Financial topics

[aeden]

Execution date 04/06/2018 01:56:50 p.m.
short book 4 closed 1/3 in it
Account type CASH
closed 3 to minutes early

[Higgenbotham]

> Technically, most investors who follow the Dow Theory are still
> long the stock market. The same goes for technicians who use the
> S&P 500 Index 200-day moving average as a buy-sell level. On
> Friday, the S&P 500 closed just 3 points above its 200-day moving
> average of 2583, and just 5 points above its early-February low of
> 2581 (top of this page).

> It would be a mistake to ignore these looming technical
> sell-signals for a very simple reason: many traders, investors,
> and speculators follow these signals, and then act upon them when
> the signals are triggered. All it will take is one more day of
> moderate declines for several technical systems to reverse from
> bullish to bearish. And when that happens, considerable selling
> will develop from market-timers.

The Random Analyst quote supports the scenario I was describing last
week. The market peaked on September 3, 1929, and then started
falling gradually and continually, until there was a sharp panic on
October 28. The "one more day of moderate declines" could conceivably
be the trigger -- not for a crash, but for a panic.

The only differences between a "correction" and a "panic" are the size
of the fall and the public reaction. (Compare the public reaction to
last month's school shooting in Florida, versus other school
shootings. Saturday's march is the stuff of a panic.)

Random Analyst threw in the towel this week, saying the most probable time for a crash has passed.

I am beginning to consider another scenario that nobody else I know of has considered. Typically the stock market doesn't blow off parabolically to this extent, is the best way I can think of to say this. If the extreme parabolic blowoff of January is ignored and the chart is looked at, say, beginning in March, with the high at March 13, then the typical 6 week time window for a crash can still be considered open. I don't consider that scenario high probability but I am open to using bootstrapping as a tool to try to take advantage of it if it materializes.

[aeden]

I will stick to the July window as it drains down, then what we already noted. Decades the educated would even pretend to offer a point to even their own grandchildren. We understand why.

[Higgenbotham]

[Higgenbotham]

[Higgenbotham]

Now it's time to pull Strauss and Howe off the shelf.

Page 272.

"Based on recent Unraveling-era trends, the following circa-2005 scenarios might seem plausible:"

Page 273.

"An impasse over the federal budget reaches a stalemate. The president and Congress both refuse to back down, triggering a near-total government shutdown. The president declares emergency powers. Congress rescinds his authority. Dollar and bond prices plummet. The president threatens to stop Social Security checks. Congress refuses to raise the debt ceiling. Default looms. Wall Street panics."

Now let's rewrite this to fit today's news.

An impasse over China's decades of unfair trade practices and theft of intellectual property reaches a stalemate. The US and Chinese both refuse to back down, initially triggering an escalating tit for tat trade war. The Chinese threaten to dump their US Treasuries and use gold as their reserves. The president states that all US responses are on the table, including military action. Dollar and bond prices plummet. Default looms. Wall Street panics.

[Higgenbotham]

I don't think the above scenario or anything like it is imminent, as in next week. Rereading Strauss and Howe's scenarios were a reminder to me of what a Fourth Turning is going to look like when it reignites. Certainly many of them were possible, even probable, before now.

I called my broker this afternoon and told him about how I am bootstrapping my account. He decided to put me on day trading margins so I can carry on with the e-mini S&P, which requires $6,380 initial margin.

I didn't ask him to. That's an indication to me that the industry doesn't feel extremely risk averse.

[John]

> I don't think the above scenario or anything like it is imminent,
> as in next week. Rereading Strauss and Howe's scenarios were a
> reminder to me of what a Fourth Turning is going to look like when
> it reignites. Certainly many of them were possible, even probable,
> before now.

> I called my broker this afternoon and told him about how I am
> bootstrapping my account. He decided to put me on day trading
> margins so I can carry on with the e-mini S&P, which requires
> $6,380 initial margin.

> I didn't ask him to. That's an indication to me that the industry
> doesn't feel extremely risk averse.

Continuing with the theme that I've been discussing for the last few
weeks, the market has been in wild swings the last few weeks, down 572
today. As I wrote a couple of weeks ago, since the market peaked on
January 26, the market has been following a similar pattern to the
period prior to the 1929 panic.

The S&P 500 price/earnings ratio this morning was 25.04.

http://www.wsj.com/mdc/public/page/2_30 ... dc_h_usshl

The earnings period is going to start in earnest this week. The
expectations are an astronomical earnings increase. If those
astronomical expectations are not met, that could be the trigger.

One theory is that the October 28, 1929, panic occurred because
earnings were below expectations. If we want to guess at when
there might be a panic this year, it would be on April 28, 2018.

[Higgenbotham]

That reminds me of something I read a couple months ago. In speculating on why the market cracked when it did, It was mentioned that there is a stock buyback moratorium around the time a company reports.

Under SEC rules, companies can't buy back any of their shares during the roughly five-week period which ends two days after the company's results are released.

https://www.cnbc.com/2017/02/23/one-way ... eriod.html

As to why that is important now in particular,

But now, courtesy of Goldman Sachs, we know where the tax cut is really going. Surprise! It’s paying for stock repurchases by corporations, as Corporate America despairs of investing in much other than dividing the pie provided by near-record profitability into fewer and larger pieces.

Buyback announcements are up 22% this year to $67 billion in just six weeks, Goldman said in a note to clients.

https://www.marketwatch.com/story/now-w ... 2018-02-22

[Higgenbotham]

I noticed something else of interest this week.

After I made a deposit into my bank account in August, I got a letter from the bank saying I would get paid a bonus if the funds stayed in there for a certain length of time. The letter said to go to the branch in the future to inquire as to whether the offer is still in effect.

This week I took the letter into the branch to inquire if the deposit program was still in effect. It wasn't. They made a big to-do and scheduled an appointment with a personal banker, just for him to tell me the offer is no longer. Then he went over to the next office and brought the guy in who is with the bank's stock brokerage. Before I could leave, I had to listen to a high pressure sales pitch to open a stock brokerage account where he basically TOLD me 3 times that he was going to open an account for me.

Prima Facie evidence of where the Sheeple's money is being steered versus where it wasn't being steered in August when a massive stock market runup was forthcoming.