Wow! Incredible research and profound thoughts. Thank you so much for sharing! I'm wondering the market makers/FED...would just let the history repeat and see the market drop that much? Or is it just something nobody can control?
I know a lot about the technical ways in which trends form and fail and not much about the Fed/MMs etc. So any comments on my part there would be armchair economics. However, this has followed a basis pattern for over a decade now. And in that pattern, the big drop is the next implied swing.
This shows the pattern over the years and also makes some comments about the FED and such.
>Or is it just something nobody can control?
Just for the sake of devil's advocate, it could also be the case the CB wants something like this. I know that sounds silly, but this is exactly what is proposed happened in Japan (Who made a bubble high in 1989 and have not made a new high since - had a 80% drop). Here's a doc on BoJ and the Japan Depression. https://www.youtube.com/watch?v=p5Ac7ap_MAY
Yes that is a great documentary and I feel like at one point Japan was the blue print to move forward with MMT as their economy didn’t suffer much afterwards longer term, yes the Nikkei collapsed but they had deflationary pressure from an economy of excessive savings. However no real wealth was built after that NIKKEI collapse and the BOJ owns 9% of the entire market. ( https://m.investing.com/analysis/how-much-of-the-japanese-stock-market-does-the-boj-own-200623132 )
And they are the only buyer of their own bonds. I think that’s why Powell chose not to embrace MMT. Basically the point being made here is when Powell says higher for longer and treasury run offs we should believe him in the short term and no expect a pivot until shit gets real.
I apologize I never meant for this to be a macro conversation. In regards to the harmonic butterfly at this level it makes sense to go short, from the highs you tested the 0.5 FIB (in October) and ripped off it to the .886 so if you are a harmonic butterfly believer this is the level you to short however my levels are a little higher than yours. I have the nasdaq testing the 6000-7000 area the problem is time frames become impossible to predict. But yes I agree with your sentiment you need to see bears knock it down from here with conviction.
Thanks for sharing your views on the macro stuff though. It's interesting me and I am sure it will be to others. It's just not something I can offer much back on.
Nasdaq to support the imminent bear case I'd want to see under this 161 without the 220 breaking. https://imgur.com/a/HV5FFqM
Agreed on timeframe. You can be essentially right on the price swings but a range here, a retest there - before you know it weeks and months are thrown into the variables.
Under normal circumstances I think the fed would pump it back up but now we are seeing stalling CPI and high employment. The fed would normally intervene when unemployment goes parabolic, also with inflation sticky at the Core CPI level I think the argument to intervene becomes slim until stuff breaks. I think they will want the dollar strong to take a bite out of it and not go the Japan MMT route, over there you are starting to see currency weakness and Turkey tried to just ignore it all keep rates at 0 and now the Lira is under threat. With all that said I think you have global macro pressures that will make the fed remain high and let treasuries run off. But once something does break I agree I think we see a solid bull run but that feeds into the bullish harmonic butterfly pattern which HoleyProfit has put forth.
To expand upon this 1USD=5TRY was the prior exchange rate now it’s over 20TRY and you are seeing Japan defend the 1USD=145JPY. Also back in 2008 when this market was saved and liquidity was pumped everywhere our inflation rate was around 1% it’s much higher than that now. However generally a recession causes deflation so it could be a cure to what we see but with that you will see liquidity wiped out.
Wow! Incredible research and profound thoughts. Thank you so much for sharing! I'm wondering the market makers/FED...would just let the history repeat and see the market drop that much? Or is it just something nobody can control?
I know a lot about the technical ways in which trends form and fail and not much about the Fed/MMs etc. So any comments on my part there would be armchair economics. However, this has followed a basis pattern for over a decade now. And in that pattern, the big drop is the next implied swing.
For background on this, see this post from Dec 2021 (Which was the first post of the bear market warning newsletter). https://beatthebear.substack.com/p/different-ages-with-similar-crashes
This shows the pattern over the years and also makes some comments about the FED and such.
>Or is it just something nobody can control?
Just for the sake of devil's advocate, it could also be the case the CB wants something like this. I know that sounds silly, but this is exactly what is proposed happened in Japan (Who made a bubble high in 1989 and have not made a new high since - had a 80% drop). Here's a doc on BoJ and the Japan Depression. https://www.youtube.com/watch?v=p5Ac7ap_MAY
Yes that is a great documentary and I feel like at one point Japan was the blue print to move forward with MMT as their economy didn’t suffer much afterwards longer term, yes the Nikkei collapsed but they had deflationary pressure from an economy of excessive savings. However no real wealth was built after that NIKKEI collapse and the BOJ owns 9% of the entire market. ( https://m.investing.com/analysis/how-much-of-the-japanese-stock-market-does-the-boj-own-200623132 )
And they are the only buyer of their own bonds. I think that’s why Powell chose not to embrace MMT. Basically the point being made here is when Powell says higher for longer and treasury run offs we should believe him in the short term and no expect a pivot until shit gets real.
Also as long as other central banks keep hiking that puts pressure on our FED to also hike since we need a strong dollar to drive down inflation.
This also seems most logical to me, but 100% of my trading experience is in charting. I take a stance of being agnostic on news.
I apologize I never meant for this to be a macro conversation. In regards to the harmonic butterfly at this level it makes sense to go short, from the highs you tested the 0.5 FIB (in October) and ripped off it to the .886 so if you are a harmonic butterfly believer this is the level you to short however my levels are a little higher than yours. I have the nasdaq testing the 6000-7000 area the problem is time frames become impossible to predict. But yes I agree with your sentiment you need to see bears knock it down from here with conviction.
Thanks for sharing your views on the macro stuff though. It's interesting me and I am sure it will be to others. It's just not something I can offer much back on.
Nasdaq to support the imminent bear case I'd want to see under this 161 without the 220 breaking. https://imgur.com/a/HV5FFqM
Agreed on timeframe. You can be essentially right on the price swings but a range here, a retest there - before you know it weeks and months are thrown into the variables.
Back in 2021 I wrote a bit about how to use a combo of short call spreads and long puts to negate the time risk a bit. Is a good way to go about things if you feel you have a good read on levels but it's hard to pinpoint timing. https://www.reddit.com/r/BeatTheBear/comments/oyrmas/bear_market_options_portfolio_basics_of_credit/
Under normal circumstances I think the fed would pump it back up but now we are seeing stalling CPI and high employment. The fed would normally intervene when unemployment goes parabolic, also with inflation sticky at the Core CPI level I think the argument to intervene becomes slim until stuff breaks. I think they will want the dollar strong to take a bite out of it and not go the Japan MMT route, over there you are starting to see currency weakness and Turkey tried to just ignore it all keep rates at 0 and now the Lira is under threat. With all that said I think you have global macro pressures that will make the fed remain high and let treasuries run off. But once something does break I agree I think we see a solid bull run but that feeds into the bullish harmonic butterfly pattern which HoleyProfit has put forth.
To expand upon this 1USD=5TRY was the prior exchange rate now it’s over 20TRY and you are seeing Japan defend the 1USD=145JPY. Also back in 2008 when this market was saved and liquidity was pumped everywhere our inflation rate was around 1% it’s much higher than that now. However generally a recession causes deflation so it could be a cure to what we see but with that you will see liquidity wiped out.