The Market Perspective

Staying Beyond Your Expiration Date

Friday May 25, 2023

The Cost of staying Past Your Expiration Date

In a unanimous decision, a Republican-led House investigative committee that spent months quietly looking into Paxton recommended impeaching the state's top lawyer on 20 articles, including bribery, unfitness for office and abuse of public trust.

Yahoo News this morning

Paxton was indicted for securities fraud in 2015 and has been under investigation for years.  This unanimous decision may lead to a vote today, If an impeachment vote passes he has to leave office Only two Texas officials have been impeached in  200 years.  Paxton should not have run for office again under these circumstances but he never asked me. Democrats will be delighted.  Negative mood is exclusionary, throw the bums out is the mantra and we see that here. /After years of investigation, bang, he is about to be impeached now.

Crude oil is bouncing in the $70-72 range.  It remains above its 200 day moving average at  $67.10. Gasoline is doing better at $2.55. Its MA is $2.07.

The major oil stock prices all experienced a terrific rally from the end of  2020. Conoco Phillips  ran from  $30 to $130 and is now $101.69. Warren Buffet has loaded up on Occidental. It ran from $10 to $75 and is now $58.81.

I have recommended shares in the Nustar NS complex. Nustar is a San Antonio based company which owns extensive pipelines in the  US as well as storage facilities along the Gulf Coast. The stock has climbed to the high sixteens. The Preferred B which was recommended in the low 22s is now $23.59.  Both issues have a 10% dividend.  We will discuss the stock market next but with a bearish view of the stock market it is important to find high dividend stocks somewhat independent of stock market action. Nustar seems to fill that requirement.

The equal weight SPX has fallen from 6300 to 5700.  The move down should accelerate from here. The SPX has rallied from its March low at 3825 to 4150.  This divergence in the weighted SPX versus unweighted SPXEW is hiding the real weakness in the market, stay alert and be prepared.

The decline in stock prices lately is attributed to the debt ceiling debate. No doubt we will see a rally in stock and bond prices once a deal Is reached, then the bear market in both should resume.

Bear markets are marked by a renewed interest in horror movies. The 1930s had Frankenstein, 1972 had the Exorcist and now no less than six horror movies are in various theaters.  Dead Rise, Nefarious, Beau is Afraid, the Pope’s Exorcist, Renfield, and Outpost are all telegraphing that a bear market in mood is upon us.

30 Charts on Where We Are Now

30 Historic Charts, take a look

Ger,amu FsOmtp Recession

Thursday may 25, 2023

Germany Falls Into Recession

 

This is the biggest economy on the EU continent,  More evidence that the bear market is getting underway in  athird wave.

Perspective on Silver

Wed May 24 2023

 

Here’s What Silver Investors Need to Know
Large Speculators have been making this bet on silver

By Elliott Wave International

Observations over the years reveal that hedge fund managers tend to extrapolate current trends of financial markets into the future -- just like most Main Street investors.

In other words, hedge fund managers are just as much a part of the "crowd" as the little guy.

So, this 2021 headline from the American Enterprise Institute is not surprising:

The SP 500 Index Out-performed Hedge Funds over the Last 10 Years. And It Wasn't Even Close

Hedge funds and trend followers are known as Large Speculators in the Commitment of Traders report published by the Commodity Futures Trading Commission. They usually take the opposite side of the trade from a group known as the Commercials; insiders who participate in a business related to a given commodity. The Commercials usually turn out to be on the right side of a trade.

With this in mind, let's focus on silver. Here's a chart and commentary from our May 15 U.S. Short Term Update:

Large Specs... are strongly betting that [Silver]'s rally will continue. The middle graph on the chart shows the Large Spec net long or net short position as a percentage of total non-spreading open interest. Two weeks ago, it was 23.49%. Last week, despite a 9% decline in silver prices over just five days, Large Specs are net long 23.14%, hardly budging from their prior stance... We will keep you apprised of new developments.

The U.S. Short Term Update makes clear that Commitment of Traders positions are not a great short-term timing tool. At the same time, be aware that extreme positions often occur at key trend turns.

Also keep in mind that silver's Elliott wave structure can help you to anticipate price turns.

Indeed, here’s a quote from the Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

It is our practice to try to determine in advance where the next move will likely take the market. One advantage of setting a target is that it gives a sort of backdrop against which to monitor the market’s actual path. This way, you are alerted quickly when something is wrong and can shift your interpretation to a more appropriate one if the market does not do what you expect. The second advantage of choosing a target well in advance is that it prepares you psychologically for buying when others are selling out in despair, and selling when others are buying confidently in a euphoric environment.

No matter what your convictions, it pays never to take your eyes off what is happening in the wave structure in real time. Ultimately, the market is the message, and a change in behavior can dictate a change in outlook. All one really needs to know at the time is whether to be long, short or out, a decision that can sometimes be made with a swift glance at a chart and other times only after painstaking work.

