Jasper Johns
The art world highly regards Jasper Johns for his groundbreaking painting approach and significant impact on modern art. His work, characterized by familiar symbols such as flags, targets, and numbers, challenges traditional notions of representation and abstraction.
Johns’ innovative technique of incorporating encaustic paint and found materials into his works created a textured, layered effect that blurs the boundaries between painting and sculpture. By transforming everyday symbols into profound and thought-provoking art, he explored themes of perception, identity, and the nature of art itself.
His ability to infuse ordinary imagery with new meaning and influence movements such as Neo-Dada and Pop Art has solidified his reputation as a pivotal figure in contemporary art history.
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“There is nothing new under the sun.” Ecclesiastes 1:9
“What happens today has happened before and will happen again.” Livermore
“Rather than love, money, fame, give me truth.” Henry David Thoreau
“Excesses in one direction will lead to an opposite excess in the other direction.” Robert Farrell
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Tracking Account Valuation January 4, 2022 – $1,206,085
Tracking Account Valuation June 11, 2024- $2,530,710 +110%
Intermediate-Term: ~ Downtrend
LOLR Trend: ~ Downtrend
Positions: 21% VXX, 16% SQQQ, 25% SPXU, 12% TZA, 26% Cash
Hard stops: VIX 9.93, SQQQ 7.03, SPXU 25.45
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4:00: INTRDY Stoch: OB/Rising
Daily LOLR STS
0/7-DT 0/7-DT 4/3-DT
Breadth: -1406/-2821
ADR: 0.33, SPY: -10.11 Neutral
NYMO: -27 Falling Intraday
NAMO: -45 Falling Intraday
The Summation Index is Falling
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The Sahm Rule: A Key Recession Indicator
The Sahm Rule, named after economist Claudia Sahm, is a crucial indicator for forecasting U.S. recessions. Sahm, renowned for her accurate predictions of every recession since 1960, devised this rule to pinpoint economic downturns precisely. The Sahm Rule states that if the unemployment rate, averaged over three months, exceeds its lowest point from the previous year by half a percentage point, the economy has likely entered a recession.
Recent data from Friday’s jobs report supports the Sahm Rule’s criteria. The unemployment rate for July rose from 4.1% to 4.3%, causing the three-month average to surpass the 3.6% average from a year ago. This upward trend in unemployment often signals economic slowdowns, as increased layoffs lead to higher unemployment, reducing consumer spending. The resulting decline in business profits can trigger further layoffs, creating a cycle that typically signals a recession.
The Accuracy of the Sahm Rule
Claudia Sahm designed the Sahm Rule as an early indicator of recessions. The following is a historical breakdown of how the rule’s signals corresponded with the onset of recessions:
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March 1960: Coincident. The U.S. entered a recession in April 1960, shortly after the signal.
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December 1969: Coincident. The recession began in December 1969, aligning closely with the signal.
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November 1973: Coincident. The recession began in November 1973, coinciding with the signal.
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January 1980: Followed. The recession started in January 1980, matching the signal timing.
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August 1981: Coincident. The recession began in July 1981, just before the signal.
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July 1990: Coincident. The recession started in July 1990, coinciding with the signal.
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April 2001: Coincident. The recession began in March 2001, preceding the signal slightly.
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January 2008: Coincident. The recession officially began in December 2007, slightly before the signal.
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March 2020: Coincident. The recession began in February 2020, closely aligning with the signal.
In each instance, the Sahm Rule’s signal coincided with or shortly followed the official onset of a recession, highlighting its reliability as a recession indicator.
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Market Indicators and Defensive Sectors
Recessions and Bear Markets, though, never happen without warning. Stock prices reflect the anticipatory actions of “smart money,” which subtly influences key sectors before broader market trends become apparent. These nuanced shifts, often called “little things,” are early warnings of impending bear markets or economic downturns. Defensive stocks, particularly, signal trouble weeks or months before these trends are widely recognized.
Defensive sectors typically outperform during recessions due to their inherent resilience to economic declines. As money managers detect early signs of financial shifts, they reallocate funds into these defensive sectors, making these movements valuable indicators of broader economic trends. The anticipation of a recession by “smart money” often leads to early moves into defensive sectors, allowing these sectors to outperform before the broader market catches on.
Recent Market Trends
Here’s a closer look at key examples of these sectors. Known for excelling during recessions, they have been signaling in recent weeks, particularly in light of the Sahm Rule trigger on Friday, August 2, 2024:
VIX and VIX Derivatives (e.g., VIXY, UVXY, VXX): Recessions increase market uncertainty, heightening volatility. As fear rises, so does the VIX, making these derivatives an everyday play during uncertain times.
Gold and Precious Metals: Often seen as safe-haven assets, gold and other precious metals tend to hold or increase in value during market turbulence and currency devaluation. They hedge against inflation, currency depreciation, and overall financial instability.
Healthcare: The healthcare sector remains robust regardless of economic conditions since medical care is necessary. Pharmaceutical companies, medical device manufacturers, and healthcare providers perform well during economic downturns.
Utilities: Utilities offer predictable revenue streams and cash flows, providing essential services such as electricity, water, and natural gas. Their services are indispensable, leading to stability even in recessions and providing a haven for institutions that must stay invested.
Alert traders didn’t need to wait for the Sahm Rule to confirm that a recession was approaching. By paying attention to the “little things”—the subtle shifts and early indicators we’ve been discussing over recent weeks—it’s possible to anticipate economic downturns ahead of time. This proactive approach has allowed us to position our trading portfolio advantageously, yielding highly favorable outcomes as the recession is officially recognized this week.
By closely monitoring market nuances and defensive sectors, traders can stay ahead of the curve and capitalize on emerging opportunities, even before broader market awareness sets in.
As we move forward, subscribers can be sure that we will continually strive to bring the market’s trend into sharp focus across all time frames.
We will examine and discuss the overnight futures at 9:15 on Monday morning.
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