Remember the “Crash Warning”?
Why, it seems like just yesterday morning I was telling you that since Robin Landry put out his “crash warning” based on his proprietary indicators ‘rolling over’ the market could tank any old time, yet it could stretch out another week because next week is options expiration. And then along comes yesterday’s nearly 400-point drop in the Dow. Surprised? Not even slightly…..
Here’s why: I understand bits and pieces of how Landry’s system works. It is specifically not a day trader deal: It’s a longer term system which he’s spent about 30-years developing and fine-tuning. So, when he comes out with a “crash warning” I take it seriously, pass it on, and then sit back and wait.
If you want to look it up, the warning of the current decline was posted here waaaay back on January 14 at 10:50AM. While we were sitting around waiting for the decline to begin I talked to Landry on January 21st:
“Not that yesterday’s turn downward in the market wouldn’t have gotten me on the scent of things anyway. A call to my friend Robin Landry, who runs his stock brokerage from Shawnee, Oklahoma, confirmed my worst fears as he explained to the effect that:
“George, my indicators which are right about 90% of the time are still indicating that we are going much further down from here.
Now, the first target is Dow 7,859. After that we have resistance around 7,561, but those are only stops along the way.
On a 15-minute chart it’s continuing to build the case for a decline to in the best case Dow 6,324, or in the worst case to Dow 4,611. And again, my targets get hit 90% of the time…”
Now here’s the part that tests anyone who has a pretty good system of seeing longer market direction: Waiting around for the expected outcome. That’s where being extremely patient and not chasing a number comes into play.
So, as trading gets under way today, there’s likely to be a bounce at some point (the open maybe since futures are up a tad), but the next tests will be that close under 7,859 – which may be easily done since the Dow penetrated 7,849 yesterday.
After that, the next test ought to be around 7,400, and once that fails, a trip down to the 6,000’s and maybe under that.
Please don’t take me as a pessimist, though. Ups and downs are part of any market. And, once we get down to whatever this bottom is going to be, there’s a fair chance of a barn-burner smoker of a rally which should propel the Dow back up to nearly 10,000….and maybe even above. I’m still throwing darts at how I will play this one: Will I wade into the double Dow tracking fund? Or, stay on the commodity side and buy up oil call options? Gold and silver call options oughta pay off well in the period. Geez…so many ways to make money, I can hardly count them!
Once there, however, and I’m thinking August-ish, then it will be time to ‘load the boat’ on shorts. Reason? If this really is the culmination of the much written-about Super Cycle Peak, then the ultimate target for the Dow would be down to levels not seen since the 1960’s…which would mean down in high 770’s.
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All of which is very, very difficult for me. I’m a Skip Barber/930 personality, perhaps suited to option trading, although I often have lost a big pile by letting ‘too much ride’. Landry, on the other hand is a Lexus driver. Landry’s is more methodical and patient; catching the big moves and not trying to be a ‘noise trader’ – which is a fool’s game at best.
I’ve got a long-held belief that the kind of car a person drives is a pretty good reflection of some aspect of a person’s personality. A figure a manual-shifter (versus an automatic) might be a little more ‘hands-on’. An economy car is thrifty, a luxury car, if owned outright means someone has a couple of dimes, but a lease immediately reveals someone who may be more flash than cash. I used to ask people when I was hiring them “What is your ‘dream car’? And press them a bit for detail, realizing that humans on the inside, as Plato teaches in the Allegory of the Cave, project to the Outer World:
“Socrates begins his presentation by describing a scenario in which what people take to be real would in fact be an illusion. He asks Glaucon to imagine a cave inhabited by prisoners who have been chained and held immobile since childhood: not only are their arms and legs held in place, but their heads are also fixed, compelled to gaze at a wall in front of them. Behind the prisoners is an enormous fire, and between the fire and the prisoners is a raised walkway, along which puppets of various animals, plants and other things are moved. The puppets cast shadows on the wall, and the prisoners watch these shadows. There are also echoes off the wall from the noise produced from the walkway.
