To say that the “market” has been under pressure this week would be an understatement. Yet, it should not come at any surprise, for I have been pounding my desk (and keyboard) over these many years that once the Federal Reserve began implementing their so-called “normalization process” aka QT (quantitative tightening) the Potemkin Village that this “market” has been built to represent would become manifest.
And – here- we – are.
The reason why I felt compelled to write this update is for two reasons. One: I’m being barraged and questioned by friends, family, people I meet in supermarket line. I feel I’m being asked questions more often than a French waiter what wine goes with “the fish.” Two: What I just heard via my radio in regards to so-called “experts” stating what the reason for, or why, this recent price action is playing out.
In regards to the latter: I just heard what must have been a prerecorded stock market update in the early morning before the market opened. In this “update” I listened to what is deemed “insight” from the “Chief” or “Head of investment” of a major national investment house. The argument and the reasoning behind it was obviously recorded when the major averages were all showing “green” this morning in what looked like a meaningful bounce or reprieve from the deluge of selling that has been taking place the last few days.
The arguments made for “this is it” type of arguments as in “the selling has stopped and now buyers are coming in and it looks like all the bad is now behind us” was not only laughable, but rather disturbing as I listened and was watching the screens tumble further, and further into “red.” This “ad” or “segment” should never have been allowed to be kept in the play rotation of the station. But that’s what happens when all there are are computers running the show. And yes, most radio stations are on complete, automatic, computer controlled autopilot. Even many of the “personalities.” Yep. all pre-taped. It’s called voice-over work, but I digress.
So here’s hat I’m looking at for those wanting to know.
Looking at this “market” via my “technical eye” I see two paths. The first is we are either going to find some support in or around this 2500 area in the S&P 500™, then have a significant bounce or as they say, “short squeeze” pulling this thing up quickly and forcefully. Or…
We are about to fall off a precipice in 2008 style. And I don’t mean in weeks I mean in either days, if not hours. That’s what I see when looking over all the charts, technicals, relative strength indexes, wave theory possibilities, etc., etc,.
Again, I’m not trying to cover my tracks here and say something akin of “if we don’t go down – we’re going up.” I leave that for so-called “experts” trodded out on the mainstream business/financial media at times like this.
To be clear, what I’m concerned with is this “market” is on the precipice (all my own opinion of course) of a 2008 style waterfall event. The issue here is: Does it happen now? Or: Does it take place after the so-called “pullback” off the cliff.
The odds of it taking place at any moment are now in my opinion 60/40. the 60 represents now rather than later. (now meaning within a few days, if not hours.)
I’ll use a simple chart using a simple Fibonacci extension graph to show my thinking.
Again, I have no idea if I’m correct or not. I could be wildly wrong. However, with that said, remember what I’ve been pounding the table saying before this all started. i.e., Once the Fed. began QT, in earnest – this is the type of reaction we should see if I was ever correct to begin with.
And last week was the first week they did just that – all as Ms. Yellen exited the Eccles building.
As I iterated earlier, all my opinion, but there it is for those that want to know, which seems to be quite a few today.
As always: We shall see.
© 2018 Mark St.Cyr