When The Process Bears Out

Talk to any Wall Street veteran or analyst and they’ll tell you (if they’re honest) “Calling tops and bottoms is a suckers game that makes a fool’s errand look down right genius.”

I’ll add to the above: Attempting to do so in this “Alice In Wonderland” period of quantitative easing (aka QE) has made the “Mad Hatter” of said wonderland look down right sane in comparison.

And yet, with the aforementioned clearly stated – that just doesn’t seem to stop one like yours truly from still “throwing his hat in the ring” (you’d think I would’ve learned by now!) to articulate what it may or may not portend.

Remember: I am not a financial analyst or anything even close. I watch and comment on the machinations of the “markets” only in regard to what it may mean to the bigger picture of business, because we’re all interconnected far more tightly to “Wall Street” than most dare contemplate. Understanding where we all are in relation to the “ups and downs” is more a kin to knowing if you’re going to be dealing with a scattered shower or Cat-5 Hurricane regarding the business climate. It’s an imperative aspect and facet for anyone taking their business or, business in general, seriously.

As I’ve alluded, it’s hard to get anyone to agree on anything pertaining to “markets” however, there is one thing all veterans of watching “markets” can and will agree on, which is this: Although trying to call a top or bottom with a singular event or point is nuts. What is a completely sane and accepted fact, is that tops (more so than bottoms) are usually a series of events then, suddenly, just give way to explosive downside moves out-of-nowhere.

It is possible, repeat, possible (just look to the above for clues) we may have had the first of just that, which may morph into a much more prominent series going forward. i.e., there’s more than ever to reason why one should be on high alert this holiday season than the old “I’ll pay attention in the new year.” of seasons past.

Here’s what I mean…

On November 6th I posted the following set of charts and a possible prognosis regarding the events of that week. To wit:

(Chart Source)
(Chart Source)

Since then the “markets” seemed to confirm my hypothesis (albeit barely) until today when said “markets” exploded ever higher making them and reappointed Chair, Jerome Powell even better, stronger, faster. (cue “Six Million Dollar Man” intro here)

But then, something happened that fits into the “out of nowhere” category I spoke of earlier. For, suddenly, the “markets” tanked – and kept on tanking going from a nearly 1% gain on the day, originating with a gap-up at the cash open – to closing red (aka – at a loss) with seemingly no bounce whatsoever.

Here’s a “picture” using the S&P 500™ at the close of today. Again, to wit:

(Chart Source)

So, “What does this all mean?” I can hear you saying through my monitors. Well, here’s the honest truth: I have no freakin’ idea. And, much like I said earlier on my show – I believe no one else does either.

We are now so deep into this experiment of monetary policy, unlike anything anyone has ever seen, it has continued to defy any and all rational analysis. In other words: Applying logical processes to illogical inputs is just plain nuts, and it doesn’t work. Trust me, I (along with many far more adept than I) have been doing exactly that for years now. So far, it’s Crazy-town scoring: 4,569,959,345,284 to Sane’s: 0.

So with all the above now out on the table, here’s what I will postulate for your consideration…

It is still entirely possible, as well as feasible, that I did correctly mark a seminal event on Nov. 6th. However, instead of it being an “event” in isolation, it may very well be the marking of the first in that “process” I alluded to earlier.

What now needs to be watched (for those trying to stay ahead of possible systemic dynamics) is where we go from here and in what fashion.

Or, said differently, Does the “market” just gyrate mildly both up and down roughly between where we are now (on the low side) and a bit higher eking out nothing more than a headline for “New High!” but materially really no higher than we were at the beginning of today (i.e., the now newest, latest and greatest high) for the remainder of the year?

Or…

Does it (“market”) suddenly appear it can’t catch its footing and slides faster and further than “Old Saint Nick” down a chimney into the remaining year?

As always, we shall see. But that’s what I’m watching for those that want to know.

© 2021 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.