Let me reiterate this. Most of you will not watch the video. All I can tell you is this, WATCH THE VIDEO. You will see better what I am going to summarize here.
I think MNQH23 is a major turning point. The only problem with that is, no one, including me knows which way it will go. Nobody, and I mean, NOBODY knows what will happen next.
I hate to quote Motley Fool (a newsletter) but they point out the two things that really matter, earnings and interest rates. Earnings could become critical in businesses tied to semiconductor components and could be subject to great risk in any conflict or even blockade by the People’s Republic of China (PRC) of Taiwan. Even if there is no conflict, I would imagine commodity prices will continue to rise if the US Dollar weakens.
There is, as I mentioned in the video, a very real chance that in the next three to five years the United States Dollar will lose strategic reserve currency status, and that will likely knock the socks off of any USA-centric stock portfolio (in normal English, cause that portfolio to decline). This is discussed somewhat in this article. That would also negatively affect most state and Federal pension plans, Social Security payments, and Medicare/Medicaid payments. Those payments face complete bankruptcy as this decade ends ( I mean that for state and institutional pensions that are taxpayer-funded, as a high percentage of them are deeply in arrears (like YOURS IS, if you live in South Carolina, for example).
If the PRC recovers from its fascist ZERO-COVID lockdown, chances are good that its economy will recover, which will lead to rising commodity and export goods prices. All of that, the potential of conflict with the West, and strategic reserve currency implications are discussed in this article.
The bottom line for me is this (as shown in this chart):
You are still looking at a break above from 11721 to beyond 11918 to 12063 if you have a chance at MNQH23 rallying to 13215 (based on the weekly chart, with the requisite VWAP lines added in). If not, there could be a 9-handle in your future with a breakdown below the pivotal low of 10608.50 to perhaps 9384. Below that would be a VWAP concentration area around 8086.
The monthly chart provides a little more nuance as to other targets:
There is a loose confluence of Fibonacci price levels on two separate Fibonacci scales around 14817. If I were to guess at what potential rally highs might be in the current economic environment, I would estimate that 14817 would roughly be that high target price for MNQH23.
In my opinion, for that to happen, the Federal Reserve would likely have to pivot and lower interest rates. Against the backdrop of what could be higher commodity and raw materials prices going forward as world economies recover (however that happens), the Fed interest rate pivot would be a bad move if, in fact, food and energy prices continue to accelerate. All that could happen once again as Russian sanctions are continued. Those kinds of moves will make Americans poorer and Russia replenished with more capital to continue their war against Ukraine. If egg prices continue to rise 11% per month as they did last month, food prices, which include many processed foods that contain eggs, will also rise dramatically. You saw last week’s chart regarding consumer credit. If the American consumer is tapped out, how can that be anything but threatening over time to corporate earnings? With no fiscal or monetary restraint, Americans will not buy things, and the economy will slump over time. The Uniparty cares nothing for you, they just want to spend what comes out of those humming U.S. Treasury printing presses.
In three months, the MNQH23 contract could be at 14,558 or 9384. Either way, the Federal Reserve and Congress will be in control of that and not the earning capacities of US corporations.
I have no idea where these prices will land in three months, but I do feel like that range will contain most all of the price action as the world begins to choose sides between the US Dollar and other world currencies including the Chinese Yuan and other BRICS currencies.
This is NOT your father’s, grandfather’s, or perhaps even great-grandfather’s stock market. It is a casino-style market controlled by US Federal, European Union, and world debt, and monetary and fiscal policy between economies around the world. If you are long only, you are probably going to get burned at some time in the next 5 to 10 years. If you have a balanced approach (long and short) with other asset classes, including stocks, you probably can survive, but you will do so with very great effort. If you have a pension, particularly a taxpayer-funded one, KEEP YOUR EYES OPEN. It will be most interesting, and perhaps terrifying, for you in the future.
That is all I have for today. More will be coming soon. THANK YOU AGAIN FOR SUPPORTING THIS BLOG!
