Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Tuesday, July 14, 2020

Taking Stock

I post an update of the Dow Jones Industrials every business day on my Face Book page. Yesterday's was long and, I think, meaningful, so I'm reposting it here.

Monday, July 13, 2020 Yellow Arrow Sideways
DJI30 Index at the close —- 26,085.80 +10.50 (+0.04%)

The index opened at 26226, up 150 points. It spent the next half hour between 26240 and 26330, then started rising, hitting a hi of 26525 at 11:30 on the way the daily hi of 26639 at 1:45.

Except for a brief bounce of about 100 points between 2:30 and 3:00, the rest of the day was down. The image of an avalanche springs to mind. The lo - a mere 42 points below the close - occurred only 4 minutes before the end of trading. The day’s total span was 595 points, and it all occurred after 1:45.

This was a dramatic reversal in the last 2 hours. I actually felt hopeful around lunch time Today’s hi was the highest since the pop above 27000 from 6/05 to 6/10. A glance at Graph 1 shows that recent action is now the second sideways move of more than a month’s duration since the 3/23 lo. This does not look like any kind of impulsive upward move.

The red and orange horizontal lines represent the Fibonacci .681 and .786 retracements of the drop from the Feb 12 hi to the March 23 lo.


Graph1 - two sideways moves


The only practical alternative view is that this is an unusually long and extraordinarily complex counter current move - the the main thrust being down, shown in Graph 2. The Index is moving into a trend line wedge where something will have to give pretty soon.



Graph 2 - Into the Wedge


In Graph 2, the peak on June 8 defines the top border of a potential down-sloping channel from the 2/12 hi that is a stunning 10684 points wide. If this concept has any validity, it could lead to an ultimate lo far below the 18214 reached on 3/23. 

In 1929, the Index lost something like 89% of its value. Can you imagine the DJI30 Index bottoming at about 3000? It needn’t be that extreme to be devastating.

The 3/23 local bottom represented a loss from the 2/12 top that was within 50 points of a Fibonacci 38.2%. A 50% loss would put the Index at 14784. A 61.8% loss would bottom at 11295. Other potential support levels are in the regions of 1600, 1500 [support/resistance levels from 2014 -16] 14165 [the 2007 all time hi] and around 13000, 11000 and 10000 - support/resistance levels from 2010 to 2013. These things are shown in the third Graph, labeled Trend From the 2009 Bottom.

The Fibonacci 61.8% loss at 11293 is in the broad range of round number support from the last few of those mentioned. So the range from 10000 to 13000 is a reasonable target for the ultimate low, which could happen this year or off a few years into the foggy and unpromising future.

 Graph 3 - several possible support levels


The effects of the corona virus on the population and the economy of this country are going to be far worse than what we have seen so far, due to the abysmal denial and mismanagement of donald j trump and his corrupt minion governors in republican controlled states. Some are starting to realize it now, but what they are doing is far too little and far too late. Tragically, this devastation was largely preventable, as a few nations like New Zealand have shown. Even here in Michigan, where Gov. Whitmer has tried to do things right in the face of organized and intimidating armed opposition, we have been trending the wrong way for almost a month. Can you guess why?

Stocks are at an epic level of disconnect from the underlying economy - which is weakening as you read this. When this situation rights itself, the spring-back will overshoot, and probably by a large margin. That will be the time to buy. 



Stay tuned. Pictures at 11000.

Closings -
7/13/18 - 25019
1/02/20 - 28869
6/12/20 - 25605
7/13/20 - 26086

NYSE Internals -
A/D = 1093/1899 = 0.58
A/D Vol = 0.54
New Hi/Lo = 119/6 =19.83

Friday, April 10, 2020

Taking Stock

I've been reporting on stock market activity on my FaceBook page every business day.  I thought yesterday's events warranted a more permanent record, so I'm copying it here.  Today is Good Friday, and the markets are closed.

