Yes. Market dropped like a free-falling safe Wednesday. And yes, we had a nice 4-digit pop in the Lunch Money account.
But this is a move we have been talking about for a long time. For example:
“Early futures were (predictably) up because the real close Monday was down. No one seems to know which way this is going to break. Except, our charts reveal that a couple of key trend channels have been broken and in our view, a rerun of the 2018 Slaughter of the Elves over Christmas could be coming.”
To put it simply, if you want to know the future, try reading our past, right?
Sucking it Up: The 1929 Problem
I guess we can begin with a visual comparison of the 1929 lead-in and present market events in a nice graphical way:
Maybe you didn’t have the fascination with the rhyming aspects of cyclical economics that haunted me in my undergrad work and followed me through the MBA and then on to this site. But, if you had, you might have developed an eye for the visual rhyming that has taken place.
It’s very Zen (koan-like): In long wave economics, “Every Time is Different, but Every Time is the Same.”
America is, I think destructively, too focused on “silver bullets.” The Lone Ranger IRL doesn’t exist. Problems are multivariates (probably, so’s G_d, but that’s a longer-ish discussion). For now, let’s mov to…
DCBT (Dead Cat Bounce Thursday)
It’s an old axiom in Technical Analysis that “Markets climb a Wall of Worry.” And to the Cult of Charts, it’s well described that Rallies take extremely roughly about twice as long to play out as declines.
My consigliere and I were talking about this Wednesday and he sagely dropped that “corrections don’t happen in a single day.” And of course, we agreed on this point.
Let me help you with what to expect, if you’re interested?
IF (and not financial advice, just observations) the TOP of the market is really in now, THEN the following data from 1929 may be useful in understanding the short-term future.
We can calculate that from the top the first two days after the 1929 top fell by 2.99 percent. In the real-time, the S&P was down 2.95 percent Wednesday so for us, this is a “close enough.”
While our “double-precision thinking” notices that our Aggregate Index only dropped 1.815 percent, sure, we could go down a bit more today (one percent, say). But since other measures (like the Russell) were down more than 4 percent, this decline IS worth watching.
The 1929 data is by no means specifically predictive – this is a much different world! But, we do have to note that if we had two small days of rally into the weekend – and if the Santa Rally fails to materialize next week, THEN we might look to a massive decline into year end and then A HUGE cratering in January – February. An idealized (initial) low might come around February 9th next year.
So, how band MIGHT it be? Oh, lordy. The decline to the first major bottom was (381.17 down to 232.13 in early November 1929) was 39 percent. Or, to put it another way, it would be like the S&P falling – between now and Presidents Day next year- from the high close last week (6,090 ish) to a lousy 3,708 next year.
Obviously, one who had some inkling what they were doing (oh, and history evolved like we’re laying out as possible – yet unlikely) could buy bushel baskets of put options which could soar into five or even six figures each.
We need to be clear, this is highly speculative and is the same as gambling. People who don’t aren’t already nicely into six-figures net worth (or above) shouldn’t even think about the kind of $5,000-$10,000 bets involved. You’re likely to lose. No whiners allowed. Big boy pants mandatory.
But the hell of it (with major market peaks) is that you have to “be in it to win it” and while the BCN’s advice to “never hold a losing position” is always true, it’s also true that no one held out a flag, waved it Tuesday, and said “Buy short here” ahead of the Fed move.
With the Punch Bowl now taken away, the long shore strike resumption, the death of the demo-packed BS Budget called out my Musk and Vance this week, change is most certainly in the air.
But around here, there’s a (weak, don’t believe us!) case for a good stiff decline that could “let 40 percent of the air” out of this market before I turn 76.
Which may explain why Warren Buffett has been raising cash, why we have doggedly held a sizable short position, and why the market going up today and tomorrow, but a fizzling Santa rally would be about the least surprising future outcome of all.
Well, except for the U.S. attacking Iran in support of Israel before New Years, but that last-minute press into WW III is a whole other kettle of fish.
More, obviously, on the Peoplenomics.com website and this weekend’s ChartPack.
