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The economist and strategist Martin Armstrong has been saying for years that the next financial crisis will be created by an ultra strong Dollar. Apparently many emerging economies have lots of Dollar debt, and as the Dollar goes upwards they have to pay more and more until they reach default. Then a cascade of selling starts as they become desperate to sell anything to repay, so just like the Russian crisis in 1997/8 the problem cascades over into mainstream markets as massive selling hits them. And hedge funds etc get redemptions so they have to raise liquidity – there’s no market for distressed debt so they also have to sell their mainstream investments just to satisfy cash levels.
In the DXY chart long term I see a completed ABC three wave pattern from the lows years ago. Then a possible expanded flat B wave. Now it’s entered wave C upwards which appears to have started with a small five wave advance making wave 1 of C. If so, we should shortly see wave 2 down to perhaps the 94 area after which if the projection is correct the Dollar should start rising with gusto in wave 3 of C.
In Credit Crunch II a lot of wealth will be destroyed.
If I am right we should all know this by mid 2020 and
you’ll remember who gave you the heads up on kpad.Never give up, never surrender.
Update of my Dow chart: In my original chart showing 27500 as a possible target I imagined that the route would be some sort of rising wedge thing. Of course that’s not happening because the latest sharp rise is clearly NOT a three wave sloppy affair but a bullish five wave thing. And looking at the overall picture from the low, the sharp ‘straight up’ nature of the rise also clearly smacks of a five wave structure.
When five wave structures don’t fit logical Fib ratios it’s often the case that the final 5th wave is shortened to 0.382 of waves 1-3 or slightly extended to 0.618 of 1-3. It’s possible that what we are now seeing is a final 5th.
0.618 of 1-3 added to 4 gives a target of 27650, very near to the original 27500 target (and might be due to rounding errors).
I’m not completely convinced and certainly won’t be betting money on this idea, but here’s the chart for information.
If we DO get to 27500/27650 then clearly some important decisions will have to be taken.
Cheers hatman
I will use that Dow chart to help guide me through this maze.
Never give up, never surrender.
Note that the next Fed meeting isn’t until July 31st. So if they make noises today but don’t actually do anything, the market might stall but then start to anticipate better news at the end of July. That time period would be enough for the Dow to form some sort of lazy 4th and 5th waves upwards to the target box.
Otherwise something else is happening.
For today’s FMOC I have four small trades to give
me some fun during the swings.Short Dow 26502 x 2
Long Dow 26499 x 2If I am busy tonight or the moves are not to my liking
then I will close all four together at a quiet time.Never give up, never surrender.
For today’s FMOC I have four small trades to give
me some fun during the swings.Short Dow 26502 x 2
Long Dow 26499 x 2If I am busy tonight or the moves are not to my liking
then I will close all four together at a quiet time.Some 2 way action and enough to net some points.
Never give up, never surrender.
DJT: In Dow Theory, any new highs in the Industrials Indices (Dow, SPX) must be confirmed by the Dow Transportation Index in order to indicate a healthy economy.
If the DJT fails to confirm new highs in DJI and SPX then that is considered divergence failure and a warning that ‘something is not right’.
So here’s the current DJT Index chart. Notice that DJT is still trading 10% below the peak whilst DJI and SPX and close to achieving new highs. This 9%/10% difference between DJT and the others is considered a significant warning under Dow Theory.
Of course the transports index is a different beast compared to when Charles Dow published his theories. But still, perhaps it is still relevant, in which case this is a clear signal of ‘sell or get ready to sell’ DJI and SPX.
Here’s the Bradley chart for 2019. Interestingly the next peak occurs at the end of July, almost to the exact day of the next Fed meeting on July 31st.
It might be a case of ‘better to travel than to arrive’.
Clearly if DJI and SPX are at or near my targets at the end of July that will be a signal for serious consideration.
However these Bradley charts are often complete nonsense. I’ve followed them for many years and I’ll guess the success rate to be 50% or less. Sometimes they are surprisingly accurate, and might be on this occasion. Who knows…
I’m not interested in taking any positions at the moment. However *IF* the Dow and SPX are at my target prices AND that coincides with July 31st, then it will likely be time to may a short play.
June expiry has again had large moves and they may
not be over yet as the rats run about the ship.Dow 27000 with it’s all eyes big round number may
prove to be a tricky trades as the robots will
want their fuel from too tight a stop traders.SP500 may be fun in the 2960 – 2970 range and
then even 3000 as another all eyes number.It’s been slow and a bit boring so we must have
fun and enjoy these moves.Never give up, never surrender.
For the sp500
The numbers I see had ‘retail short’ which is seen as bullish
but as of this morning ‘retail long’ which is seen as bearish.Never give up, never surrender.
For the sp500
The numbers I see had ‘retail short’ which is seen as bullish
but as of this morning ‘retail long’ which is seen as bearish.I am not sure about the conclusions here because shorts still out
weigh longs 2 – 1 so contrarian to retail would be bullish.I think it has more to do with the gradual shift of retail
from short to long.The retail bears have not thrown in the towel yet.
Never give up, never surrender.
Dow: If my target numbers of 27500 and/or 27650 area correct (they might be pie in the sky of course) then we have to look for wave 3 to peak and then a 4th and eventually a 5th wave.
It would make logical sense for the peak of the 3rd wave to be in the area 0.764 towards the top target area which gives a 3rd wave target area of 26850/26950.
And then a reaction back down to the 0.618 might materialise for wave 4, around 26400/26500.
The Dow hit 26800 last night so it is only 50 points shy of the lower 26850 W3 target and 150 points below the upper 26950 W3 target.
It would make sense to watch for a ‘pop and drop’ into the 26850/26950 area followed by a 4th wave drop to around 26430/26520.
Of course last night’s near touch of 26800 is very close and might mark the top of W3.
DXY: the Dollar Index dropped but remains supported by the 200 day moving average which it has tested four times from above. Once that support breaks I imagine the Dollar will move quite quickly down to the target area around 94. But for the moment it’s a tough cookie at the 200 MA.
Korea KOSPI: the KOSPI is trying to rally in response to the US markets but remains 17% below it’s peak. Like the divergence in DJT, this is another warning that ‘something is not right’ with world markets.
I have been expecting that KOSPI will try for a flat or triangle B wave here, ranging between roughly 2000 and 2250. But interestingly the last drop stopped at exactly the 38.2 area from a C=A target at 1650, so this might be a very bearish chart.
Let’s see what happens to KOSPI between now and July 31st. The signs are negative and *might* be pointing to a sharp correction in US markets after the targets are met at Dow 27500/27650 in late July.
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