Interim Update Oct 18, 2022

[SOL]

The update will be sent out in two parts, as I sustained a minor hand injury while in the gym. Overall it's not severe; it makes typing somewhat tedious because it affects the speed. If there are any delays, we will send whatever has been completed, primarily the market analysis portion, and the rest will be sent out later.

Germany might have issues if the pressurisation issue several experts are talking about is real. One of those articles is posted in this forum under the "out of the box thinking " section. In summary, they state that it is tough to get even 50% of the Gas out of the underground storage unit without a constant pressure source.

Key targets still have to be overcome, preferably on a weekly basis, but at the minimum, the following indices need to close above these levels to indicate further upside.

Dow: 30,459 SP500: 3837 Nasdaq: 11244. Weekly closes would be even better.

Remember, short-term analysis can change as external factors and development have an outsized effect on the short-term trend.

Other things to note

Negative sentiment is extremely high both in the corporate and retail sectors. Institutions purchased a record amount of puts close to 10 billion worth just before the markets mounted a strong rally last Thursday.

[LoriPrecisely]

The update will be sent out in two parts, as I sustained a minor hand injury while in the gym. Overall it's not severe; it makes typing somewhat tedious because it affects the speed. If there are any delays, we will send whatever has been completed, primarily the market analysis portion, and the rest will be sent out later.

Germany might have issues if the pressurisation issue several experts are talking about is real. One of those articles is posted in this forum under the "out of the box thinking " section. In summary, they state that it is tough to get even 50% of the Gas out of the underground storage unit without a constant pressure source.

Key targets still have to be overcome, preferably on a weekly basis, but at the minimum, the following indices need to close above these levels to indicate further upside.

Dow: 30,459 SP500: 3837 Nasdaq: 11244. Weekly closes would be even better.

Remember, short-term analysis can change as external factors and development have an outsized effect on the short-term trend.

Other things to note

Negative sentiment is extremely high both in the corporate and retail sectors. Institutions purchased a record amount of puts close to 10 billion worth just before the markets mounted a strong rally last Thursday.

As a fairly new subscriber, as of April of this year, I would like to clarify a few things in the latest update.

On Page 3,
"Two corrections were projected to occur this year. As the duration of the first correction was longer, the second correction is expected to extend into next year. In between, counter-trend rallies are expected."
When I look at the daily chart for the $DJI, $COMPX, and $SPX, I see a continuous downward trend from the beginning of the year until now. I know we had a rally with lower highs in August, but the overall direction is still in a downward trend. Are you stating that the August rally created a divide between two corrections?

On Page 7,
"Bullish readings have been below 20 for several weeks, so the potential for a multi-week rally is above average."
I assume you mean a lower high for this rally also?

On Page 2,
"Too many subscribers falsely assumed they could take on higher risk, and these warnings will help eliminate that issue.
Going forward, if you are a "low-risk trader" and fail to heed these warnings, you should accept responsibility for the consequences."

I don't think it is an issue of risk here. For me personally, it was the continued affirmations of a rally in Sept/Oct timeline that threw me for a loop. I have accepted responsibility for my actions, as I believe we all should.

[Yodean]

I think besides being prepared for different scenarios of what the equity indices might or might not do, it is best to focus on the individual stocks which one is trading.

Many stocks are starting to show divergent behavior vs. the underlying indices.

[AstuteShift]

The more doom and gloom the better the opportunity.

At the end of the day, the market will always recover. Just the big parasites make it seem that reality is impossible when really it’s just a big Ponzi

Keep up with your journaling, that way you can look back and see how you reacted and what actions you take

SOL to his credit, did warn about corrections last year, the dollar rising like 2 years ago and the rise of manipulation.

Investing is a solo act at the end of the day

[DOCLUC]

Investing is a solo act at the end of the day

Chapeaux monsieur Astute
Very true

to SOL: went theough last MU issue
The clear distinction between long and short term views is super clear.
Appreciate

[Yodean]

Investing is a solo act at the end of the day

true, dat ... seems the best trades often come down to this:



Can't be taught, not really ... but can be learned, methinks.

[nicolas]

Investing is a solo act at the end of the day

true, dat ... seems the best trades often come down to this:



Can't be taught, not really ... but can be learned, methinks.

My not-so-long experience with investing in asymmetric setups tells me that's exactly true. Can you think of something more lonely and widely ridiculed than buying coal miners in 2020?

Coal is going away, idiot! It belongs in a museum! It's dirty and it should be illegal to invest in it!

Buying uranium was so mainstream in comparison

The trick is that to reap the rewards, I needed the not-giving-a-f**k resolve to look like a moron for 2 years. Case in point:


Bought WHC in Dec. 2019 at 2.71. After a 70% drawdown, it took two years to break even. Blue arrows indicate profit-taking along the way, still holding a third of the position.

When you're up 4x, it's easy to forget that you were down for a loooong time, down to -70%.

But why didn't you wait for the bottom, dummy? asked Mr. Hindsight.

Oh, sure, I can do that too:


With the benefit of hindsight, it looks like I got in near the bottom (in Dec. 2020), yet it was already up a lot.

But, how do you think it feels to buy something that's up 68% in just 2 months?

It feels like you missed the move and you should have bought it 6 months ago.

The lesson I try to take from these two charts, it's that when you have strong confidence in your thesis, that's grounded in the truths of the physical world and the constants of human behavior (and not some bs narrative du jour), you can be in the hole for 2 years and still quadruple your money in the third year, and you can buy after it's already moved 70% and still hold a future 6-bagger.

Edit: I should add that these 2 are the best performers of my selection. The overall return for the basket is around 90%, which I'm already very happy with considering this is a long-term trend (like 10 years) that I intend to ride and trade around.

