I risk repeating myself each week, but WATCH THE VIDEO. Monthly chart analysis begins at 0:00, weekly chart analysis begins at 9:55, and the daily chart analysis starts at 12:45.
The basic trend charts, despite the overt bullishness seen on a daily and weekly basis still to not surpass a pivot price of 15469.50.
Longer range monthly downtrend line chart (typical lower high, lower low scenario):
The shorter-term bearish trend line line looks like this and shows that a pivot candle has yet to be created as the trend line remains down-sloping:
The target I was trying to remember, for now, is still in play if a bearish AB=CD pattern continues unabated:
The all important question is: “Where are we headed, up or down?” All I can do is postulate as no one knows for certain.
In the short run, the Wall Street casino will be open again if the Fed starts cutting interest rates, much as it was after April 2020 when ‘covidiocy’ spending was introduced and many Americans sat around on lockdown. The money will flow into markets like a torrent, and every American who chooses to invest in stocks will once again look like a genius. That can only go so far, however, as it likely invites another round of inflation, tending toward hyperinflation if it happens again. Inflation is, after all, a monetary phenomenon of too much money chasing too few goods.
Without a cap in spending, which will not be in place until January 2025, assuming a non-Uniparty candidate wins. Right now, that seems more remote as Congress, the Federal bureaucracy Federal law enforcement. the American justice system, and media are all engaged in elimination of any political opposition. No one in Washington, D.C. is minding the store or caring about the needs of American citizens. In the end, some kind of triggering event will end the runaway spending. I think Stan Druckenmiller says it best. Continued profligate spend and an external triggering event. like the collapse of the yen, could trigger a global financial crisis at some point in the near future. Dr. Peter St. Onge discusses the situation in Japan and how it could affect the world in this link, which I think you should watch.
If you have read my previous posts, most every macroeconomic indicator is beginning to flash that the risk of recession is elevating. You can go back through many of my previous posts to see them. Most recently, the latest of issues come from staggering rates for business loans. Interest expense at the Federal level continues to spiral out of control, much like Japan’s economy for the last roughly 35 years. From a general risk perspective, yields on bonds now exceed yields on stocks, so income seekers are more likely (if they are wise) to seek a bond ladder over a portfolio of stocks, even the outrageous valuations of most tech stocks, and the damaged collection of zombie company stocks in the Russell 2000.
The other bit of disturbing news is another bank failure on Friday, this time Citizens Bank of Sac City, IA. As rates continue to have the potential to rise, many banks’ bond portfolios will continue to have pressure put on them.
Any number of things could trigger a correction on bonds and stocks from global conflict to collapse of currencies, and everything in between. At some point, we should expect some kind of recession, and without a curtailment of spending and the expansion of Federal entitlements, which Stan Drukenmiller commented on in the linked video, the U.S. economy could see a decline of some magnitude. Even Dr. John Hussman considers the current situation in this market analagous to the period of late 2007, when investors, like me, lightened up considerably in equity holdings in the event of an economic turndown, which we eventually had.
Which direction are we headed? I have no idea, but I do believe that one must be hedged for the inevitable downturn, as so many indications, locally, nationally, and internationally are all flashing that something significant is about to happen, and it might not be the best thing in the world. Until that time, the casino may be open, but the time draws nigh when the piper of over-indebtedness globally MUST BE PAID.
That is all for now. Have a fantastic Sunday, and I will be back next week!
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