Thursday, April 9, 2020
Green arrow up
DJI30 Index at the close —- 23,719.37 +285.80 (+1.22%)
The Index opened at 23691, 251 points above yesterday’s close. The high was 24009, and it was approached at 10:00, 1:00 and 1:30. Round number resistance bent, but did not break. The next move was a drop of 500 points to 23504 just before 3:00, followed by a choppy ride into the close. The last move of the day was a gyrating drop of 90 points in the last 25 minutes.
This is a clearly up day, with the hi, lo and close all higher than yesterday’s.
Today’s good news and bad news:
Good - Fed to provide $2.3 trillion to prop up the economy - just what a liquidity fueled, significantly over-valued market needs. 

Covid-19 cases reported to be slowing. We’ll see how well that holds up given, frex - Arkansas and Trump’s great desire to reopen the economy.
Bad - Horrible unemployment numbers, exceeding expectations with over 6 million new claims on top of the over 10 million from the last 2 weeks.
Teenagers spending is off 13% YoY.
Nearly 1/3 of tenants didn’t pay rent this month.
All of this is from the Yahoo Finance news items listed below the stock chart.

 Today’s lo to hi span was 505 points, the lowest since 409 on 2/20. That looked like an outlier at the time, but got swamped from the 24th on. For context, the ten day average then was 207 points. On April Fool’s Day it was 1039. Now it’s 778.

Today’s moves would have looked wildly disjoint as recently as the middle of February. But now it’s the tamest day we’ve seen in 6 weeks. Is this some sort of new complacency? This market is remarkably resilient. And I find that to be frightening.
The breaking news is that with the markets closed tomorrow for Good Friday, the SP500 had it’s best week in 46 years. The Nasdaq had it’s best week since 2008. Hmmm - what happened after that? For the DJI30, it was the best week in 2 weeks! Go figure.



While we’re at it, let’s have a look back 46 years ago to 1974. Context matters. I can’t quickly find S&P data for 1974, but DJI30 should be good enough. The index averaged 4764 in Dec.1973 and 3071 in December 1974, a 46% loss. So that big gain happened in the midst of a brutal bear market and clearly didn’t last long.
But wait - there’s more. The DJI topped at 7785 in Dec ’65 and bottomed at 2145 in July ’82 - a bone crushing 73% decline that took 17 years to play out. So the ’74 bear market was just an episode in a much longer devastating trend that nobody seems to remember today. Here's a link to the chart, and you can play around with the dates, if you’re so inclined.

Historically, most of the largest short term gains - covering a day or a week - have occurred during bear market rallies. These things treacherously offer false hope. I believe this financial exuberance is irrational and the pandemic optimism will backfire horribly. I would love to be wrong.

Stay safe out there. Or, better yet, just stay home.
NYSE Internals
A/D = 2584/422 = 6.12
A/D Vol = 3.52
New Hi/Lo = 12/2 = 6.00

Notes on the graph --

The fine green, blue and red lines indicate daily hi, close and lo values, respectively.
The heavy green line at the top is a projection of the all-time high of Feb12.
The down-slanting channel contains the drop from the all-time high.  It was violated this week, but i kept it for reference.
The horizontal channel indicates sideways motion.  It looked like it was in effect since the bottom on Mar 23. Possibly obsolete now.
The falling blue line is the 233 day EMA.



Saturday, March 28, 2020

Encounter with a Bernie Bro

On 3/19, I posted on FaceBook an excerpt from Adam Parkemenko's daily BIG STUFF.  This led to an encounter with a Bernie Bro.