[jlhooter]

Nicolas that was very helpful. Very eye opening that if you are in for the looong haul then you realize todays poor market is an opportunity to latch onto now for the future.

[Yodean]

The lesson I try to take from these two charts, it's that when you have strong confidence in your thesis, that's grounded in the truths of the physical world and the constants of human behavior (and not some bs narrative du jour), you can be in the hole for 2 years and still quadruple your money in the third year, and you can buy after it's already moved 70% and still hold a future 6-bagger.

Sounds simple and clear, but much tougher to do in real time, I would wager. I'm sure you prolly had some challenging moments when you were looking at your portfolio.

Truly an epic example of the Diamond-Handed.

[AstuteShift]

When SOL recommended to buy the dollar, I loaded up on UUP leaps.

If you can handle the volatility and stomach the pain then you can reek the rewards

In a way, I love the pain, since it’s not real, it makes you mentally tougher. It’s 4th way training LoL

After a while, you get bored. I do enjoy the drama of the cannon fodder tho but it’s infectious

The anti venom is not giving a fuck and living. The entire system is a joke so just laugh and run like a bandit haha

[scott]

When SOL recommended to buy the dollar, I loaded up on UUP leaps.

If you can handle the volatility and stomach the pain then you can reek the rewards

In a way, I love the pain, since it’s not real, it makes you mentally tougher. It’s 4th way training LoL

After a while, you get bored. I do enjoy the drama of the cannon fodder tho but it’s infectious

The anti venom is not giving a fuck and living. The entire system is a joke so just laugh and run like a bandit haha

"Positive stress", hormesis, works on mind and body. In the stock market, and in the gym.

[gnosis12]

When SOL recommended to buy the dollar, I loaded up on UUP leaps.

If you can handle the volatility and stomach the pain then you can reek the rewards

In a way, I love the pain, since it’s not real, it makes you mentally tougher. It’s 4th way training LoL

After a while, you get bored. I do enjoy the drama of the cannon fodder tho but it’s infectious

The anti venom is not giving a fuck and living. The entire system is a joke so just laugh and run like a bandit haha

"Positive stress", hormesis, works on mind and body. In the stock market, and in the gym.

@Astuteshift , seems like you have grasped the main concepts of MP very well and I would have to agree with your assessment, though while you are in the storm it's not always easy to envision the sunshine that will follow.

Scott you are man of few words but the message is almost always loud and clear. What's a good gun for a novice to purchase.

[scott]

When SOL recommended to buy the dollar, I loaded up on UUP leaps.

If you can handle the volatility and stomach the pain then you can reek the rewards

In a way, I love the pain, since it’s not real, it makes you mentally tougher. It’s 4th way training LoL

After a while, you get bored. I do enjoy the drama of the cannon fodder tho but it’s infectious

The anti venom is not giving a fuck and living. The entire system is a joke so just laugh and run like a bandit haha

"Positive stress", hormesis, works on mind and body. In the stock market, and in the gym.

@Astuteshift , seems like you have grasped the main concepts of MP very well and I would have to agree with your assessment, though while you are in the storm it's not always easy to envision the sunshine that will follow.

Scott you are man of few words but the message is almost always loud and clear. What's a good gun for a novice to purchase.

Thanks gnosis, about a gun, it depends on intended purpose, what you are allowed to own and other factors. I'll post in the "gun stuff" thread to start. Think Eric would have some good input. You're also welcome to PM me.

A bit more on hormesis.
I think Yodean put it, you need friction to grow. As a doctor, for sure he knows about hormesis.
No pain, no gain.
If it doesn't kill you, it makes you stronger.

Used to be, I thought these truisms were conciliatory, to assuage (losers?) hurt people. Just understanding does not make it a truth for you, its just in your mind. When you internalize it, take it to heart and soul, along with your mind, then its (your) truth.

"...though while you are in the storm it's not always easy to envision the sunshine that will follow."
About that, some more truisms:
Its mind over matter, if you don't mind, it doesn't matter.
This too, shall pass.
Its only important if you think it is.

And not a truism I would like to hear bpcw's thoughts on, since I'm still internalizing.

God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.

Looks like astuteshift appreciates The Fourth Way, as I do, thanks to Sol. I dare say since astute is embracing "the pain", soon he won't feel pain to embrace. Perhaps at the "expense" of being bored, but I say not for long!

[SOL]

Usually, these things would be discussed in the MU, but in keeping with the "simplicity" format, many complex topics will now be omitted, and the focus will be on trends. Sometimes time permitting, those topics will be addressed here.





The above chart suggests that inflation is putting in a multi-decade topping formation.


A subscriber posted this chart in one of the forums. The downtrend line has been breached. Is this a false breakout or the start of a new trend? The main forces behind this significant surge in prices are supply-side factors. If the supply-side issue is addressed, prices will drop dramatically. Thus, we suspect that the breakout to the upside could be false. Remember, though, real inflation based on "hard money" factors has been an issue since the Fed abandoned the Gold Standard.




Supply Chain factors were purported to be massive not too long ago, but the situation is almost back to pre-pandemic levels.



Businesses have difficulty passing on their costs to consumers, so profit margins will be squeezed.


For the Month of August, the BLS reported over 1 million fewer job openings than expected. In July, 11.2 million job openings were reported. this is the most significant decline since April 2020, indicating that wage pressure will decline. Demand is dropping, suggesting that wages could rise at a slower pace, or they could even experience a decline as more and more companies are firing and scaling back on hiring.
https://www.bls.gov/news.release/jolts.nr0.htm

[bpcw]

Just want to say a big thanks for the new format around simplicity, and a clear distinguishing between higher and lower risk categories. Also think the cash level recommendations will be a great help and give clarity as to where we're at in the investing cycles, something I called fora while back.

Great that TI listen to members and make changes where appropriate!