Interim Market Update March 7, 2023

[George1010]

FWIW Martin Armstrong has inked in April 10 as a significant day.

Does he mention what type of event. Are the markets expected to drop?

I have been steadily using rallies to close positions that have turned profitable. I feel a lot better now as I have cash on hand if there is an opportunity and overall my portfolio is faring a lot better this year

MA isn't specific but it is not good.

I currently have a reasonable amount of cash available. In the event of a market shock, I plan to use these funds to purchase some stocks from TI's list, as well as other stocks I'm interested in but prefer to wait for a more favorable entry point.

[SOL]

Sol, you state that silver, palladium have bottomed and copper will surge and also that we will get one more large correction in stocks, plus the dollar will have one more run up before putting in a major top.

Do you think that the above commodities will have one more leg down following the dollar inversely as they usually do, well the PMs anyway or that this relationship could break and we see them go up together. It seems from the updates that you don't make a case for one more leg down as with the stock market?

Just hoping to get a bit more clarity so I can time the commodities better.

Whilst it's feasible that there might be further downside, the patterns appear more stable compared to the equities market. Just consider the tumultuous journey we've experienced in March. Up, down, up, and down, and so forth. Powell virtually declared he would ease off the accelerator; however, after an initial surge, the markets relinquished their gains. We may now witness the Stock markets tumbling down a precipice of favourable news. As for equities, we maintain our long-standing mantra for long-term investors with low to medium risk thresholds: utilise rallies to accumulate cash.

Drawing inspiration from Aesop's Fables (which we believe to be the finest investment guide available, provided one adheres to the common-sense principles), we opt for the approach of the tortoise, as opposed to the hare, which commenced fast but ultimately finished last.

The pattern is more distinct with specific commodities, particularly given their well-defined relationship with the dollar. With commodities, any pullbacks must be viewed through a bullish lens. Gold is holding up remarkably well and could be on the verge of surpassing 2,000.

[bpcw]

Sol, you state that silver, palladium have bottomed and copper will surge and also that we will get one more large correction in stocks, plus the dollar will have one more run up before putting in a major top.

Do you think that the above commodities will have one more leg down following the dollar inversely as they usually do, well the PMs anyway or that this relationship could break and we see them go up together. It seems from the updates that you don't make a case for one more leg down as with the stock market?

Just hoping to get a bit more clarity so I can time the commodities better.

Whilst it's feasible that there might be further downside, the patterns appear more stable compared to the equities market. Just consider the tumultuous journey we've experienced in March. Up, down, up, and down, and so forth. Powell virtually declared he would ease off the accelerator; however, after an initial surge, the markets relinquished their gains. We may now witness the Stock markets tumbling down a precipice of favourable news. As for equities, we maintain our long-standing mantra for long-term investors with low to medium risk thresholds: utilise rallies to accumulate cash.

Drawing inspiration from Aesop's Fables (which we believe to be the finest investment guide available, provided one adheres to the common-sense principles), we opt for the approach of the tortoise, as opposed to the hare, which commenced fast but ultimately finished last.

The pattern is more distinct with specific commodities, particularly given their well-defined relationship with the dollar. With commodities, any pullbacks must be viewed through a bullish lens. Gold is holding up remarkably well and could be on the verge of surpassing 2,000.

Thanks Sol

And to add, I get the message behind Aesop's Fable, however, just as low to medium risk players should be mainly in cash as we expect one more downturn, if we were likely to get a similar action in the commodities then surely the same should apply.

[MarkD]

I monitor a list of 20-30 income and dividend ETFs/CEFs almost daily. Only a few are worthy of consideration on the daily, weekly/monthly are not looking healthy. I did swing LQD for some lunch money while JPow's creative destruction ensues, but as bonds bottom before stocks it looks like Sol's Dow Utility theroy is spot on.

LQD and Corp are investment grade corporate bond funds so it seems they would suggest companies are likely able to pay their debts. JNK and HYG are high yield and don't appear as promising. Junk tends to correlate well with stock prices.

SOFR (replacement for LIBOR) is up this week on the Fed rate increase so momentum to the upside for rates continues.

The good news is that 10 year rates look to have peaked and has been consolidating sideways for months. ST rate look to be going higher. Treasury rate inversion continues.

Update of the bond A/D plus Prings New high indicator for bonds. Note: There are significantly more investment grade corporates in this data than junk (high yield) so it mirrors short term behaviour of LQD and Bond.

https://ibb.co/M5ryf8X

Here's the link to FINRA bond data for anyone who might be interested.

https://finra-markets.morningstar.com/B ... eStats.jsp

[SOL]

And to add, I get the message behind Aesop's Fable, however, just as low to medium risk players should be mainly in cash as we expect one more downturn, if we were likely to get a similar action in the commodities then surely the same should apply.

Certainly, the same applies to commodities, perhaps even more so than equities. Commodities appear to be headed for long-term bull markets.

