Saturday, April 11, 2020

One Partial Answer

I wanted to post this video as a partial answer to the two questions posed yesterday - and in particular the relationship between the FED, the economy, asset prices and debt.



When you get towards the end of the video, you will hear a lot about networks, and the certain type of exponential growth they enjoy. This endows entities like Microsoft, Google, Facebook, Netflix and Apple with a certain monumental profit over time that harder industries can not accomplish. I think one bridge to a brighter future might be a "network tax". 

If you think of a "network" as a "utility" - like the gas company or the power company- then perhaps a portion of their revenue should go to the public good, such as infrastructure, health, etc. and to prevent them from becoming "too powerful". Well, mull it over.

This is the third post this weekend. If you have not seen the previous two, you may wish to have a look at them.

Have an excellent rest of the weekend.
TraderJoe


59 comments:

  1. Amazing interview.
    I wish he had talked in a bit more detail about the relative influence of differing deflationary triggers, for example, that triggered by technological innovation, and that by demand destruction (Covid 19).

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    1. Yes. This is a guy who's brain it is worth picking!

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  2. Why are you not looking at your original count B as new high at 3400 and then we had C down

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  3. Replies
    1. Those are your words, not mine. This is a matter of probabilities. At the moment, the daily Bollinger Band is holding the market. Obviously, to prove any down move a retrace of the high must hold.

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  4. If the move off the Feb high was not an impulsive one I fon't know what is. It certainly met (and I do not count waves well!) one of my own critical requirements of demolishing MULTIPLE S/R shelves on the INITIAL wave down. This it did in spectacular fashion, including the bull trend line off the 2009 lows. If that first wave down was impulsive, that makes this move up corrective, with lower lows ahead.
    Several analysts with far more EW chops than I are now calling a bottom. Oh, I do undetstand how they can sub-divide the move to get an abc for a completed foutth wave but frankly that strikes me as being way too cute by half, considering the larger context.
    I realize the job of high degree second waves is to re-kindle bullish fervour, sometimes, remarkbly, to a level exceeding the ATH. Having said that, it is truly astonishing how quickly that has ocurred this cycle. I could be wrong, but it seems to me that relentless CB intervention just might warrant a re-think of EWT. (We are now back within that busted bull channel off the 2009 lows). If we go on to a new ATH, I would even more persuaded that such is the case. Intetesting times!

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  5. The fewer likely Corporate buy-backs would also tend to agree with the position that holding equities would still be quite risky.

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  6. Again, the TRILLION dollar question - does the price of equities have anything to do with ANYTHING?!
    Debt, revenues, un-employment...etc, etc.
    I used to think I knew the answer to that question. I think we are about to get a definitive answer to that thorny question.

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  7. The recent spread of the virus has been on a linear trend, suggesting we’re starting to get over the hump.

    What would be the catalyst for the massive wave 3/C down? The second wave of CV in the summer/fall perhaps?

    One last food for thought is that indexes like the DAX and NIKKEI already retraced 50% of their runs from 2009.

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  8. The spread of the virus itself won't be over when the "hump" is reached. There's still significant amounts of new infections all over the world every day. Other countries are just starting the wave. A lot of people and the market seems to hope for a quick reopening and recovery, but realistically, lock-downs and limitations have to be continued for a long time to not start a new wave of infections. Just imagine airports and airlines would resume normal operations next week, or in 2 weeks... The spreading would be out of control.

    Also, after the virus comes the real pictures of economic impact. I would expect those unemployment numbers to continue to be at significant levels for weeks. Business are hoping to go back to work soon, but if they can't we'll see a lot more layoffs, bankruptcies, productions chain interruptions etc. In the past 3 weeks, 10% of the US work force has lost their jobs. That could double by the end of this month because more and more businesses are closing down as they're hurting from the shutdown. No country in Europe has reverted any lock down orders, for very good reasons. Numbers have been declining there for days. If the US does it before them it won't end well.

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    1. There is evidence out there now that lockdowns are not changing health outcomes, just creating economic devastation. Sweden decided not to lockdown, and their infection rates and related data are no worse than in neighboring countries. Moreover, they may ultimately benefit from higher or earlier herd immunity.

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  9. Some people just wanted to know "which direction the market is going tomorrow". If you just said, "up", you would be wrong. If you just said "down" you would be wrong. What these clear mindless critics don't seem to get is that a market can do 'both' in the same day.

    I said there could be another 'spike' higher. There was. Then, there was a clear reversal, so far.

    https://invst.ly/qf962

    This is absolutely one way to resolve the ending diagonal for a minute ((c)) wave. There 'might be others', but the market would have to demonstrate such. As it stands now trading below 2,690 would create a longer wave than wave (ii) and from here, we'll have to see how the overnight goes.

    TJ

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    1. Fascinating how they bought the lower trend-line of the potential ED at around 2720 to prevent a clran break...

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    2. That low last night could have been the 4.