Adam Parkhomenko --
Remember when House Republicans were the worst people in Washington? Well, they’re still pretty awful, the title for worst has been claimed by Mitch and his cronies. Where to begin. Let’s start with Sen. Richard Burr, chairman of the Senate Intel Committee and someone who was busted in a recording obtained by NPR telling rich donors how bad the coronavirus would get even as Trump was telling Americans it was no big deal and it would just go away. Then we have Sen. John Cornyn, who used a racist diatribe to explain why calling it the Chinese Virus isn’t racist. Sen. Ron Johnson, one of the biggest scumbags of the Biden stuff, told his local paper that you just gotta keep it in perspective that a few million Americans might die. And then there’s Rand Paul. And really, ‘nuff said. Under Mitch’s leadership, or lack thereof, the U.S. Senate dragged its feet for days on the action the House took and now Mitch wants to cut Pelosi out of the negotiations. And for reasons we will never understand, there are many Democrats who want to take politics out of this current environment. These people must be new here and have never met a Republican. Like David Axelrod complaining because Democrats are running ads against Trump’s response? Seriously, Axe? Some of those first term capitulations are suddenly making a lot more sense. Trump fucked this up, and he and his party are going to be responsible for the deaths of many Americans. We sure as shit should be talking about that.

The Bernie Bro --

Just more bipartisan fuckfoolery. I'm immured to it, now. What will fall will fall.

JzB --

Both sides are not the same.

BB

They're not?
Could'a fooled me...


JzB

Sure, you can always find an example to validate a point of view. It's cherry picking, and it's not valid. You have to look at patterns of behavior, not isolated incidents. You have to look at policies and their effects.

Seriously, there are differences in any economic or social metric you can think of between when Rs and Ds are in control. And with the Ds it's always better.

Always.

Yes it's true that both parties have too much corporate interest. But that does not mean that they are equal. Frex: BHO had the backing of Wall St in '08, but they largely abandoned him in'12, because they didn't like what he was doing.

BB

Sorry [JzB}...I no longer believe this. I see them as two rival gangs in a kind of "Three families" criminal setup. The third family is the nonpartisan/bipartisan Deep State, which is actually more powerful than either gang. It allies itself with whichever gang seems most likely to continue to succeed in doing its bidding.

We've recently had a little shakeup of that system, because Trump surprised all THREE gangs and essentially took over the Ratpublicans. He is a rogue gang leader, and so far the other two gangs (and whatever parts of his own gang secretly wish him gone as well) have not been very successful in unseating him.

They DO keep trying, though.

We'll see in November...if of course there even IS an election in November. But never fear...we'll someday see who wins and who loses.

But...nothing substantive will change.

It's just the way things work.

Been that way since history began...

BEFORE it began, I'm sure.

It just didn't get written down.

JzB 

Well, you're entitled to your opinion. I've studied these things. Policies have consequences for people's lives, and R vs D policies are drastically different.

My dad told me something ca. 1962, and I never forgot it. Every once in a while, if a crumb falls off the plate, the Democrats might let you keep it. The Republicans won't even do that.

Also, ponder these things -- Would President Gore have ignored the screaming warnings from the intelligence communities like Shrub did - that allowed 9/11 to happen?

Would he have launched an illegal and pointless war against an uninvolved third-party country based on invalid, cooked intelligence?

Would he have cut taxes on the rich while launching this war - something no ruler in the history of the world has ever done?

Would President HRC have ignored the impending Covid-19 situation for months, while denying the reality of it to the American people in the hopes of personal gain?

Would she have signed into law yet another tax cut that benefited only the super rich and did squat for anyone else? And that, by the way, was completely unjustifiable on any economic terms and needlessly blew up the national debt?

Look at the history of criminal indictments in R vs D administration - dozens, maybe hundreds of Rs and a small hand full of Dems.

Look at the Rethug Senators who dumped millions in stocks just before the crash, while publicly saying Covid-19 was no big deal and we'd all be fine. The one from GA even made a huge investment in a tech company that might profit from people working from home. And her husband is Chairman of he New York Stock Exchange.

These are off the top of my head. Policies matter - to you and to me and to the rest of the world. 

Many of the things I listed were earth shaking.

