I figured you new folks would come here if you read some Latin phrase. Made you look, didn’t I?
My middle school Latin teacher, Ms. Billie Addis Shaw, would be proud of me except for the fact that my verb declension was off before I checked the phrase. The phrase “Quomodo progredimur?” means “How do we move forward?” in English. That is the purpose of this post. It provides you with some key ideas as we move into December 2023 and into next year as to what will happen next. As we all know, NO ONE KNOWS FOR CERTAIN, but one can at least put a range on the outcomes with some fairly well-tested analysis.
Do me a favor. Watch my video above and this video from David Keller, CMT of Stockcharts dot com. Now onto the discussion of both sides of the “market coin”( that is NOT a cryptocurrency, it’s like a coin to determine who receives the football at the beginning of a football game ).
Cycles And Volatility Tend To Support A Bullish Thesis
Here may be the main point of the video, as described by Ari Wald, CFA, CMT of Oppenheimer and Co.
Historically, this bear market is at the low range of the typical average bear market cycle that has been seen since 1950. If we are at a primary pivot ( as you can see in the Stockcharts video and in my video, cycle analysis would tell you that. in fact, we are sitting at a point that leads to a future bull-market-style rally. There is a ton of evidence out there that would support that, but as you can see, the 1973 markets were in the midst of hyperinflation, and the 2000 markets were caused by a dearth of earnings in early-stage tech companies and a general recession. The 2007 selloff was created by a massive debt-fueled mortgage debacle. 2020 was caused by government interference in the economy via lockdown. (You may not like that opinion, but historians will label that as fact once everything is known about the so-called “pandemic” policy.)
Now let us look at NASDAQ 100 volatility (1-year and Maximum charts)
As you can see in these charts, VXN has dropped quite a bit recently, which can typically portend an end of investor fear over market returns as time moves forward. What is most important to note, however, as I did in my video (which you folks better watch :D ) is that volume has also tailed off. The holidays could be responsible for that. Beginning this week, we may see the whole “Santa Claus rally” or “Kris Kringle collapse” that portfolio managers engage in as IRA money pours into the markets at years-end. That influx causes market activity to expand. You can see VIX in the StockCharts video to understand what could be happening in the $SPX. Generally speaking, the market cycles tend to be BULLISH as the year ends.
Government Intervention And General and Government Insanity (Or Malevolence) Tends To Support A Bearish Thesis
The key thing to realize in 2023 in the EU and the USA is that programmable central bank digital currency is on the way. It will be actively used in the EU and will be rolled out in the USA if the Uniparty gets its way in 2023 and 2024. The end of all financial privacy will roil markets in ways we have never seen before. I realize there is not a ton of technical analysis that can project that, but common sense and logic would project the bearish pall over investments if the government-controlled your access to them. A programmable digital currency can do that. It is being used effectively in the People’s Republic of China today.
A coming rail strike will disrupt all supply chains, driving everything from fuel, technology, and food prices out of the roof. You might not pass your CMT exam by knowing that, but your gut feeling would prepare you to avoid investments that would be negatively affected by such a strike. That would be virtually everything in an extended strike.
The diesel oil shortage will affect everyone even if there is no rail strike. No fact-checker can deny that there be some impact going forward. Diesel oil prices, just as gasoline prices, have declined as crude oil has declined thanks to the draining of the Strategic Petroleum Reserve. Any decline in prices now will be impinged by any increase in Russian oil sanctions combined with the furtherance of restrictions on US hydrocarbon energy production. Supplies will dry up again. Not only that, the diesel crisis can expand worldwide. Even leftist publication Bloomberg can see the problems. The USA Today fact-checkers can suck it on that basis, and the basis of many energy experts that see what is happening on the ground.
Supply chain maladies of government creation are still facing us into 2023. That will create problems in forecasting earnings growth, and that will create more confusion in the markets until these supply chain disruptions are ended. The sad part of it all is that the leadership in the 2023 House of representatives is still the crowd that bends over to the DNC and Uniparty leadership. Unless that can be blunted somehow by other leaders in the House, we are probably headed for more pain. Once again, NOTHING IS CERTAIN. It is still possible that all this can be solved.
Conclusion
If you are a long-only investor with a long time horizon, sector rotation may solve your problems as 2023 arrives. I still am not particularly bullish because of governmental malfeasance and fiscal incompetence, willful or otherwise. If you are going to be long in this market, you really need to analyze what would benefit the most in these times of market interference. If you don’t like what you see, you may at some point have to join the game of those who will trade both sides of the market at the margin until some modicum of sanity and normalcy returns to U.S. and world economies.
AS ALWAYS, THANK YOU FOR SUPPORTING THIS BLOG! If you have questions, leave them in the comments.
