December 11, 2022
“What has been will be again. 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, or fame, give me the truth.” Henry David Thoreau
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Answering The $Billion Question
The Opportunity of a Lifetime
92 Years Of McClellan Summation History
Tipping Point for the Ages
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Tracking Account Value: 3,673,647
Primary Bear Market
Intermediate-Term: ~ Downtrend
LOLR Trend: ~ Downtrend
Tracking Account: 31% UVIX, 18% TZA, 22% SPXU, 15% SQQQ, 14% Cash
Stop UVIX 5.78, SPXU 13.88, SQQQ 40.38, TZA 28.08
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Friday: 4:00:
Daily LOLR STS
Down Down Down
2/5 0/7 0/7
Breadth: -1300/-1200
NYMO: -37 Falling/NYSI Falling
NAMO: -21 Falling/NASI Falling
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Markets trend. Trends produce price.
Like the tide, TRENDS are NOT reversed by the news of the minute, day, or hour. Prices may ripple like waves – but the TREND ignores the dips and swells and carries the price to its high and low water marks.
When one listens to financial news via the internet, radio, or television, one hears pundits as they pontificate that the future course for stock prices will depend on this factor or that one. They speak of “seasonal strength” and Santa Claus rallies and remain oblivious to the TREND.
If one were to believe the reporters and pundits, it’s all random. “If this happens, markets will do this.” “If that happens, markets will pivot.”
Listeners nod appreciably as if they now understand what lies ahead for prices. “Sounds good. Makes sense to me.”
But the fact is that the TREND controls prices. Events will provide shape and color to the trend, producing daily or hourly whitecaps and breakers like the ocean.
Ultimately, though, the price is driven to its shoreline by the TREND.
Our goal today is to be very clear in defining those overall trends that control every market and this one in particular.
Next week we will discuss the TRUTH about what drives those TRENDS, namely human emotions:
As an exercise, we suggest that the reader review the above and answer this question:
“Where on that continuum are we NOW?”
Please understand what we are saying. Indeed there is a connection between unfolding monetary, interest rate, profit, geopolitical, and other developing factors– and prices.
However, human emotions produce the TREND. Those emotions oscillate over time- like a pendulum. They swing to one extreme, reverse, turn to the other, and return.
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A. Secular Trend
The following Dow Jones Industrial Average levels display eight Secular Trends since 1925:
We understand the secular trend by tracking the following metrics:
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When the monthly MACD is in an uptrend, the market is in a Secular Bull Market
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When the monthly MACD is in a downtrend, the market is in a Secular Bear Market
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When the 6.57-month moving average (200 Day MA) is above its prior low, this is a Secular Bull Market
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When the 6.57-month moving average (200 DMA) is below its previous peak, this is a Secular Bear Market
While the above is NOT intended to be absolute, it allows us to understand at a glance what the Secular Trend is at any given time.
Currently, that Secular Trend is a Secular Bear Market.
For any who wish further proof, we ask them to ask themselves this question:
“Can I point to ANY time while I’ve been alive on this Earth that markets produced the level of speculation we just witnessed in 2017 through 2021?”
No matter the reader’s age, the answer is a resounding “NO!”
(Reference: Answering The $Billion Question)
Why was this top different from each one we’ve witnessed before? Because we have all just lived through the top of a Secular Bull Market and have entered a Secular Bear Market.
Full stop.
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B. Primary (AKA Cyclical) Trend
Rather than recreate the wheel today, we have “lifted” the following from June 5, our 2022 article entitled:
Anatomy of A Bear Market
“This week, we will devote this article to an overview of these basics regarding a Primary Market TREND:
We’ll start by examining two recent complete Bear Market Cycles:
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The 2000-2002 Bear Market Cycle
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The 2007-2009 Bear Market Cycle
What does an entire Bear Market Cycle “look like?”
The 2000-2002 Cycle via daily charts:”
The 2007-2009 cycle via daily charts:
SPX entered a Primary Bear on January 4, 2022. The following price movement has transpired since January- as the Bear is just getting started:
By the time it has run its course, this Primary Bear Market will “look like” those examples from 2000 and 2007 in form and shape.
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C. The Intermediate-Term Trend:
The Intermediate-Term Trend just this week produced these decisive and conclusive new downtrend signals as laid out on December 6 in our “Let Me Count The Ways” Article:
As of TODAY:
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NYMO is now negative
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NYSI (NYSE Summation Index) is Declining
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The NYMO Daily Sentinel produced a Sell Signal
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NAMO is negative
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NASI (NASDAQ Summation Index) is Declining
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The NAMO Daily Sentinel had a Sell Signal
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The LOLR Sentinels made a Downtrend Signal
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(The Daily Sentinels produced a Downtrend Signal the day following the December 6 article)
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