Imagine how different it all would be without 9/11, ISIS, the disaster in Syria . . . Needless wars and ghastly foreign policy blunders have drained us of blood and treasure, and thoroughly destabilized an already fragile middle east.

And Trump and his cronies have gotten richer by many, many millions. To our detriment.
Ignoring these things for the sake of believing in a fictional both-sides-do-it duality might be satisfying in some way that I can't wrap my head around, but it is not an accurate depiction of the world we live in.

Think it over.

BB

You write: "Every once in a while, if a crumb falls off the plate, the Democrats might let you keep it. The Republicans won't even do that."

This in the biggest bakery of all time!!!

And you claim that they are "different?"

Not much more to say. I think that your father's statement pretty well sums up the difference between the two parties.

Minuscule.

Crumbs.

I could argue against every point that you make here.

You are as convinced as are the Trumpsters.

I will say this, though.

Don't worry. You have a lot of company.

JzB

It's pretty damned lame to dismissively hand wave away a long list of actual facts. In case you didn't notice, I put a lot of thought and careful planning into my response. Did you even read past the anecdote? I do commentary like this all the time, because I value the truth. You're welcome.

You could argue - but you don't. That says a lot, right there.

And, btw, comparing me to Trumpers is a blatant insult, because I actually fucking think things through; and I deeply resent it. You haven't done anything to earn the right to an attitude quite that superior.

If I'm convinced of something, it's because I've done the leg work to uncover actual facts and data. Years of technical training, along with my natural inclinations, lead me to make data-driven decisions. I have 463 posts on my blog with the tag "economics" and have actually put a bit of serious thought into some of them, with real graphs and detailed analysis.

What IS similar to Trumpers - and right wingers more generally - is a casual disregard for facts and data, with no attempt at rational discourse. I've experienced this hundreds of times. It's depressing as hell.

My posts are public on purpose. I welcome disagreement.

Note that it moves the discussion along in a more constructive way when the disagreement actually makes some sort of sense.

Prove to me that I'm wrong, and you will have done me a favor. The operative word here is PROVE.

But do it tomorrow. You've kept me up unit midnight, and I'm gong to bed

Think it over. Seriously.

BB

I am not going to even TRY to "prove" what I am saying to you.
The proof will be in the pudding.

We'll see what happens if Biden is elected with a majority in both houses. Or without.

Or if Trump remains.

Or...if some other outcome happens.

Gore?

HRC?

Bill Clinton?

Bush II?

Obama?

ALL willing supporters of the Permanent War state that has decimated this country on all levels and has simultaneously been the single most polluting environmental set of events of the last 30+ years. And all complicit in the selling of the country's industrial strength to the highest bidders, a sale that has totally wrecked the economies of the working class/middle class.

Biden?

Just another tool of the globalist corporate system for his entire career.

And yes, I did read your posts.

All of them.

I will read them no more.

Save your energy.


And at that point, he blocked me.  There was no attempt to engage any of my points, just spouting an extended sequence of naked assertions.

I'll concede that the Dems are far too close to big business and especially big finance.  And, to be sure, the history of humanity in a nutshell - always and everywhere - is the exploitation of the many by a small wealthy, privileged elite. But the mere fact that there are disturbing similarities between the two parties does not mean that there aren't also deeply significant differences. Our own history over that last hundred years, and especially the most recent decades, demonstrates that dramatically.


Sunday, February 23, 2020

Unhealthy Inequality

This is from 7 1/2 years ago.

Imagine how much worse things are now.

Sunday, November 17, 2019

Against Economics

I wrote my impressions as I read this article.  H/T to my old virtual friend Nanute.

Since some time in the 80’s we’ve had the great stagnation.  Presumably less volatility [and low inflation,] but at the cost of slower average economic growth.  Yet we had the recession of 2001, which was bad enough, and then the great recession of ’08 - from which we have yet to recover.  So - in my view - it has not at all been worth it.