Economic Scratchpad
GDP is just out. Just remember, the real value of which gets messy because GDP is denominated in “squishy bucks” and the Bureau of Biden Apologists states everything they can in relativistic percentage-based gobbledygook. Like this:
“Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the third quarter of 2024, according to the “third” estimate. In the second quarter, real GDP increased 3.0 percent. The increase in the third quarter primarily reflected increases in consumer spending, exports, business investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
And they do a chart – but no dollar numbers:
Might we off some real numbers?
Meanwhile, we were expecting new UI filings to pop since the drop of 355-thousand in the household employment figures for last month: But, we were wrong:
And the beat goes on.
Train Wrecks at the Roadside
While we await an Israeli strike on Iranian nuke plants, there’s the matter of Syria. Turkey’s FM rejects Trump claim of Ankara ‘takeover’ in Syria. Of course, anyone who’s map-literate can see Israel plans to old the south coast (boxing in Lebanon) while Turkey wants the north and the whole thing is a lit fuse going into Hanukkah which coincides with Christmas this year. Meantime, is this related? Like, you know, a warm up? Israeli airstrikes target Yemen’s Houthi rebel capital of Sanaa.
Peace in Ukraine could be coming – and with it, problems for the American Arms industry: Putin Says He’s Ready to Talk With Trump ‘Anytime’ About Ukraine Peace Deal.
Do we sense a little lefty bashing of RFK and California Gruesome has imposed a state of Bird Flu Emergency? Bird flu is getting serious as Trump’s quacks flock to Washington, (We’ll take RFK, jr. any time, since he’s willing to err on the “first do no harm” side. Which has gone missing in the Spay, Neuter, homeless, and broke state.)
Pissing away Tax Money seems to be slowing: Republicans scrap spending bill, under pressure from Trump and Musk. Hoo-rah. Now the problem for the right rational is how to get rid of RINO Mike: RINO Mike Johnson Omnibus bill would have given congress a 40% pay hike AND would jail you if you posted AI images for two years!
Mike Benz does Roto-Reuters: Where’s Our $300 Million? – Issues & Insights wants to know about all that money to buy media coverage.
And up North, the damning of TruDope continues as Canadian Freedom Convoy organizer Tamara Lich testifies before European Parliament.
Around the Ranch: Our Next Ikigai
If you don’t know what “ikigai” is, there are two videos to watch. Because they answer the “Where do you get all your energy from?” question.
There are a couple of ways to approach ikigai. One is the “soft way” with a TEDx talk: While the other is with IKIGAI | A Japanese Philosophy for Finding Purpose.
Essentially, you draw four circles (mission, passion, profession, and vocation) and then see where it all overlaps.
When everything is overlapped (and the more, the better) then you get into an almost instant state of “flow.”
The problem that ADHD people like me (and my offspring) have, is that ikigai can change over time.
When we moved out of the Big City and withdrew from the corporate rat race (even though we were winning) it was because the “fun” seemed easier to find out here in the woods. I wanted to be a writer. Now, having written at a brutal pace for 25-years (and what will be 14-books), it’s time for a New thing.
Working away on my next book (Downscaling) it’s clear that I will eventually run out of useful economic observations to make and ideas to share. When it comes, it will lead to a natural path into a “next” highly energizing flow.
I’ve told you about all the personal workstations around here – and they make life really tons ‘o fun, but under the concept of ikigai there’s no real way to “get paid” much from them.
Each has potential to become a business model, though. Handmade models (planes, boats, trains) certain are one angle. A 3D printing and laser-cutting job shop is another. So is the repair of old tube-type shortwave and ham radio gear, that I also enjoy. But wait… there’s more!
Had a nifty new idea pop up recently, and I will be working on that one for the first Peoplenomics report of the new year. Charts only till be get out of the holidays because they fall on our normal in depth article days this year.
But the “new concept” is really pretty neat and should be a lot of fun. It was surprising and that’s the fun part of doing your own ikigai work. It will keep the “forces of life balanced” and that’s the main thing I wanted to pass along this morning.
Off to watch the rally and let’s see how far this “dead cat can bounce.”
Write when you get it all,
Read the full article here