[MarkD]

Once and if the dollar tops the commodity inflation will take hold but it isn't visible currently on the charts which I follow. Atm, technology has deflated everything. Why would that not continue with AI enhancement?

Here are unlabeled examples I follow (I just don't want to confuse anyone, just observe the trends which are commodity related):

https://ibb.co/C0tHnVc

https://ibb.co/2Frqvfz

Plus the Capacity Utilization Index which cannot stay above 80% in the past 20 or so years. That won't change imo until/unless reshoring of manufacturing occurs at a greater rate than present. Semiconductor plants are the first (ten or so sites are currently under construction) but will eventually be highly automated.

https://ibb.co/R6prRW0

IMO, all of these continue to show that inflation which is "sticky" is unlikely to occur until consensus among the data occurs. And another interesting sight which I just came across,

https://truflation.com/

And when unemployment gets increasing, that is deflationary also.

[SOL]

Once and if the dollar tops the commodity inflation will take hold but it isn't visible currently on the charts which I follow. Atm, technology has deflated everything. Why would that not continue with AI enhancement?

Here are unlabeled examples I follow (I just don't want to confuse anyone, just observe the trends which are commodity related):

https://ibb.co/C0tHnVc

https://ibb.co/2Frqvfz

Plus the Capacity Utilization Index which cannot stay above 80% in the past 20 or so years. That won't change imo until/unless reshoring of manufacturing occurs at a greater rate than present. Semiconductor plants are the first (ten or so sites are currently under construction) but will eventually be highly automated.

https://ibb.co/R6prRW0

IMO, all of these continue to show that inflation which is "sticky" is unlikely to occur until consensus among the data occurs. And another interesting sight which I just came across,

https://truflation.com/

I completely agree with your assessment. What's interesting to note is that unlike previous cycles, there seems to be a shift in the market sentiment regarding the US dollar. It appears that the trend of shunning the USD is gaining momentum, which could have significant implications for various asset classes.

Additionally, with the possibility of the dollar putting in a multi-year top, we can expect certain commodities such as copper, gold, iron, and others to trend upwards. Time will tell

[MarkD]

The real risk imo is overtightening by the Fed. The two year treasury is at 3.76% and the Fedrate is 4.57%. A significant disconnect and why bonds are dumping atm. Jpow truly wants to kill the bull, including the record low unemployment rate, and maybe save the dollar. Just a wait and see situation.

With the USA being independant from foreign energy supplies, improvements in battery / energy storage, and cycles of market behaviour shortening, should we not be prepared for Tech to lead over the next decade as AI rollout increases?

[SOL]

Commodities are just one of the markets we are considering, and we won't allocate all our assets to this class. We have long believed that AI will dominate every aspect of our lives, and we're waiting for one more confirmation that will confirm the replacement of carbon with silicon is all but a given

It seems that we're on the verge of witnessing a significant shift, where humans could lose their apex status as technology continues to advance at an unprecedented pace.

[MarkD]

After our debate yesterday I found this on Twitter which confirms a commodity shortage is likely to contribute to higher inflation in the near term, possible dollar weakness. But LT I believe (trouble with belief systems. I know) it's simply because elites know technology is deflationary. Most of them are, or will pass on, immense wealth. The schema is to influence the little people regarding fear of the unknown and prolong this act. When in reality, the broader public benefits from deflation. And it eliminates their Power

https://ibb.co/mJf68zr

Now the loss of the US dollar as reserve currency is another matter. Plenty of rumbling about that but there's no alternative YET that would allow for huge deficits like the dollar.

https://ibb.co/1T74BBL

So if you follow my line if thinking , what better way to preserve and enhance wealth and disparity than reserve currency weakness veiled in false premises.

Power vs Force.

[SOL]

You provide some interesting food for thought.

However, If countries use their own currencies to trade directly with each other, they wouldn't have to use the US dollar as a middleman. This would make each country more independent in terms of its monetary policy. Just throwing this out there as this concept is gaining traction.

[MarkD]

In general that makes sense. The currency folks believe China, Russia, OPEC, etc, cannot assume the reserve currency role as they run current account surpluses. A reserve currency by default has to absorb the monetary excess. So a barter type vehicle works until someone disagrees with their cut, aka, commodity backed currency and China has a manufacturing base not a commodity one. I can't believe the plan in D.C. is to get them to go at each other's throat.

Oops, I made another assumption.

My guess is they will try this alternative and see if it can remain stable. As we used to say during contract negotiations, "We're not happy 'til you're not happy. "

[Yodean]

FWIW Martin Armstrong has inked in April 10 as a significant day.

Does he mention what type of event. Are the markets expected to drop?

I have been steadily using rallies to close positions that have turned profitable. I feel a lot better now as I have cash on hand if there is an opportunity and overall my portfolio is faring a lot better this year

MA isn't specific but it is not good.

As you know, Budge, I read MA as well and enjoy his perpectives as well as perusing his various arrays created using his A.I. Socrates. Have been doing so for years.