As I see it, inflation is a resultant, not a cause.  It’s the result of a healthy, growing economy - and therefore - at the very least - not a bad thing, per se.  When conservative economists voice their concerns about inflation, it seems like there is always the implicit but unmentioned specter of hyper-inflation lurking over their shoulder.  Except under very rare and special circumstances, that is not a concern.  But I think Hayek was deeply influenced by that fear, and  passed it on to his acolytes.



What we have now is economic disparity similar to that of the 1920’s.  This gets worse every day, as more money flows into the hands of the wealthy and hyper-wealthy.  It then gets hidden in a tax dodge, often off-shore; diverted into non-value-added speculative financial tail chasing; or, maybe worst of all, used to buy another senator.  This does exactly nothing to promote a healthy, prosperous economy.



Put a dollar in a poor person's hands and it gets into the productive economy immediately, because s/he has unmet needs.  This is not rocket science.

Several years ago, one of my Angry Bear colleagues - I’ve forgotten who - put forth the idea that economics as an intellectual discipline was invented to mainly justify the existence of a dominant wealthy class. I’m not sure that’s exactly correct, but following orthodox economics in our post-capitalist world seems to have the effect of increasing wealth disparity. 

I also believe that nobody really understands either money, nor inflation.  The classicists, neoclassicists, monetarists, Austrians, Keynesians, neo-Keynesians, market monetarists and MMT guys all have different ideas of how money works. They can’t all be right, but they can all be wrong. 

The empirical reality is that austerity impoverishes, and government spending leads to some relative level of prosperity.  What do we do to get out of recessions and depressions?  Spend, spend, spend.  I wonder why that works?

But, alas, wealth and power are fungible, and the rich cannot resist the urge to buy control of government and then seek to enforce policies that further favor their already exalted positions.  So we get things like austerity and low inflation.  Another thing that’s happened over the last 40 years is the dismantling of unions.  Only government and unions have the power to stand up to capital.  So capital has suborned government and pretty much destroyed unions.

Interestingly, the author posits that, contrary to orthodoxy, central banks don’t control the money supply; they control interest rates.  I’m on record saying they don’t even do that. The blow back I got on that was mainly that they set expectations, and interest rates follow.  Not only does this seem like magical thinking - or, at least dog-wagging, I also wonder whose expectations?  How many people are even aware of central banks, let alone what they can or cannot do?

I’m writing this as I read, and see my thoughts have gotten a bit ahead of the author.  But I’m happy to see we are in broad agreement.  Especially about the disastrous effects of austerity.  So why do we repeat this same error so many times?  The author has the answer buried in parentheses: “tight-money policies (which benefited creditors and the wealthy)”

Interestingly, he then goes on to criticize what I was harping about several years ago - that when reality differs from an economic model, economist go with the model and deny reality. The basic assumption that people are reliably rational actors is absurd on its face.  It is completely indefensible.  Yet, on that foundation, the entire edifice of scholarly economics rests. 

And here is my favorite quote from the article — “lunatic premises lead to mad conclusions.”  This, by the way, is also the fundamental flaw of libertarianism - but I digress.



Aha - some competition for my favorite quote: “Secondly, if shares are always correctly priced, bubbles and crises cannot be generated by the market….” Or even the types of 1500 to 2000 point CORRECTIONS [!] we’ve seen three times in the DJI30 index, just this year.

I share the pessimism of the article’s last paragraph.  But for what might be a slightly different reason.  As I suggested earlier, the rich control the government.  The difference between Republicans and Democrats in this dimension is a matter of degree, not kind. It took the Great Depression to bring about the New Deal reforms that led to America’s golden age.  But it also brought on World War II.  The current economic conditions are closer to those of 90 years ago than most people are aware of, or willing to recognize. And there is certainly no dearth of international tensions.

So, there might be a light at the end of this tunnel we’ve been digging for 3 or 4 decades. But the journey to the other side - if we can even get there - is likely to be long and very painful.

