As I did two weeks ago, I will ask you to WATCH THE VIDEO for how I drew up and analyzed the AB=CD patterns. The timeline is as follows:
Intro to Monthly Chart: 0:00
Daily Analysis for the bullish MNQM24 case: 3:46
Weekly Analysis for the bearish MNQM24 case: 6:38
Daily Analysis of the bearish case to further amplify how price supports and Fibonacci price levels line up, along with a summary of the video: 10:59
As I have said previously, I have no idea how this will turn out, and no one else does either, but what I can do as I did above is give you a reasonable estimation of what the bullish and bearish outcome of price action might be at the extremes.
This Forbes article summarizes what we know about the Magnificent 7 stocks which are heavily weighted in the QQQs and MNQM24, and for the most part, they beat estimates. Apple still hasn’t figured out what it will do to improve iPhone sales, and that could be a near-term drag on earnings.
Tesla’s sales of EVs are still sluggish, and price slashing only kills profitability as other competitors intend to drag their products over the Mexican border to force Tesla to keep prices low. Tesla’s earnings were marginally higher as indicated when Q1 2024 numbers were reported, but Elon Musk was touting that Tesla is the biggest AI story on the NASDAQ. I could pull out another “Crazy Train” video (Ai, ai, ai!), but that joke is getting old. Between the PRC’s pressure on Tesla inside and outside of China, Tesla will probably have to find an out, or perhaps sell assets for cash to maintain any future for its AI projects.
We will see how the rest of the earnings reports go. What is most frightening are the external issues, interest rate hikes, newly spiking inflation at street-level consumer purchasing, and the whole commercial property meltdown. Both the WSJ and Bloomberg pigeon-holed the Republic First bank failure in a side article and a podcast, but running away from a serious issue does not make the issue disappear.
Is this the beginning of the unwinding of the U.S. interest rate doom loop of “lower than zero, after inflation, interest rates” or collapsing economy (and middle class), as is depicted by this comparison of rate cut charts comparing 1915 to 1981, or does it come from manipulating U.S. Dollar strength (weakening the dollar) to reduce the pressure on debt by printing money, one of the ways described in Luke Gromen’s video for FFTT, LLC.
The way described by Mr. Gromen likely leads to higher inflation which presses the middle class harder even than it is now. If you are independently wealthy, you can “sweat that thundershower”, as the late George Carlin might have said in one of his comedy routines. If not, well, there will be great pressure on Gen Z’ers who are less wealth-endowed than almost any generation in U.S. history, and pressure on less wealthy retirees on the other end of the age spectrum.
Mr. Gromen seems also to see a possible “productivity miracle” where Russia and China find regime change while U.S. business continues some kind of growth cycle and all of a sudden there is less pressure on treasuries and money market funds and American institutions and individuals invest in “risk-on” assets. My only problem with that thesis is that in 1980 we had most of our heavy industries on our shores and chip and electronics technology was exploding at the same time. Even with interest rates approaching 20%, the nation’s industries could sop up liquidity and produce cheap goods, eventually quelling the huge surge in inflation we took after dumping the gold standard in 1971.
I am not Luke Groman and I do not play an esteemed and sharp economic analyst, but the U.S.A. does not possess that kind of an economy any longer as our political class and its billionaire corporate class has shipped those businesses overseas. The one area where we might have a ghost of a chance and some level of dominance might be in artificial intelligence. With our borders open, wages declining, our defense industries intent upon exhausting our armaments, and our budgets defending Islamic terrorists and money-grubbing neo-Nazi thugs in Europe, we may have a real problem creating a stable economy again that can fund a middle-class lifestyle for most Americans. I think the chances of Russian or Chinese regime change are relatively slim unless someone upsets the trade apple cart, but that will depend on what happens in the U.S. November 2024 elections. The dynamics of that election are impossible to estimate, but what happens there could change the U.S.A. and the world forever, and perhaps not in a very good way.
I could go into other angles expressed in that video, but I will not. You should watch it at the link I provided above. The one thing I will mention, as others out in Substack and X-land have mentioned, is the possibility of pressure of weaker JPY versus the dollar creating much higher U.S. 10-year treasury bond yields. If that continues, banking gets shaky, and all manner of loan-related pain will be foisted on the general public and American business. I could pull a ton of articles, but again this week, the prize for brevity goes to Luke Gromen in this Schwab video. The chart showing the tight correlation between JPY and the 10-year-treasuries is here.
As you can see from my chart analysis, anything could happen. It is important now to see what limits there might be in terms of support and resistance which could lead to another massive run in MNQM23 and other stock indexes and stock index futures contracts. You have seen both my bull and bear estimates and I am agnostic in terms of how it goes, as I can be long or short at any time I need to be. There are total gloom-and-doomers out there looking into the rearview mirror and thinking that the end is near (in this case on the $SPX).
I am not going there right now. I think everyone needs to keep their eyes open in all directions. Between the dual simultaneous clown shows in the Western and Eastern hemispheres, there are enough options to run a massive keno game. Can you or I win that game? I don’t know, but I am going to keep some of the chips dry as the game progresses.
That is all for me today. If you have questions, leave them in the comments and I will do my best to answer them. If you liked this post, give it a like as well down below.
Thank you once again for supporting the Buffalo Trader’s Writing Desk! I still haven’t figured out how the format will go in the future, but once I am done with the internet market presence issue with the other business, I think I can refine it more clearly. Stay tuned!
Have a great week trading and a great week in general this week!