Socrates asks if it isn’t reasonable that the prisoners would take the shadows to be real things and the echoes to be real sounds, not just reflections of reality, since they are all they had ever seen. Wouldn’t they praise as clever whoever could best guess which shadow would come next, as someone who understood the nature of the world? And wouldn’t the whole of their society depend on the shadows on the wall? “
A little time reflecting on “What kind of car would you drive if you could drive anything?” and “What kind of House?” “What kind of lifestyle?” “How much exercise; what kind of sport?” “What would you read…?” All these things, when answered honestly, and meditated upon for a while can yield surprising results.
And, since the market can dead-cat-bounce from here and then resume its downward track, or it can go into another maddening series of triangle, we may, or may not, have time for such meditations.
But not too much time! The linguistics from HalfPastHuman.com are showing high immediacy values for “shortages” and when those start projecting out onto the Cave Wall in front of us, there’s bound to be a big panic and hoarding start up.
We’re in a curious time when we can either transform ourselves, or events are going to do it for us.
Balance of Trade
Myth and reality time once again as the government has released the balance of trade report:
“The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total December exports of $133.8 billion and imports of $173.7 billion resulted in a goods and services deficit of $39.9 billion, down from $41.6 billion in November, revised. December exports were $8.5 billion less than November exports of $142.3 billion. December imports were $10.2 billion less than November imports of $183.9 billion.
In December, the goods deficit decreased $1.7 billion from November to $51.6 billion, and the services surplus decreased $0.1 billion to $11.6 billion. Exports of goods decreased $8.3 billion to $88.7 billion, and imports of goods decreased $10.0 billion to $140.3 billion. Exports of services decreased $0.2 billion to $45.1 billion, and imports of services decreased $0.1 billion to $33.4 billion.
OK, no surprise there.
But Wait! Let’s do a little quick math and see what the real story is on trade, reader?
December imports plus exports: $307.5 billion. So, imports (173.7 billion) is 56.49% of the trade pie.
Previous month (corrected) the total was $326.2 billion and imports (183.9 billion) was 56.38% of the trade pie. Hmmm…imports are still getting to be a bigger slice…..
So, while all the “happy-talk” makes the rounds, the facts speak for themselves: The proportion of import is UP, not down. MSM is going to miss this completely…which is why people don’t trust ‘em…with good cause, eh?
But in the inbox this morning was a little email out of the UK that gets me to wondering just how real the trade numbers are…in response to my notes on the Baltic Dry Index:
“when you see BDI number creeping up think on this. I Spoke to a farm transport chap who was busy on a contract to move wheat, big contract for a buyer who only buys 10,000 ton crops at a time off a friendly farmer mate of mine.
Apparently the new game is filling a bulk carrier with a few hundred thousand tons of grain in the UK, ship sails out into international waters, anchors up for a few weeks, then sails straight back in unloading supposedly French grain!
I don’t understand it, but thats whats happening over here
”
And then there’s this note that “PIMCO says world economic crisis faces “Second Wave“.
It just Keeps Getting Better
Just when I thought everything that could be diddled with had been diddled and jiggered, this pops up:
“Have you seen the article in the NY Times on how Rep Ackerman wants to invest state pension funds in these crap banks? Isn’t it enough that they have already destroyed SS and 401K’s? Please cover this, this is insane.”
Of course it’s insane! What’s your point? It’s just another NY grandstanding socialist…I mean democorp…who wants to hijack state autonomy and consolidate everything under the aegis of those central planning geniuses at the federal level!
Why do you think New Hampshire and 9 other states are putting the federal government on notice that “If we didn’t delegate you a specific power, you don’t have it”?
Tanker Accident
While we’ve been watching for ‘maritime markers’ to denote the onset of the next level of crisis/panic transformation slapping to begin, thanks to the navy ship grounding off Hawaii and now this tanker accident/chemical spill off the coast of Dubai, seems just about all the linguistic markers are in place. Fire up the popcorn for chock-a-block full headlines over the coming couple of weeks.
Terror Watch Up
What’s being billed as an unprecedented global terror alert from Interpol is making the rounds this morning. However, when I checked this morning, no chage at the Department of Homeland Security site, there was no change…
They note that the threat in the airline industry is at orange.
Global Uprisings Department
Latest data point is the ‘global rebellion/soft revolution’ meme may be the takeover of a factory in Ukraine by workers.