Do you think we will ever see a week of market moves associated with news events for which you will not shake your head?
Week after week I think analysts say something so stupid that I just want to scream. As I have pointed out so many times over the years, I keep hoping that some form of sanity will grip pundits one day. I keep hoping that they may wake up and recognize the error of their ways. But, alas, I continue to long for that day.
So, whenever the market moves, everyone goes through the exact same thinking process: “Hey, look. The market just saw a big move. Let’s go see what news caused this move.”
Is this not the structure of almost all the analysis you see presented? Let’s look at this past week, for example. During the week, the futures took a strong downturn. And within hours, every analyst was certain that it was “caused” by Gary Cohn’s resignation.
So, let’s think about this. For how long has this resignation been telegraphed? I think we all knew it was coming. So, are you going to tell me that the market did not already have this “priced in?” You see, this is where this type of analysis gets really fuzzy.
Note from Tim: I didn’t write this. And I probably have as contrary a view to the thoughts below as can be imagined. But I want to provide other points of view. I simply wanted to stress……these are NOT my opinions. No no no no no. OK, thank you.
Over a week ago, in my analysis to my members, I noted that, ideally, I was looking for the market to pullback and test the 2800SPX region. And, the market certainly dropped down to the 2800 region, but also broke the 2796SPX support upon which I was focused. That had me begin to focus on the 2700SPX region of support. And, today, we dropped and broke my next level of support at 2700SPX. But, this is the pullback I have been looking for over the last several months which had not materialized. Now, it has come in with a bang.
While this pullback took many by surprise, the common reason attributed to the decline last week was the rise in interest rates. I need help understanding this “reason.” Allow me to explain.
Back on June 27th, 2016, we published analysis to our members entitled “Beware of Bonds Blowing Up.” That was the first long term top call we made on bonds in the 5 years we had been open to that point. And, as we now know, the bond market topped a little less than two weeks later.
I’m going to start with a tale from about 180 years ago. In the early 1840s, a religious leader named William Miller believed the second coming of Jesus was foretold in the Bible with mathematical accuracy, and using a myriad of verses and tidbits from the Bible, he sought to compute as closely as possible when exactly J.C. was going to come back.
At first, he didn’t offer anything very exact:
Using an interpretive principle known as the day-year principle, Miller, along with others, interpreted a prophetic “day” to read not as a 24-hour period, but rather as a calendar year. Miller became convinced that the 2,300-day period started in 457 B.C. with the decree to rebuild Jerusalem by Artaxerxes I of Persia. His interpretation led him to believe and promote the year 1843. Despite the urging of his supporters, Miller never announced an exact date for the expected Second Advent. But he did narrow the time period to sometime in the Jewish year 5604, stating: “My principles in brief, are, that Jesus Christ will come again to this earth, cleanse, purify, and take possession of the same, with all the saints, sometime between March 21, 1843 and March 21, 1844.” (more…)
Looking at the larger structure of the US Dollar, I think it is pretty clear to me that we are in a constructive structure meaning this is only a back test before the next move into the 80’s. The dollar seems to be trading in a bear flag if you look at the 4H below.
When I sat down to review how I can update the analysis I provided to our members in my mid-week update, I realized that there is not much more technical analysis I am able to add to what I wrote to our membership in my mid-week analysis, so I am going to repeat it here, with some additional general thoughts below:
While I strive to provide deep insight into the markets I track for you, I am somewhat at a loss in this region with the metals, especially with the various charts presenting quite differently.
For those that have followed me for years, you know when I am bullish and you know when I am bearish. And, for the great majority of the time, my bullishness and bearishness have been appropriate to prepare for impending price action. However, we are now in a region of uncertainty, and I don’t think I can classify it any better than that at this point in time. (more…)