One For The Record Books

I was speaking with a colleague after the “markets” closed today and let’s just say we had one heck of a poignant discussion. The reason for this was the usual question of asking me “So, what are your thoughts going from here?” By the time we were finished I could tell he was now feeling as I described myself on today’s show quoting the great Bob Seger from his song “Night Moves:” “Wish I didn’t know now what I didn’t know then.”

The reason for this was simple: He asked me what I meant when I said (paraphrasing) “There’s not going to be anything good to discuss concerning the markets going forward, for none of it will matter. The damage is already done and there really will be nothing more than more damage to come. It’s what we’re going to have to do and work with in this new evolving environment, because what everyone thought before as “business as usual” ain’t coming back. Probably ever.”

Now let me make this one point clear before I use a “picture” as they call them in Silicon Valley to make my case.

First: Out of calamity and chaos comes the greatest of opportunities to those that understand not only this is part of the process, but also it’s where true integrity and intention has the greatest canvass to not just express itself – but to thrive.

Second: Understanding the first takes care of the second. Rinse, repeat.

This doesn’t mean things won’t be hard, or crazy, or even flat out nuts and scary simultaneously. But what it does mean is for those that have been waiting for the world to give them the opportunity where they can prove their worth and profit by it – this is what that opportunity looks like from now on and going forward, possibly into another generation or two or three. And no, I’m not trying to give some rah, rah, rah talking points just for the sake of it. I truly believe it to my core.

But that doesn’t mean there ain’t gonna be any moments that try our souls. As a matter of fact we may be on the precipice of one right now, which is why I’m putting up the following chart for posterity. (Warning – this is not for the faint of heart.) To wit:

(Chart Source)

I have notated the above chart so it pretty much speaks for itself using one of Clint Eastwood’s best for its theme. Here’s an abbreviated version of the reasoning behind it that I discussed with my colleague earlier…

We started talking and another question was to what I thought was behind today’s move back up. My answer was “Bernie Sanders.”

What people forget is the market sold off from an opening of up over 3.5% to then close the day lower and go even lower in the early overnight session, till then suddenly we bottomed and up we went into the AM session and carried then further. What happened to cause this?

All conjecture, but let me ask you something: Today was one of the worst tally days for anything concerning the virus. i.e., worst global count, worst death count, NY higher, other countries higher still. And the markets go higher? When have we seen this before? Hint: Rhymes with Sanders losing.

Tuesday night there was still the possibility (Wisconsin election) that Mr. Sanders could cause havoc, but he lost. The overnights reversed on just that news. Next: Mr. Sanders officially dropped out, today, right before noon time. Market response? Came of the lows and rose all remaining session.

Coincidence? Could be, but it makes a pretty good case to side more on the causation aspect for odds rather than correlation. But that no longer matters for further considerations anymore. i.e. Mr. Sanders has now vacated the stage.

However, if you look at the chart above, at what level did the S&P™ close at? Hint: is 2749.98 close enough to 2750 I’ve been banging my keyboard about as a very important level?

The issue now is since we’re here once again (i.e., there’s a meaning inside there) the only question now is: Where to from here?

From my analysis the chart above tells one all they need to know about my thinking. And I’ll say it once again – it ain’t for the faint of heart.

The above chart is represented via monthly bars/candles. I am of the opinion that we will be lucky if we only visit the “good” area over the next weeks to month. I believe we have a very high degree of possibility that we visit the area marked “Bad” between now and November of this year. The odds of touching the “Ugly” area is of right now very low, but if we get to the “Bad” and the “markets” seem to be expressing more panic than what we’ve already seen? Then that lower area moves up from low possibility to high probability very, very, very (did I say very?) fast.

None of the above is in any way to be taken as some foregone conclusion. However, the levels and lines are the most basic and line up when I use a myriad of other analysis tools to find overlapping dynamics and more for where they occur and try to see if they fit the most rudimentary and easily recognizable junctures. The issue that made even myself blink twice at the results was they were doing just that. And that’s why I’m putting it up.

You’ll really need to listen to tomorrow’s show where I can articulate my viewpoint a bit better. But this is the reason why I said earlier “I’m going to stop discussing market moves the way I have been going forward, because there isn’t going to be anything good to say going forward, regardless if the market has even more record up days or not. Period. The reason?

The psychological damage about what used to be this thing called “markets” has already been badly damaged and will last for who knows how long, maybe generations. Again, that’s not being hyperbolic. I mean it.

If we only get back down to where we were, which is just below the bottom from a few weeks ago, that alone will be more than enough to solidify my premise. Any lower?

We’ll talk about that tomorrow.

© 2020 Mark St.Cyr