Interim Market Update Sept 17, 2022

[harryg]

{...} GBPUSD awesome right now.

My thoughts anyway

GBPUSD this year is an eye opener / eye waterer depending on outlook. Wish I was still trading futures for that one. Indirect effect is considerable if GBP* is your home currency - the slump this year makes my share positions look less cr*p (if I choose to look at it that way).

For younger peeps who don't know, this currency pair is referred to as 'cable', because information used to be transmitted from US to UK & vice versa via an undersea cable (true).


*Or EUR - EUR/USD more or less parity...

[jonnyfrank]

I don't know if buying into the "one last rally" pump is the thing to do. Next week could be even more miserable than this. I went against the newsletter and shorted a while back as a hedge, and thank God I did. Shorting the market makes sense sometimes.

[Yodean]

So with the dollar being "king", which investments do you suggest one takes a long hard look at? You know, investments that do well in such a dollar king environment?

If dollar breaks 114 to the upside definitively and confirms, the path of least resistance is to 120. Hopefully recent break of 112 to the upside is a bit of a blow-off interim top (buying climax), and USD consolidates below somewhat.

We're going through today what feels like a bit of a selling climax in terms of equities ... running the stops of most traders who set their stops below the recent June lows.

The problem is that there may be more than one selling climax.

More to your question:

-this is just a rough guideline of my base case scenario: capital flows to USD, then things improve a bit, more capital flow to gold, U.S. large caps (e.g. tech titans), then to long U.S. bonds and silver, then some select U.S. midcaps, etc. something along those lines ...

[MarkD]

Be assured, any rally will not appear like past experience, a good reason to feel comfort in Sol's advice, "..leave the party early...".

PMI was below 50 today but the manufacturing segment was still above at 51.8.

https://www.marketwatch.com/story/u-s-e ... ewer_click

The rental vacancy rate in the USA is looking strong as well.

https://fred.stlouisfed.org/series/RRVRUSQ156Nm.

Regions vary as one would expect, particularly interesting is Tennessee where I currently reside. Tons of multifamily high rise have been (possibly over) built. But single family is still fine atm, at least in the SE and Midwest where I reside and have lots of colleagues. One house in our neighborhood sold in four days. Another which is nearly a copy of our house sold for a ridiculous amount the week before. We purchased two years ago. Appreciation in Nashville is nuts. It won't last but as long as Cali/NY/Illini exists in their present form things are going up around here.

https://ipropertymanagement.com/researc ... cancy-rate

Unemployment is low also. Like there aren't enough of us to be impacted by the ST drop in activity as most folks are tired and need a day off in many industries.

With all the bad news a spark will set a roaring blaze in the markets.

At this juncture my suspicion is the ST top will possibly be impacted by probable Fed rate hikes/dot plots and election results. Markets may hiccup before or after both events.

If it's geopolitical your guess is as good as Zelensky's...but I believe the labor shortage will be solved by immigration (legal or not). And the impact on Main Street may not be as severe as Wall Street. I still get occasional inquiries to see if I want to work.

Things are slowing but to me it means Sol is correct and the IT/LT are going to be more than just fine. A bit like '94 before the dotcom boom began.

https://imgur.com/YgWQw59

[jonnyfrank]

"Blaze" as in the markets will burn down and lose or blaze as in shoot up?

[chippermon]

"Blaze" as in the markets will burn down and lose or blaze as in shoot up?

Or Blaze as in smoking a huge blunt and getting HIGH

[MarkD]

Up. May be an interim top as Sol projects as the Fed is trying to maintain the dollar as the world's reserve currency by hiking into stratosphere.

With respect to the dollar a couple of comments.

1. Other folks I follow and trust don't believe a commodity backed currency is acceptable to the broader world community. This is due to the inherent volatility in commodity pricing which could gyrate wildly.

2. So yesterday I ran across a couple of interesting articles which may or may not be true but would confirm even Russia, China, etc, understand the risk of commodity reserve currencies.

https://newspunch.com/russia-signs-draf ... nal-trade/

[Eric]

So if governments start settling international payments in BTC what is that going to do to the price of bitcoin?

Then I found this article.... GBTC holds 3.12% of all bitcoin and it's trading at a 35% discount to it's NAV...

https://cointelegraph.com/news/the-bigg ... -btc-price

I have avoided crypto like the plague save for buying GBTC a year and a half ago(?) when it was an official TI play (not sure what service though).