.

Sunday, October 13, 2019

More Right Wingery

So a nice right wing lady had this to say about my characterization of the right-wing mind.

 Why not write a book? your "great" analysis is lost here. So what? "Reality" is in the eye of the beholder and your reality is different than mine. "Magical thinking" is saved for progressives that insist that Socialism will work, even as Venezuela starves it's people and hospitals have no drugs. there is no magical thinking within my reality....the fact you even write about it is crazy! Give me an example of Conservative magical thinking----😝

I am not making this up.  She really did say: "Reality" is in the eye of the beholder and your reality is different than mine. 

My response:
If my great analysis is lost on you, it's because you aren't willing to do the hard mental work of acquiring information, digesting it, and using rational thought processes to drive your conclusions.
We all have opinions. A rational, thoughtful person puts some effort into having those opinions correspond as closely as can be achieved with actual observable reality.
Magical thinking is the notion that thinking, believing, or hoping for something makes it true, irrespective of evidence.
Examples of conservative magical thinking:
The unregulated free market is the best market - there is "an invisible hand."
Tax cuts for the rich help the economy.
Tax cuts pay for themselves.
Every other aspect of supply-side trickle down economics.
Having a business man run government will give the best results - because he's NOT a politician.
A Border wall is a solution to immigration and/or smuggling issues.
Mexico will pay for the wall.
Man's action can't affect climate because God is in control.
More broadly, all climate change denialism.
God chose Bush and/or Trump to be president.
White race superiority.
Trade wars are good and easy to win.
Alliances are easy to form and maintain.
Tariffs imposed here are paid for by other countries.
Vaccines cause autism.
But you summed it up perfectly, yourself: "Reality is in the eye of the beholder and your reality is different than mine."
As if your subjective notions and opinions are just as good as my facts, data and empirical observations. That is magical thinking in a nutshell.
Thank you for proving my point.
.

Saturday, October 12, 2019

Right Wingery

I've been engaging right wingers in various contexts for over a decade now. Here is my view of how their minds work - and it's stereotypical: you see the same things over and over and over.
The foundation for their belief system is fear and a deep negativity.
Their world view is based on -
- ignorance
- prejudice
- reality denial
- magical thinking
This is supported by cherry picking favorable bits of data and information, while ignoring the larger picture -- epistemic closure. The flip side is steadfastly holding on to ideas that are demonstrably not true - the entire genre of ridiculous conspiracy theories.
Their technique of argumentation is -
- deny
- delay
- distract
- deflect
Hence their tendencies toward what-about-ism, changing the subject and personal attacks.
They manifest all this with the trifecta of right wing behaviors -
- projection
- an often stunning lack of self awareness
- tone deafness to irony
Be on the look out for these things. It is how they always operate. Because when when facts, data and all the other aspects of reality are not on your side, what else are you going to do?

Friday, September 27, 2019

Taking Stock 9/27

Here is a graph of the activity in the Dow Jones Industrial Index since the beginning of the month.

Dow Jone Industrial Average, Sept, 2-27, 2019

The black line at the top of the graph is a projection of the all time high of 27398.68, reached on July 16 of this year. The local high on 9/12 of 27306.73 didn't quite get there.
A couple weeks ago I drew a trend channel around the August decline, but that fell apart pretty quickly. Stock market analysis in real time is always dicey, and you can't fall in love with what you thought you saw.
Back at it, I've drawn a new declining trend channel, outlined in purple that looks like it began around 9/12. instead of just going by daily closings, this is now based on the intraday highs and lows. That's better and more complete information. Daily highs are in green, lows in red, and closings in blue. The midline of the channel is in yellow.

