Mercury

@TrendFollower, regarding your comments, it seems we now both align to a strong rally on bitcoin and that blockchain is here to stay in some form or the other. I think I may have mentioned in the past that the Institute of Chartered Accountants in England & Wales is studying blockchain as a potentially new accounting method. That is not something that happens everyday, we are still basically using the same method for accounting as devised by the Medici family... My experience of new tech innovations is that early adopters get crushed and launching new things on the back of a "tear down the establishment and democratise the system" never lasts. Eventually the system co opts and adapts the new things. This is why I think Blockchain survives; eMoney becomes a reality but crypto coins die, at least this iteration. Wouldn't it be nice if we could arrive at a situation where there was one single medium of transacting globally? A bitcoin like system adopted by all the worlds governments might do the trick but that is far out in the future for me and will happen only after the system crashes and the political will to change it exists. It is a phoenix scenario I foresee but for the phoenix to rise there has to be ashes. I'm betting on ashes so am keeping cash and precious metals only, trading instead of investing. Check out the interview with Jim Rodgers on Real Vision for his views, he is one of the Market Wizards you cited in the past I think.

Deeper retrace all the way to the Fib 88% (that is getting really common across many markets these days!) and now another test of the upper ST channel line. A break of this line and a test of the overhead resistance zone will be instructive. MY technical set up remains in play with a wave C (pink) already in at the lower consolidation triangle line and a short term 1-2 to set up a strong rally just done. This is a rally that could, based purely on the technical chartist analytics, produce a phase end around about the 22,000 mark (not withstanding any exhaustion spiking). I am Long for the first time on Bitcoin around the wave 2 (blue turn) for a low exposure trade.

Another interesting video interview from RealVision this morning that suggests some things that I have personally thought were the case and based a lot of my fundamentals assessments on. It is about the Repo issue in the US that has made the news of late. The key points I took are as follows: It is a liquidity crisis - lack of liquidity is what I believe will topple the house of cards that is the financial system No one knows why banks are not engaging in the repo market, thereby causing the crisis, but a thought is that they don't want to be exposed to a Bear Sterns type existential risk The banking system was not fixed after the credit crunch - I have believe this to be the case for some years now, it is definitely the case in the Eurozone and Japan. I think it is also the case in China, based on what experts are saying, and I think the US is not in the great shape that is widely commented on. The policy makers don't understand how the Repo system really works - this one is eyeopening! No one is paying attention to this because few understand it If you are looking for a Black Swan then this is surely a great candidate! This summary piece on free section has clips of the main interview if you don't have access. https://www.realvision.com/tv/shows/the-one-thing/videos/repo-madness-theres-always-a-bigger-fish

No one is orchestrating anything, that is the central point. Politicians, business leaders, union leaders, central bankers they are all trying to keep the system going and leverage it for their own benefit. Humans think they can, and ought to be able to, control everything but are too short sighted in the main. They will all fail and everyone will suffer. In a major recession, and particularly in a depression or hyper inflationary environment, it is about how badly one suffers. It is easier for the youth because they have time; it is terrible for the older people. Traditionally people who have "safe" jobs do ok, but if this is an event like no one alive has seen in the West then what is safe? The youth are up in arms but the truth is they should be eager for a major event as it will reset the system, bring prices of critical assets like housing down to affordable levels and the youth have time to recover, little at stake and a chance to effect real systemic change. A shift to uber socialism is exactly the wrong reaction, even if it is understandable. Much better to fix the issues that caused the problems, to learn from the past. Alas the youth, in every generation, tend to want to "rebel" and blame their parents for everything rather than build on things.

