I was perusing some blogs yesterday after the market got absolutely spanked on the close. If you forgot we were in a bear market, yesterday’s close ought to disabuse you of that perspective.
I can’t help but think the market broke on the fact that the mainstream news media picked up on the Hunter Biden story. It is still a STFR market. Rallies can happen and they can extend for a bit. But, the bear will come and claw it all back quickly.
Two people I know that are successful traders, but use very different ways to be successful posted some information I think you will find interesting. Both of them use technical analysis and stats to drive their decision-making.
Over at the permabear site, Slope of Hope, Tim Knight posted this video. Tim has premium posts you can subscribe to if you want.
Tim sees doom and gloom on the horizon for the market. It’s easy logic to piece together given our current leadership and also given the ramp-up in government spending and the failure of the Federal Reserve over the last several years to keep interest rates in line with where the economy was.
My friend from the trading floor Yra Harris has a blog. Another friend from the trading floor, Rich Miller, posted a comment there. If you were on the floor you would remember him as RMIL. Rich has a trading service you can subscribe to if you want.
Here is what Rich wrote at Yra’s blog.
Although governments may try to temporarily “rollback the growth in Globalization” it is like trying to pour back 5 gallons of water into a one-liter jar.(use of gallons vs liters intentional) In a world where the largest companies are truly global, Putin is bad for business and for everyone.
The real growth in trade is only just beginning to manifest itself. Individuals are, with the advent of the internet, collaborating in so many ventures that it is truly impossible to stop without shutting down the system that is enabling it. Inexpensive access to education and information is changing the world in ways that no government has the power to stop. The world is becoming more interdependent on trade and that is a good thing, everyone benefits from it. Individuals around the world now communicate and collaborate and trade. Intellectual property trade, research, knowledge, information etc is growing at rates and in ways no government can or should stop. The largest global corporations that build the infrastructure are not going to suddenly stop and tear down what has been built, just the opposite. And it makes life better for everyone on the planet.
So while some may be talking about rolling back globalization, the only ones that will be promoting it are people trying to exploit the current situation for their own gain. Putin will be gone someday, not because a bunch of politicians are going to to anything, but because he is bad for business in a Global economy.
Rich cites this academic study to support what he asserts
As humans, we are hard-wired to understand fear. Fight or flight has sustained and preserved human life for generations. That’s why bearish logic is so easy to latch onto. It’s harder to be an optimist which is what Rich offers up in his post.
Both of them make good logical cases. Which one is correct?
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Regarding globalization, see my post Coupling:
https://chicagoboyz.net/archives/58361.html
Given the fact that the market has been pounding higher for the last week and a half or so, after rather effortlessly holding a technical zone, I don't understand "sell the rally".
And yesterday's selloff was weak, as is today's so far. If a 1.5% pullback in the context of a strong bull trend higher is the start of the next bear market, then maybe I'm missing something.
But, yeah, sellers may wind up from here and the pooch gets screwed.
Thanks as always for your take.