With the spike in Covid-19 cases, several U.S. states are scaling back reopening measures, which will further weaken economic growth, reports Jeff Greenblatt.

Arizona Governor Orders Restaurants to Operate at Less Than 50% Capacity.

Among other issues, one of the ongoing debates is whether the U.S. economy is in recovery. With California Governor Newsom closing a good part of California again, I suppose restaurant owners should be counting their lucky stars Arizona Governor Doug Ducey is ‘allowing’ dining rooms to operate at no more than 50% capacity.

The restaurant business is tough enough as everyone knows, it is a business driven by different demand levels during the day. They need to operate near full capacity during mealtimes to make up for the slow periods the rest of the day. It never occurred to American politicians this could be the case. If they are going to shut down, shut down. But small business owners still have expenses like overhead and rent.

New York City is feeling the pinch as many sources have reported 25% of Big Apple residents have not paid rent since March. State law prohibits property owners from evicting residents to an undetermined date but without collecting rent, how will they pay their mortgages? I could go on and on. The nation barely survived lockdown one, but it appears number two is upon us.

If that truly is the case, it will be the knockout blow to the economy, and it will not recover for at least a generation. Stock market historians will show you the Dow Jones Index did not retake the 1929 high for 25 years. The only reason the stock market rally has survived is because the Federal Reserve has become the universal backstop to everything.

There is going to be a day of reckoning for the market. We have looked at the U.S. Dollar chart on a weekly basis and now it is at the great inflection point (see chart below). A drop here could be catastrophic. It failed the trendline a couple of weeks back but is now threatening to break intermediate level support. If that happens, the stock market has my permission to stay up but as the value of the currency sinks, those gains won’t be what they appear.

at the great inflection point

But that is what a hyperinflationary depression looks like. Most people won’t realize it because the media won’t report on it until it becomes obvious and too late.

At the rate we are going, there is a particularly good chance the real unemployment rate will be over 50% near the election. As of July 15, we are only six weeks away from the stock market’s least favorite time of year. Should I handicap the election? In 2016 you could see the complacency of those who assumed Donald Trump was going to lose. The Democrats had no chance to match the excitement and foot traffic of those historic rallies. This year there is no excitement nor is there foot traffic. As the lockdowns take root, there is little chance President Trump will have those rallies. On the other side of the coin, Joe Biden has nothing to offer either. The other day at an event in Pennsylvania, he called for the end of the ‘era of shareholder capitalism.’ With those comments, he caught a lot of people off guard.
The only chance Trump has of winning right now is for the silent majority to realize what Biden is pushing is the most anti-American platform in the history of this republic. Trump now owns the worst economy in the history of the country. Our choice this year comes down to picking the lesser of two evils.

On that note let's look at what is working right now with the Kairos methodology. The session did start with a rally and it was fueled by this setup. There was small flip in polarity on the Dow Jones E-mini futures as former resistance turned into support at 26813 (see chart below).

support at 26813

By itself, that means nothing until you realize the 813-pivot materialized at 13 minutes off the bottom. That led to a 111-point move in the next 17 minutes. As the move south developed, there were several Kairos/polarity flips as well. Polarity flips make outstanding trade opportunities as they play into the zero-sum aspect of trading. Don’t think the institutions are flawless. They make plenty of mistakes and when they do, they are just looking to breakeven on the trade. You do not need me to tell you this, I learned about the value of polarity flips from Steve Nison’s candlestick books nearly 20 years ago. What I’ve improved on is the Kairos, which is the supreme moment where the vibration of price and time, line up.