UK house prices go negative in September according to the HBOS data. If house prices represent consumer confidence, as many believe, then this is another recessionary signal. The house price fall during the credit crunch was nothing compared to the 1987 crash, which only bottomed out around 1994/5 and left people in negative equity for over 10 years. Given the level of house price appreciation (bubble) this time the fall could be much further than the 80s and last longer. There is at least hope for the youth now but I'd be worried if I had leveraged the equity in my house, which I haven't. The post 1987 crash saw changes to mortgages, such as an end to 100% mortgages, which then crept back in later as politicians wanted to goose the housing market and repayment type mortgages were superseded by interest only. Connected to this there was the endowment mortgage misselling scandal, followed by the payment protection misselling scandal and now another one is potentially going to emerge, just in time for the next crash? https://www.ft.com/content/bf426410-f7fc-11e8-af46-2022a0b02a6c

Looks to me like we might be seeing a small 1-2 bearish retrace that is now in the process of ending and turning into a long term rally (relatively). A break of the channel could be indicative and then I would be looking for a higher high than the recent top (my 1 blue). I have no fundamentals view on this market other than the mania is not yet over. I still believe all the crypto coins will fail leaving the blockchain technology to be developed in a next generation solution to the current currency crisis we are in, but that is off in future.

I have been enjoying my coffee of late; really this market, and I assume other similar markets, seem like they couldn't care less about the Fed, economic data, recession and so on. It is purely about supply and demand; a proper market and a welcome relief from the financial markets nonsense. My analysis of coffee has reminded me that 2 analysts can look at the same data using very similar methodologies and come up with opposite views, at least in the short to medium term. There is another analysts (he charges for his services and has a long history in the markets, I am not a client) who has tipped coffee to rally hard (many other commodities too). I agree with him long term (for the record I only saw his analysis this week, after I had carried out my own) but I felt coffee would at least touch down into that $4-8/lb zone before it rallies where as he thinks it has already turned. Why is this interesting to me? It shows that no system is foolproof; it requires an analyst to read it right. If I am wrong I assume it is me and not the method, and by and large this plays out as I then spot a new scenario or one of my alternatives kicks in. This is the reason why I tend to have several scenarios in play at key market turns (or potential turns) and it may take some time for a single scenario to reveal itself. This is also the reason why many of the great traders of the past and present all say that it may take several attempts to catch a major turn. Anyway back to coffee and I can see those 2 scenarios clearly on my daily chart below. The scenario that the other guy is tipping is suggesting that the rally from the May turn is a wave 1 (red labels) and that turn was the bottom of the market. It isn't confirmed because the upper channel line (off the weekly/monthly chart price action) has not been broken. He thinks the bearish move down since July was an A-B-C to a wave 2 and now we are in a strong wave 3 rally. My lead scenario is for that rally off the May turn to be an A-B-C to a wave 4 (blue) and now I am looking for a final wave 5 (likely inside market bottom zone, blow $8/lb). I see the move down to be a wave 1 (green) and the recent rally is the wave 2. The most recent price action is a small 1-2 (brown) that would set up a strong wave 3 down. The price action on Friday would seem to support my set up as I would not expect such a bearish candle on a strong wave 3 up! The turn on Thursday, backed up by the bullish price action on Friday was all I needed to get Short. I am now stop protected at BE and awaiting developments. A lower low ideally and then sell the rallies. While I am, at present, looking at my lower channel line, just inside the $8/lb zone as a likely ending point, if I am right about my labeling of the 1-2 (green) the bearish move could carry much further into the market bottom zone. So we are looking at a potential minimum 2000+ points but a maximum of circa 6000 ($4/lb bottom range). Not sure where else you can get such pointage with a very low exposure level (now zero)...