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    3. Yep. Looks like it went low enough to keep possible ED intact.

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  10. Tryng to think logically about herd sentiment and wave development per RNE thory, I wonder if it would be reasonable to assume that much of the initial decline was fueled by insiders exiting on early recognition of the coming pandemic.
    We know that Bezos for example was unloading billions in December and January, as well as a few Congress folk. I think one could reasonably argue that we have yet to see the full damage inflicted by this sudden and unprecedented hard stop foisted on not just the US, but the global economy. What does that imply about future sentiment and where we might be in the current down-cycle?

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  11. ABC ? There is a triangle in B/2nd wave position.

    https://imgur.com/m5I4yig

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  12. ES 15-min, price just took out the lowest fractal of the triangle.

    https://invst.ly/qfibs

    TJ

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    1. How common is truncation of C of five of an ED?
      Never seen one beofore....

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    2. In this hourly count of the futures, nothing truncated. So I don't understand fully your question.

      https://invst.ly/qfjcg

      TJ

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  13. Yep!
    Does anyone know why volatility is so muted ahead of a possibly violent downside move?

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    1. I have been stumped regarding that from the open??? is this just corrective? further upside?

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    2. That's how my non EW system is reading it at the moment.
      For now, I'm just looking for micro 5 down, then 3 up before reassessing.

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    3. keep in mind not all stocks are open today due to Easter Holidays, so that's why there might be lower volumes

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  14. Now, down through the overnight low fractal.

    https://invst.ly/qfiwi

    TJ

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  15. As far as I can tell, cash has already exceeded the limit for the further fourth wave of a larger diagonal.

    https://invst.ly/qfj9r

    That isn't to say price 'couldn't' form a triangle in cash to provide one pop higher, but the odds are beginning to get lower and lower of continued highs. And it is up to market to prove it.

    TJ

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  16. So far, this is the hourly count upward. The market is going to have to prove that the point labeled ((v)) is actually a larger ((iii)). I'm not saying that "can't" happen, so don't say that I did. What I am saying is there is a way to count completion and the odds of further higher highs are getting lower.

    https://invst.ly/qfjcg

    For one reason, the downward wave (if it's a new wave four) is 'longer in time' than the prior wave two. That is not 'fatal', but it drops the odds.

    TJ

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    1. ..just another factor? That 'triangle' for the a-b-c upward 'should' indicate "last wave upward was dead ahead". It may have. Again, it just lowers the odds.

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    2. when you have timme can you help with oil count in 30-19 range. thanks

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    3. ..the unknown account is not responded to; please chose a user name or log in.

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  17. The larger diagonal on es lost all wedge shape as well.

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  18. The up wave could not break a parallel to the upside - meaning likely not a third wave, now it has broken a parallel to the downside. It just peeked past the 50% retrace. And, now it's on 'overlap watch'.

    https://invst.ly/qfjz7

    TJ

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    1. now .. overlap on ((A)), up. Not a very bullish sign.

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    2. Broke the latest short term red fractal.

      https://invst.ly/qfk4x

      TJ

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    3. ..watch for a choppy diagonal downward or 1-2-i-ii

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    4. ..there's a lower low .. diagonal is possible.

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    5. ..diagonal is possible, but no beyond the length of ((3)).. as below.

      https://invst.ly/qfkd4

      TJ

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    6. ES ..price now over upper diagonal trend line; downward diagonal has formed properly in all details.

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    7. ..update on diagonal

      https://invst.ly/qfkjz

      TJ

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    8. ..held the high, so far, and falling off impulsively.

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    9. what's your count from last weeks top so far?

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    10. ..IFF (if an only if) the high does not hold; one might count the diagonal as a triple zz 'X' wave.

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    11. @B F, the top (if there is one) was made Sunday night. As I said earlier, the only 'up' count I see would be in the form of a triangle. And a down count would have to get below 2,690 in the ES. We're not there yet.

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    12. Something like this 'could be' a final triangle. Price length below ((A)) is needed to 'rule it out'.

      https://invst.ly/qfle0

      TJ

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    13. ..just so it's said, obviously from the ((B)) wave high, the opposite count, or count lower is a i-ii-(i)-(ii).

      TJ

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  19. Now there is an expanding diagonal higher.

    https://invst.ly/qflnz

    TJ

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    1. ..now the high of the downward diagonal (or Triple ZZ) was just exceeded higher.

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    2. ..chart showing w-x-y

      https://invst.ly/qflp-

      TJ

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    3. As far as I can tell, a (i)-(ii)-i-ii is good until about 2,762. Beyond that it would break the trend line from the highs. If it breaks the trend line, then consider the triangle.

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  20. Reminder: at 3:50 ET, the Interactive-Brokers full margin requirement goes into effect each day.

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    Replies
    1. ..there it is ..2765 to 2745 in LESS than a minute.

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  21. Interesting divergences among NDX, SPX, and DJIA....

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  22. A new post is started for the next day.

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