I will let the cat out of the bag to say that price symmetry may now be converging on 9800.75 or thereabout, but there are deeper issues involved in this market that make this target not so certain as a near-term bottom. Alex Spiroglou created this chart showing cross-correlation of assets is the worst it has been since the beginning of the GREAT DEPRESSION (not to be confused with the Great Recession):
Alex is a CMT and a great market analyst. I do not endorse any trading products of his that he may be marketing at the link you in that first link behind his name, I just follow his keen analysis.
The bottom line is that our US Treasury and corporate bond markets are broken until we truly 1) accurately depict what the true rate of inflation is and 2) take steps to make certain that fed funds rates end up being higher than the CPI is. This is a statement that Stanley Druckenmiller made in June 2022 which he repeated recently on CNBC.
If that number is really the one based on the calculations of consumer inflation as it was in 1980/1981 before the readjustments made to CPI to reduce the figures as safe cover for the political class, according to Shadowstats.com that Fed Funds rate would have to be higher than 17%. The lovely and purportedly sane people at the U.S. Treasury and the U.S. Federal Reserve cannot determine what the real rate of inflation is, let alone whether the US is in a recession or not (even though we have experienced 2 consecutive negative GDP growth quarters, the classic definition ). Under those circumstances, this issue may be decided by the markets, and as more and more entities are rejecting the purchase of US Treasury bonds, that determination could be violent in terms of volatility. That would not accrue to the benefit of American investors, many of whom are retired or near retirement.
Q4 2022 earnings, as early forecasts show, could also be weak, and that could lead to further price deterioration. Jamie Dimon seems to think stocks could fall another 20%. On the other hand, JP Morgan Chase thinks the economy is resilient, even though retail sales from the last report seemed to be less than robust.
I won’t even start on the issues, largely government-created, that are occurring in the energy markets, but a report will come soon. I think the US economy is being set up for a massive shock in oil, gas, fuel, and petroleum derivatives in an attempt by our Federal government to cease control of portions of those industrial components. I could be wrong, but things do look rather suspicious.
Either way, I will trade what I SEE, and there is a small chance that we could hit a temporary MNQZ22 bottom at 9800.75. We could also potentially rally back to around 12,300 on MQNZ22. I remain agnostic and trade the best set-ups I see. If they don’t show, then I don’t trade.
As always, THANK YOU FOR SUPPORTING THIS BLOG. I will shortly produce a post on what could be algorithmic trading at the edges of the 2 standard deviation areas around hourly volume average weighted price lines (VWAPs).
Have a great week everyone!