Looking at the big picture there are 2 obvious scenarios as follows: The April top was a wave 2 retrace completion off the previous bear move, the recent gap rally was a 1-2 and now we are in a wave 3 down. The April top was a wave A; the August bottom was the wave B and the gap rally was a wave A of a wave C so the wave 2 retrace will end around $80 Both of these scenarios are technically feasible but I prefer the set up for #2 for a variety of reasons. In any case the likelihood is that if the August low is exceeded on this bearish move down from the top of the gap then scenario 1 is in play but if we get a confirmed turn and rally then it is scenario 2. The wave B (green) currently in progress would be an effective double bottom and there is strong PMD on both the 4H and 1H charts at this turn. However there are 2 possible upper channel lines, one of which is broken, so the turn is not yet confirmed for me. Even if the first line is proved correct I might expect a small bearish retrace before any rally gets going; alternatively a strong rally phase that breaks the upper channel line would be encouraging. I also want to see USDCAD turn and go bearish but that may not happen until USD in general confirms a bearish turn. If USD does turn bearish and Oil goes bullish then USDCAD could be an excellent market to trade. So net I am looking for a return to the 5660 area to complete a small 1-2 before a big rally AND/OR a break above the $59 area to go Long but a break below the August low (5580) would negate a Long trade.

Looking back on the price action for the week just gone it seems like a turn into a rally phase could have occurred but it is not yet confirmed and so another test of my weekly support trend line cannot yet be ruled out. However at present that weekly trend line is strong and has repulsed a couple of tests last week on the daily charts before the rally took off. The trend line has 6 solid touches and rejections plus a couple of prior pivots (touches before the current down trend started). This amounts to a very solid trend line in my book and will take some breaking I feel. When it is I would expect that to be that and a significant bear market to unfold. When I look at the big picture context for such a bear market I do not think the price action of the bearish phase from early 2018 is sufficiently strong and definitive to precipitate the kind of bear market I foresee when this trend line is broken. Therefore my lead scenario is, as it has been for some time now, for a strong relief rally to prime the pump for a bigger bearish move when all hell breaks loose across the capital markets and there is a flight to the relative perceived safety of the USD. In terms of the technicals they line up with a wave 1 (blue) set up leading to a wave 2 retrace rally before a strong wave 3 down. In the near term I think we have yet to see a small wave 2 bearish retrace before the rally really gets going. I am tracking this for a Fib 62% retest of the 1h chart channel breakout zone, or a little lower. I have a 1-5 count up to the wave 1 (brown) and NMD at the turn. I expect pairs like GBP, JPY and AUD to do something similar, albeit that GBP seems to be leading.

Interesting week on stocks. We got proof positive that the US has joined other nations in a manufacturing recession with a second months ISM PMI reading below 50 (and a significant drop vs the previous month as well). Analysts consensus of a 50.1 (really? Just above 50?) demonstrates the bias endemic within the FS industry. Some people say "this time it's different", it's all about services and the consumer and anyway the jobs data is good. But what do these services serve? Retail has shown clear signs of being under pressure, which the perma-bulls ascribe to online vs high street (it just isn't that simple!). In the end when people stop buying stuff the economy suffers; stop buying long enough and widespread enough and that's a recession. In many countries people have stopped buying houses (bang goes all the house buying related goods and services); and we have seen mainstream retail players suffer and take cost cutting action and plenty of administrations over the past years or such that no one can say the warnings signs weren't there. And jobs data has been deteriorating with restatements to the downside, actual slow down and consensus misses month after month, and anyway a lot of the jobs created are gig economy, not exactly robust and stable. And now on Thursday the ISM PMI services reading missed consensus by some way (not yet below 50 but trending down) and US NFP missed on all major data points (but it's ok because the unemployment rate improved, hmm...). Bad news is good news for stocks again as the stock markets rallied on the signs of immanent recession. I can see no other reasoning other than the perma-bulls are once again placing their hopes (and their clients wealth) on Fed dovish policy. But the Fed seem determined not to be seen to be browbeaten by Trump, who undoubtedly will bombard the tweetosphere. Will they cut just a bit, will they overreact, will they do nothing? I suspect nothing short of the nuclear option will satisfy the perma-bulls, and even that may only provide impetus for an almighty Bull ending exhaustion spike and crash down, which would be on the Fed, I wonder if they sense this? I do not see this lasting much longer, and nor do many big name traders and money managers with far greater credentials than I who have none (check out the interview with Jim Rodgers on Real Vision if you have access). I see 3 scenarios for US large caps as follows: That almighty exhaustion spike and crash down, which in itself would be a clear indicator of the top out. An ending wave 5 to a fresh ATH around about the very long term resistance trend line from the 1980s and ending channel breakdown. The end is already posted and we will see a lower low turn. At present I favour either 1 or 2. I think this time next month could be a very pivotal moment if ISM data continues to deteriorate and if the Fed does not act as the perma-bulls desire. Imagine what would happen in ISM Services PSI slips below 50..! On the technicals front I see it as follows (S&P500): The bearish move was stopped at the Fib 78% with a strong pin bar on Thursday with RSI and Stochastic oversold and backed up by a bullish candle on Friday On the 4H chart it looks like a possible small 1-2 on a strong rally. From here we could see a period of consolidation before the market takes off again or alternative a turn and drop On the Nasdaq price hit the lower channel line and bounced, both this channel and the one on the SP500 are very sound with many touches. A break of these lines will be a very strong indication of a trend change. Net, I expect a final rally on stocks fueled by Fed hopes that will either be dashed and/or lead economic data will come in very badly over the coming month or so, add to that a poor earnings season and that's the ball game.