MA is pretty good with really long-term geopolitical/financial forecasts. Kudos to him for this.

Wrt to short-term forecasting, he's pretty much in the "99% accurate, 50% of the time" category - like everyone else, really. The key is to determine if he is in the "50% of the time" period. Of course, the latter is impossible to do.

April 10th, according to his U.S. Dow Jones Weekly Timing Array, is a Panic Cycle. This means that about 70% of the time, around that time, the Dow (on a weekly basis) may go higher _or_ lower than the previous weekly close, _or_ both, during that week (april 10th). In essence, there is a chance that it will make a significant high, _or_ low, that week, or even both. And that's not even accounting for the 30% of the time when the Panic Cycle doesn't quite materialize.

Not exactly that helpful - it's kind of like saying, "yo, i got a crystal ball, and i can tell you that the markets are either going to go up ... or down ... or sideways, then up ... or wait, if the Dow does this, then it could also go sideways, then down ... see, what a genius I am? Yeh, baby ... "

That April 10th date also seems to line up with one of his ECM (economic confidence model) waves ... once again, what exactly this means, one can re-read the previous paragraph.

All that bogus stuff done recently - too detailed to discuss here - Bank Term Lending Program, Fed discount window stuff, plus a few other programs - are injecting liquidity back into the system.

Also, if you count the NDX lows from the October lows when the Jesus Buy Signal was triggered, we're up roughly 20%+, which technically means we're back in a bull market, at least for now.

Selling wave? Pullbacks? There's always a possibility for a selling wave, pullback, or whatever.

There's also the potential for a buying climax, melt-up, or blow-off top, before the crash in '24.

Or not.

Let's keep it simple here ... YTD, the QQQ is up 17.5%, the S&P is up 4%, and the Dow is down 2.5%. Roughly.

Don't fight the tape. Dow will likely play catch-up for a bit, while tech consolidates.

Scared money make no money, yo ...

[Budge]

Does he mention what type of event. Are the markets expected to drop?

I have been steadily using rallies to close positions that have turned profitable. I feel a lot better now as I have cash on hand if there is an opportunity and overall my portfolio is faring a lot better this year

MA isn't specific but it is not good.

As you know, Budge, I read MA as well and enjoy his perpectives as well as perusing his various arrays created using his A.I. Socrates. Have been doing so for years.

MA is pretty good with really long-term geopolitical/financial forecasts. Kudos to him for this.

Wrt to short-term forecasting, he's pretty much in the "99% accurate, 50% of the time" category - like everyone else, really. The key is to determine if he is in the "50% of the time" period. Of course, the latter is impossible to do.

April 10th, according to his U.S. Dow Jones Weekly Timing Array, is a Panic Cycle. This means that about 70% of the time, around that time, the Dow (on a weekly basis) may go higher _or_ lower than the previous weekly close, _or_ both, during that week (april 10th). In essence, there is a chance that it will make a significant high, _or_ low, that week, or even both. And that's not even accounting for the 30% of the time when the Panic Cycle doesn't quite materialize.

Not exactly that helpful - it's kind of like saying, "yo, i got a crystal ball, and i can tell you that the markets are either going to go up ... or down ... or sideways, then up ... or wait, if the Dow does this, then it could also go sideways, then down ... see, what a genius I am? Yeh, baby ... "

That April 10th date also seems to line up with one of his ECM (economic confidence model) waves ... once again, what exactly this means, one can re-read the previous paragraph.

All that bogus stuff done recently - too detailed to discuss here - Bank Term Lending Program, Fed discount window stuff, plus a few other programs - are injecting liquidity back into the system.

Also, if you count the NDX lows from the October lows when the Jesus Buy Signal was triggered, we're up roughly 20%+, which technically means we're back in a bull market, at least for now.

Selling wave? Pullbacks? There's always a possibility for a selling wave, pullback, or whatever.

There's also the potential for a buying climax, melt-up, or blow-off top, before the crash in '24.

Or not.

Let's keep it simple here ... YTD, the QQQ is up 17.5%, the S&P is up 4%, and the Dow is down 2.5%. Roughly.

Don't fight the tape. Dow will likely play catch-up for a bit, while tech consolidates.

Scared money make no money, yo ...

Great points and I love the "99% accurate, 50% of the time". I know exactly what you mean. Sometimes it's only apparent in hindsight but, I guess we don't have long to wait.

[Cinnamon]

anyone get the feeling that standard sentiment measures unless they adjusted for, don't work like they used to work before. For example looking at newspaper or magazine covers could generally be used an a contrarian indicator. But one cover says A and the other says B and i think in doing so the contrarian effect is negated.

What I found very useful, is to pay attention to what the people around me are doing? I find it particularly disturbing that unlike when Trump won, or during the Covid crash, or other sharp pullbacks, these people are not particularly bearish or bullish, implying that something has to give.