gave way. Expect this to begin occurring among all the different indexes at different times. Yes the daily stochastic is over done and that led to rallies. But this time the support has given way.
Weekly
There it goes, we have a crossover on the weekly 13-34 EMAs. John Murphy notes this is particularly noteworthy. The 13 and 34 are Fibonacci related numbers. And weekly charts trump daily charts.
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