PS: I have a bad feeling about USD, like maybe it will take another leg up on all this. Can't think why if the Fed is expected to act but nothing about capital markets is logical these days...

Yeah bad news remains good news for stocks with the headline (and main movers) data of NFP and Av hourly earnings in the red vs last month and consensus but hey it's ok this just means the Fed will ride to the rescue, again... In the meantime my lead scenario of 1 more leg up in a final wave 5 on stocks remains in play and this mirrors my medium term projection for gold/silver. With a probably retrace turn achieved yesterday, on the back of more bad news is good syndrome, it looks like a small 1-2 and if we see a drop through short term resistance then my target of 1500 looks on. TO me this is a much better trade than Long stocks so I have switched. Apart from the Nikkei, I am still long the Nikkei.

That's the theory but it isn't working. The man on the street has no spare cash and is worried about paying the criminally high rent, cos he can't buy a house. Even if he could buy a house the cost of repayments will bankrupt him. The real hope of the academic economists was that corporates would invest but all they have done is M&A, share buybacks and inflate their remuneration. Upshot, the rich got richer as NIRP and QE goosed financial assets while real assets (commodities) fell. The unwind will be the reverse and the man on the street will pay the price, as usual. In the UK,enter Corbyn and an already disproved ideology, exit all real wealth and capability (brain drain). Hopefully we will avoid that particular catastrophe in the UK or we will wind the clock back to the 50s.

When asked recently what it would take for central banks to realise that negative rates are a bad thing, Jim Rodgers replied "catastrophe". He went on to say that Alan Greenspan has done more than most people to "ruin the world". The answer to Rodgers is wide scale bankruptcy with the USD and Gold spiking initially but when the dust settles he is switching to the Yuan and maybe also Singapore... He doesn't own any US shares because the valuations are just too high...

LOL! At least the hysteria is alive and well! Good to know that the human race has evolved so much over the millennia... Next you know we will be believing in fairies, the healing powers of pixie dust and that this time it is different... There is a cult that believes we should allow ourselves to go extinct by simply not having babies so that the planet will survive us. I guess that means we will just eat each other if there are no babies huh? I am in no doubt that the planet will survive us, the only thing at question is whether or not humans will be around to see it...

https://techcrunch.com/2019/10/02/robinhood-e-trade-schwab-ameritrade/ Question: Is this just a competitive reaction or are these brokers just finding it hard to encourage investors to buy stocks? Can the big boys really be that concerned by RobinHood? There is always a catch to free anything isn't there? Upshot is that if businesses like Schwab can't make any money their share price collapses and they sack people who can't buy stuff and certainly can't trade with the brokers who laid them off int he first place.