[Do-or-Die]

Up. May be an interim top as Sol projects as the Fed is trying to maintain the dollar as the world's reserve currency by hiking into stratosphere.

With respect to the dollar a couple of comments.

1. Other folks I follow and trust don't believe a commodity backed currency is acceptable to the broader world community. This is due to the inherent volatility in commodity pricing which could gyrate wildly.

2. So yesterday I ran across a couple of interesting articles which may or may not be true but would confirm even Russia, China, etc, understand the risk of commodity reserve currencies.

https://newspunch.com/russia-signs-draf ... nal-trade/

One thing is true at least for the masses, life is a bitch and then you die, but if you are not part of the crowd, life could be a hot babe or hot guy (depending on your disposition) and then you could _______ you know what


As for commodity currencies, i think a solution would be to use a basket of currencies instead of relying on the USD, A synthetic global unit.

[Yodean]

[LoriPrecisely]

Up. May be an interim top as Sol projects as the Fed is trying to maintain the dollar as the world's reserve currency by hiking into stratosphere.

With respect to the dollar a couple of comments.

1. Other folks I follow and trust don't believe a commodity backed currency is acceptable to the broader world community. This is due to the inherent volatility in commodity pricing which could gyrate wildly.

2. So yesterday I ran across a couple of interesting articles which may or may not be true but would confirm even Russia, China, etc, understand the risk of commodity reserve currencies.

https://newspunch.com/russia-signs-draf ... nal-trade/

There is no doubt we will, eventually, be ALL digital currency. We are 90% there already.
My phone has a "Samsung Blockchain Keystore".

[jonnyfrank]

So much for the "leg up", or so it seems, lol. Dow 20,000, here we come.

[Yodean]

So much for the "leg up", or so it seems, lol. Dow 20,000, here we come.

It's coming, but there will be a lot of fake breakouts and breakdowns in both directions. Best to be nimble, keep some powder dry.

Retail investors seem to be still buying a bit, and not selling too much or going short. The true bottom won't be in until there are no more sellers.

However, the countertrend rallying into a sideways consolidation range can start any tme ... best to keep an open mind.

All my crystal balls have been broken, even the titanium ones, but one thing I do know - the equity markets aren't going anywhere. Reverse repo. market at 2.36 trillion USD - aths.

All that money is going to go back into the markets at some point ...

[djanderle]

Bullish sentiment 14
Neutral 23
Bearish 63

Based on the above sentiment readings and the short-term technical picture, the markets are primed for a relief rally. Any small positive news should serve as a trigger for a powerful rally. Note that TLT rallied yesterday.

All indices look to either "Make it" or Break it" by the end of this week.

[SOL]

So much for the "leg up", or so it seems, lol. Dow 20,000, here we come.

Looking at 1973 to 1974, though the market bottomed earlier in 1973, it rallied until Nov before topping out and taking its earlier lows. History does not repeat itself, but it tends to rhyme. September is also viewed as one of the worst months of the year, and given the set of developments this year (especially in the last 6 weeks), everyone might be focussing on that issue and holding their power dry. The Dow could in theory, rally several thousand points in less than 15 trading days given the huge amount of money waiting to find a home.

All we can say for sure are three things

The short-term trend can be manipulated (as the big players have enough money), and the big players no longer care about hiding their intentions.

The third factor is the most important; the big players don't like losing long term. Hence the long-term view of viewing crashes as opportunities have not changed. Real big players probably make 10X more from bull runs than from shorting the markets. In fact, I think the real big players are no longer short the market with the intent to make a profit. Their focus is to pick up as many of the top-quality stocks as they can pick up for a bargain. Hence they use each pullback to deploy X amount of money as their war chest is so huge that if they deploy it all at once, the markets will melt upwards. Once they have deployed close to 90%, they then deploy the last 10% in one shot creating a mini market melt-up that triggers the money managers and whales to jump in, forming the basis for the next bull run.

Other notes

We thought the manipulation during the COVID crash was bad, but we have never seen anything like this. This means that these guys will become more and more brazen in attacking the short-term lines every time they build up extra cash. These chaps don't believe in buying at the market.

Let's see how the markets fair in the last two trading days of September and the first 1-3 in October. It should provide some indication of what to expect. Up to now, the markets have not crashed on such low sentiment numbers. Will things change? we will see in a few short days