Market internals for the indices are strong into early next week, explains Trevor Smith....
No Recovery in Sight, but Markets Remain Supported
08/06/2020 9:46 am EST
Jeff Greenblatt confirms technical/Gann support of markets but notes a Black Swann is looming.
Make no mistake about it, serious times are just around the corner, if they are not here already. Congress dithers while tens of millions of Americans face catastrophe in the form of eviction due to the moratorium ending. They’ll probably put something back in place to kick the day of reckoning down the road. But not many are considering that while evictions are being postponed, unpaid rent accumulates. It’s not like the forbearance on car loans, after all. One can’t just put rent payments on the back of the contract. Nobody knows how that will be resolved. I’m going to share some of the news of the past week because we’ve reached the point this stuff can’t be ignored anymore.
I told you there wasn’t a recovery and there isn’t going to be one. How could we have a recovery under these conditions? Now even the mainstream headlines are starting to report the same thing. If all of this wasn’t enough, it is now a Federal Reserve Board President, no less, who is calling for another lockdown of at least four to six weeks. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis said on Face the Nation that shutting things down “for a month or six weeks” is the only way to have a real robust economic recovery.” No Mr. Kashkari, shutting things down for another round isn’t going to help anyone. It will only destroy what is left of this pathetic economy.
I’ve been telling you for years one of the roots that cause economic dysfunction is social unrest, which is now off the charts.
Basically, the Minneapolis police have declared they can’t help and said in no uncertain terms their once proud city is an anarchy zone. It will never recover from 2020. At the same time Mr. Kashkari is contributing to the destruction of the economy and all the problems that go with it. You say you don’t live in Minnesota? No worries, it could end up in a city near you.
One of the reasons why Mr. Kashkari’s advice is so terrible is many doctors who have successfully treated coronavirus with various drugs are being censored and/or fired from their jobs. Amid all this, I’ve seen numerous videos about the fire sales of restaurant equipment from coast to coast because thousands of restaurants have now closed their doors forever due to incompetence of our politicians. Yes, all of this did materialize just in the past week.
Nevertheless, the stock market remains higher. What do you do about this? If you are a buy and hold type, gold is the way to go. Have you noticed silver is at its highest level since 2013? Gold is now at an all time high. At the rate things are going, these patterns will continue higher. Our weekly view of the U.S. dollar has a failed bounce attempt after it did not even make an attempt on the 89-day window. What did happen was what I call a HI-LO bounce attempt. Take the prior low on March 9 to the July 31 low and you’ll see it was roughly 103 trading days with a high at 103.89 according to my data supplier (see chart below). Your high could be slightly different but it all amounts to the same thing. We had a low to low cycle of roughly 103 days with an approximate of 103 for the high. Normally this tendency will net a better bounce attempt. Not this time. While the upper trend lines have all been broken (I’ve removed them), the lower channel line is in danger right now.
Why is the stock market higher? You know all about the Fed. But what did Kairos have to say about this? This is a calculation right off the Gann calendar. For those of you who don’t know, in the Gann calendar each day of the year has its own vibration. If you want to know why certain pivots line up according to price and time the way they do, the reason is the influence of vibration of the day of the year. In this case the Dow found a low on June 15 at 24843.18. June 15th has the 84dg vibration. The low last Thursday was 25992.28. As it turned out, July 30 is the 128dg vibration (see chart below). It is reflected in the time holder (numbers to the right of decimal point). Take the difference in the two days and we see it is 44dg. The low on June 15 ends in 43.
Overall, the vibration worked, and the Dow is once again moving higher. The Gann calendar calculations are an excellent indicator for swing traders as what you are observing isn’t a random calculation. These kinds of readings manifest all the time. The problem is so few bother to look and pay more attention to lagging indicators or fundamental reports.
In past columns I’ve shown you how intraday Kairos works with great precision. The Gann calendar is a different type of Kairos but also works with great precision. Look, I believe you stay with the chart. If it looks like it wants to go higher, you don’t fight the tape no matter what the headlines say. That being said, we are now under 90 days from the most important election in the Republic’s history since Lincoln was elected. Neither side seems to be willing to accept the outcome. I can’t even tell you what is coming is a black swan. But something is coming, we all feel it. Shorter term trading is the way to go right now. The market is fine now and likely to remain fine through August paint drying season. But once September hits, I wouldn’t want your portfolio to end up like that blast in Beirut the other day.
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