That's what Malthus said but he also said if it doesn't happen gradually and by choice it happens in a cascade (not good!). Alas our technological abilities may be our biggest issue. Technology has allowed us to feed, house and warm more people than we should be able to, which has led to environmental consequences. The environmental issues are a symptom of over population but no one want to talk about that, they just want to talk about bad government and band industry and bad meat eaters causing green house gasses. I wasn't, you always assume the worst. I was picking on the whole movement to focus on the environmental symptoms rather than the root cause (too many people in a closed system). Bit mean! As long as she only has one no problem...

Taking a quick bigger picture look at Brent I see we are at a critical juncture for this market from a technical perspective. Long term my view is aligned to those market experts to feel the world is now awash with Oil as a result of Fracking, in terms of reserves, and that this moves the power away from OPEC, or at least balances it more evenly. I also agree that demand will fall over time due to recessionary pressures on industry, population reduction (cos it has to or we are all doomed, something little Greta seems not to get...) and a shift to alternative energy sources (including or because these are cheaper now than oil in terms of production costs). Short term however there are still fears over more drone strikes and an all out war in the Middle East Deja vu anyone? In terms of the technical set up, the huge gap up cannot be easily ignored and as such my lead scenario is that this constituted a wave A which was followed by a counter trend wave B to close the gap. So far this move has turned with a slightly higher low resulting in a double bottom. If the market reverses now and posts a lower low then Bear it is but so long as it stays above the previous low (B blue on my daily chart) then Bull it is to a higher high for a large scale retrace to a wave 2 (Pink). After than we ought to see a massive Bear move but that's a ways off. If I am right about this then the next wave C could be fast and furious, adding to industrial costs as Brent jumps from $60 to $80 in a short space of time. Just what is needed to fight off a recession! Not! On my charts I have the following: Double bottom with minor PMD on B (green) turn (with a pin bar) and now regaining the monthly chart parallel channel line Wave B is in an A-B-C, does not support an wave 1 and Gap has now been closed. Narrowing channel (or Triangle) on the 4H chart that has been broken to the upside with a credible A-B-C (brown to make up the wave B (Green). Strong PMD at the turn. with a pin bar I am waiting for a break of a secondary 1H channel line to the upside.

Hot on the heels of a major management restructuring, John Lewis are now taking on landlords in a Mike Ashley style approach to further reduce costs. Not before time really the property market is hugely overprices, mostly driven by their key performance indicators related to yield, no yield on the cost of the property but the latest valuation and so high property prices lead to high rentals. In my local area we have just had a notice from a childrens club that they are closing their doors after 8 years due to inability to renegotiate rental with the landlords and "swinging rates". This was a service (not manufacturing folks!) that was very popular, with a waiting list! What future for the high street under such conditions? In order for retail to be viable long term we need to see much lower rent and rates. To get that we need a recession that crashes property prices because the turkeys don't vote for Christmas. Just a matter of time now really. https://www.bbc.co.uk/news/business-49918002 If the mighty JL is struggling in the UK then who is making any money in retail? JL have an online presence, albeit their packaging and shipping is simply not as good as Amazons, but outwith that I would still buy typical JL stuff at JL and not on Amazon so online cannot be the full story here.

This pair has been doin my head in for a while with a mass of whipsaw price action but the picture looks to be clearing now. If USD DX cements its Bearish trend change and Oil does go into a rally then that is 2 major drivers for this pair to go bearish. Add to that a possible turn at the Fib 76/78% and strong NMD on the 1H with NMD at this and the previous turn on the Daily and you get a decent confluence of fundamentals and technicals supporting a low exposure Short.

"Oh dear!"

Nope, swing traders swings with the turns; read the indicators not the bias. Long Stocks having cashed Shorts for a pretty profit; Short PMs but stayed in positions against the USD. Let's see...

What bitterness? Why are you obsessing on tech stocks? D'you know what? Never mind.

Possible bullish reversal in play aligned to stocks turn and rally and PMs turn bearish. PMD on the turn just as with stocks and NMD on PMs.

"Oh dear!" You really didn't get that one did you... What makes you think there is any complaint there? Just some facts.