You can’t say I didn’t warn you. When people have nothing left to lose, they’ll lose everything. This is the theme of a historic day where ordinary Americans who believe they’ve been disenfranchised by the election finally have had enough, explains Jeff Greenblatt of Lucas Wave International.

None of us have ever seen a scene where the proceedings on Capitol Hill have been disrupted by the public. What do the markets have to say about this? There is an interesting divergence working where most of the major indices have made new highs again with the notable exception being the NASDAQ. As far as this chart is concerned, here’s the intraday situation since the high with both pivots responding to decent Kairos readings. The latest pivot being around the time the Capitol was breached.

intraday

As you know we are in the midst of the 618-week time window off the 2009 bottom. This is an important cycle point for financial markets just as it is a historic event for this country. As a person who has been writing about The Fourth Turning book by Howe and Strauss for years, this marks the culmination of their predictions which were made nearly 25 years ago. Let’s be clear, this is the 80-year war/revolutionary cycle including WWII, Civil War, and American Revolution.

When looking at it from this perspective, this has nothing to do with Democrats or Republicans or any type of politics as usual. The Fourth Turning theory describes a recurring generational cycle for American history, as well as world history. Historical events are tied to recurring generational archetypes with each archetype creating a new era called a turning, which lasts roughly 20-25 years where a new social, political, and economic order gets established. They are part of a larger saeculum or cycle, which spans 80 to 100 years.

So, are the events of Wednesday at the Capitol the black swan I’ve been talking about? Not so fast as this is likely the start of something much larger, not the conclusion. As we are sitting on the cusp of history, nobody has the job description to determine what the outcome is going to be.

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What are the implications of an event like this? Hard to say but it is an issue of national security with the whole world watching. Everything from the civil war to revolution to the government cracking down on the protesters is now on the table. If you genuinely want to understand the intrigue going on behind the scenes, watch Tom Cruise’s Valkyrie movie to understand the confusion in the moments where the German military did not know which side would come out ahead when word of Hitler’s attempted assassination became known. I’m not comparing our situation to the 1944 coup attempt but there can be little doubt we are in the midst of a true Constitutional crisis.

What should the average investor/trader do about this? I believe this is a trading paradise for intraday traders. For swing and position traders, not so much. Geopolitical risk now is off the charts. This is not a time to initiate new long positions but an excellent time to figure out how to short stocks. Whether a new bear market commences out of this is not the point. There could be a correction where the only way to make money will be on the short side. A good trader should be able to make money in any market. All you must do is adjust your perspective and realize this is not business as usual. With so many market participants complacent right now, being open minded to what could happen and how it may impact financial markets is already half the battle. Those of you who have profits from positional trading need to take serious inventory of your entry points and draw lines in the sand to protect profits by using stop losses. In other words, this is a time to be very defensive.

The world just celebrated a new year. Those hoping 2021 would bring a return to normalcy are going to be sorely disappointed because what we are seeing now is a logical progression to everything that has been happening. It now appears this new year is going to bring the storm many of us have been writing about for years. I’ve seen several Neil Howe interviews. He has stated numerous times a war/revolutionary cycle could take up to 10 years to resolve after the initial breakdown. That means we may not get back to normal until 2030.

For more information about Jeff Greenblatt, visit Lucaswaveinternational.com.