If you’d like to read the entire online version of the book, you may do so for free once you join Club EWI, the world’s largest Elliott wave educational community.

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

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

This article was syndicated by Elliott Wave International and was originally published under the headline Here’s What Silver Investors Need to Know. 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.

 

Third Wave Down Gets underway

Wed May 24 2023

The media would have you believe the sell off yesterday and today is because of the debt limit impasse.

But the bear market began Nov 2021-Jan 2022. The counter trend wave 2 is ending now meaning the third wave down is beginning.

Sure once there is a deal,we will probably see a bounce back but that will be short lived.

SPX

Notice the gap down in today's SPX action. This took out the trendline from May 4 and is further confirmation that the counter trend rally is ending.

Equal weight SPX topped back in February. Today's action took it below all four MAs.

We need to start scaling into Hedge, a bear fund that advances as the market decliines

If we do get a bounce back it will probably just return Hedge to this level but I would not add too aggressively here now.

TBF a vbear bond fund has rallied on debt worries and will likely fall back on a resolution. This is another area we need to add.

Traders Classroom

Click here

SPX versus SPX Equal Weight

Weekend  May  21 2023

Above the SPX weighted by eight stocks which compromise 50% of it overall value, so it is headed up. THis makes those just looking at the daily quotes believe the bull is alive and well.

Here each stock has an equal weight so the trend is down not up! Bull markets end with a concentration of investors in a handful of stocks, that is the case now

Apple

PMO is flat not a good sign as Apple continues its climb. When Apple buyers exit the party ends.

Cracks in teh enewable Story

A Few Cracks in the Renewable Story

Team Biden wants to re-make the entire energy structure of the nation which consumes the most energy of all nations by (I can’t keep track) 2030, 2035, or whatever date has been floated lately.  That idea is running into some headwinds.

Germany is re-thinking its embrace of renewables. In fact ,coal-fired generators are back on the menu. Europe is quietly giving up on banning IC cars from all its cities by 2030.  Ocean located wind farms are now blamed for the increase in beached whales. Wind wills kill thousands of birds each year.  The gearboxes are prone to catching fire. 

And automakers are struggling with electric cars.  Ford just notched a  $3 billion loss on its EV program, but is certain of a reversal in three years. Chevrolet just shut down its Bolt EV automobile amid recalls and battery fires.  Rural communities are objecting to solar farms in their neighborhood. The threat of battery fires is an alarm sounded by the volunteer firemen of those communities.

The idea of banning propane or natural gas fired stoves and grills is particularly short-sighted. During the Texas brown-out we were able to use both our natural gas kitchen stove and out propane grill. Had we relied on electric, we would have been eating cold food out of cans.

How about a reality check?  Making ten-year predictions is a favorite among politicians. We cannot hold them accountable today as the target is years away. And in ten years no one remembers the prediction anyway.    Here are two realistic alternatives that could be adopted and evaluated in the near future.

Modern homes are equipped with gas or electric water heaters. But there is an abundant alternate energy water heater, the solar energy falling on our roofs.  A radiator on the roof helps cut the cost of gas or electricity to supplement the water heater. A small pump runs water to the roof and gravity returns it to the home system.   Such systems are already available. During the second energy embargo in the late 1970s Congress allowed tax credits for ceiling fan installation. Why not do the same for solar supplemental water heaters now?

Local governments utilize small utility vehicles made by Kawasaki, Deere, and other firms in the small engine business. We see them in parks and other maintenance projects. But those same governments will not let you and I license them for the street. If it is okay for the government, why not for the rest of us?  Equip them with turn signals, LED lights, a windscreen and wipers and bingo, the ideal urban vehicle. They could be electric but their small engine use way less gas and produce less exhaust than the 5,000 pound pickups in grocery parking lots.   Allowing them in bicycle lanes seems reasonable. This is a realistic alternative to the three-mile errands most of us run in our neighborhoods.

Get real politicians, let’s have some solutions now rather than ten years in the future.

Use of Elliott Waves

Thursday May 18 202

3

 

Using Elliott i different time frames

NS Rallies /Cusp of DJIA Rally

Wed May 17 2023

 

Monday I entered a ladder of orders for NS Preferred B, each lower at 

22.01

21.91

21.81

all were executed at 200 shares, the Pref B finished at  21.70 for the day. Today it finished  higher at 22.40. Most brokers just want the trade and enter all at once. Using a ladder of orders each lower can result in a better purchase.

% Over  150 Day MA

Notice this indicator jumped  10% to the upside today, and the markets, jumped as well take a look

 

no one is expecting a rally and so that is probably what we will get

 

BUY Nustar common  NSS and Pref B