As we noted yesterday, new local highs for equity markets were possible. With stock index futures currently higher this morning, it seemed like a good time to step back and look at some simple economics. With that in mind, this particular article - at this LINK - is very illustrative of the current condition, especially as related to the stock market.
I sincerely encourage you to read the article on "Where inflation is really hiding."
Should stocks rise again today, it is possible the $VIX will under-throw its wedge line, and the S&P500 cash index will over-throw its wedge line. Sometimes (often) those are close to reversal points. This is definitely not always the case, and this is definitely not a recommendation. As you know, Ira Epstein would say that until the daily embedded slow stochastic comes back under the 80 level, a retrace to the 18-day SMA is much less likely.
None-the-less it is a time to watch things closely to see how they play out. The current wave count remains unchanged.
Have a good start to your day.
TraderJoe
P.S. I am trying this count in the ES 15-minute overnight futures primarily to avoid degree violations in "time", and to further recognize the 0 - 2 guideline.
In a further update, prices are fading, well out of the channel, and it would be wise to watch the 62% retracement level to see if it holds. If it doesn't, we may have a truncation on our hands, as above.
TJ
P.S. I am trying this count in the ES 15-minute overnight futures primarily to avoid degree violations in "time", and to further recognize the 0 - 2 guideline.
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| ES E-Mini S&P500 Index Futures - 15 Minutes - All Hours |
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| ES E-Mini S&P500 Index Futures - 15 Minutes - All Hours (Update) |
In a further update, prices are fading, well out of the channel, and it would be wise to watch the 62% retracement level to see if it holds. If it doesn't, we may have a truncation on our hands, as above.
TJ
Joe. . . With Gold and Silver at lows . . . Is this where you at looking when deflation phase starts? I look for your commentary daily. . . and have for years. When is your book coming out? Thanks for your service.
ReplyDeleteHi Mark. Gold and silver will likely be subject to the vagaries of money flows. If the current inflation is seen in equities, it is equities as a class that will likely signal the deflation is imminent.
DeleteA P.S. was added to this post.
ReplyDeleteFutures now have downward overlap on that location as ((1)).
DeleteGiven the increase in sovereign debts over the last several decades, a deflationary environment in my opinion is the worst case scenario. The CBs and governments around the world will do everything they can to avoid paying back that debt with stronger currencies from a purchasing power perspective. The math just doesn't work. It only works if they inflate (i.e devalue) currencies so tax revenues continue to go up nominal values to pay back future debt in today's dollars. Debt defaults risks a global depression (30s style) and that's simply not an option.
DeleteI think more realistic scenario is Stagflation which ultimately switches the pressure valve (mentioned in Joe's article) from equities to commodities and perhaps equities of companies who can transfer prices increases to consumers.
Not sure what happens to debt securities in that scenario, I presume yields remain pressured as CBs continue to expand balance sheets (think Japan) in an attempt to avoid deflation pressures.
Happy to here about alternative POVs. Please respond.
-TJ
An additional P.S. has been added to this post.
ReplyDeleteThank you for the article link and the post.
DeleteBasis 15 min, could the move up from your (2) to the high be seen as an extended wave (3), (4) retracing to 50% area, now headed for (5)? Thx
ReplyDeleteIt's more than 2.618 if you do that - which usually means there's a degree violation in that price structure.
Deletejoe can your 5 up with truncation from yesterday become 1/5 as in still 2 more larger up waves
Deleteand circle 3 is really circle 5 and we are finishing 2 and have a lot more to go right here
ReplyDeleteYes, possibly, that's why I said monitor for the 62% retrace. That would be be the alternate count. The only problem with that scenario, then, is that the futures would have finished their count in the after-hours last night? While cash didn't finish until the regular session this morning?
DeleteThat's why that scenario is the alternate count at the moment. It is not to be ruled out unless it is ruled out by degree or measurement.
...and if that was a 'true' truncation, then price should not exceed the 2,921 level, right?
DeleteI would be remiss if I didn't point out this larger hourly, non-overlapping channel in the ES futures.
ReplyDeletehttps://invst.ly/ak2no
TJ
TJ
I noticed that also. Possible in DAX and Nikkei as well from Apr 9 low.
DeleteTJ,
DeleteWhat if ii was e of the triangle ending (b) of ((y)). This would make your iii become i and then the current EWO on a 30 minute shows good indication between ii and the current wave down iv and overlap of i.
What do you think?
Tim
TJ,
DeleteThis triangle possibly ending (b) of ((y)) was posted earlier on April 12th by you and Roy.
Tim
As far as I can tell, there is a way to count it that way.
DeleteThere's a lower ES low, and a 62% retrace.
ReplyDeleteNow beyond 62%; careful of an outside day.
DeleteSemiconductors, Tech, and Consumer Discretionary are all very strong and making new all-time highs. The only bearish thing so far is Healthcare and a few other related sectors. UNH and others are getting hit pretty hard, which may just represent the suggested "rolling bear market."
ReplyDeleteI think the bulls have more to go, unfortunately.