Note a couple of things. First, all the action this week is contained by the Tuesday high and low, 27079.68 and 26704.96, respectively. In Eliot wave terms, this suggests counter current action, and it's pretty week. I'm not very good at this, but I'm reading it as wave 4 of a five wave impulse decline that should play out in the next week or two. Wave 4 is unfolding and might take a few more days.
Wave 5 follows. Suppose wave 4 ends at 26900. Then a target range for the wave 5 bottom would be between 26330 and 26490.
Second, the center line of the trend channel has been a magnet for daily high, low and closing values. Since 9/12, several of these have wound up at or near that line.
This might seem like a cross between mumbo-jumpbo and science fiction. But I've been amazed by how many real world phenomena, and stock market action in particular, moves within channels.
I'll be very interested in seeing how this develops, and if my pessimism is validated.
For a big-picture view, see this post.

.

Tuesday, September 24, 2019

Taking Stock

My recent bold prediction did not come to pass.  The recent channel I thought looked pretty good got blown away rather quickly.  So, it's time to step back and have another look.  Here in Graph 1 is a view of the Dow industrials index over this century.

Graph 1 - Dow Industrials since 2000

I have highlighted some trend channels.  The light green lines contain the first big rise of the century.  They are projected into the present, which might or might not mean anything.  The heavy purple lines indicate the present trend channel from the recovery after the 2008 recession.  The yellow line was the top channel border until the index burst through in 2017.  This effectively doubled the width of the channel - this happens sometimes - and it is now the center line of the channel.

The red line connects two major bottoms.  Whether that has any significance is yet to be demonstrated.  This is the big picture, covering close to two decades of index movement.

This recovery is now over a decade old, which is quite rare. Further, I find it hard to believe that American industry is worth about 1.75x as much as it did 3 1/2 years ago. The bold move that occurred through 2017 looks a lot like irrational exuberance.  What reasonable explanation is there for most of that 75% rise happening in the first year of the Trump administration?  Since then, with a lot of gyrations, the index has gone essentially nowhere.

Graph 2 is a closer focus on the index during the recovery since 2008. This is just for perspective.  Can it make any kind of sense that the nominal value of the Dow 30 industrials has increased by more than a factor of 4 in the last decade?

Graph 2 - Dow industrials since 2008

Graph 3 is a look at the Dow Industrial Index during this calendar year.  The heavy green line connects the 3 tops since early 2018. The light green lines are the extended trend borders from the pre-2008 upward trend.  The yellow and red lines are as described above.  The orange lines might be the current short term decline trend channel- but it's not pretty, and I've been fooled before.

Graph 3 - Dow industrials, Jan 1 to Sept 24, 2019

My current sense is that we are now post peak.  If the index were to rise above the heavy green line, then this idea would be refuted.  The next resistance would then be at the top purple line that you can see going off the top at the left side of Graph 3.  But I think we're going down from here.  Each of the light green lines might offer some resistance.  You can see this has already been happening at several points during the year.

Should the index continue down, the next major resistance level would be yellow line - the channel center line, since I have no faith in the potential orange channel. If that is breached, the red line might come into play.  After that, it's the bottom purple line shown in Graphs 1 and 2.  This could happen somewhere between 20000 and 22000, depending on the timing and fall rate of the decline.

If that is breached, there might be support near 15500, the double bottom surrounding the beginning of 2016.  A 61.8% decline of the entire gain from the 2008 bottom would put a target low at about 14500.  A 50% decline would put the low around 17000.

This gives a broad range of potential resistance targets that land in the range of index values from CYs 2014 through 2016. For reference, that time period is shown in Graph 4.  Back then, the yellow line was a hard upper barrier, and the purple line was robust support.  When situations reverse, support and resistance lines can exchange their functions. If all of these potential support levels are breached, the entire gain from 2009 could be given back.


Graph 4 - Dow Industrials from 2014 through 2016

Of course, that is [I hope] worst case, and every bit of this is speculative. September is historically a weak months for stocks, but this year it has gained back most of the 2000 or so points lost in August.  On average, Octobers have been net positive, but the most dramatic historical declines [1929, 1988] have been in October, which is right around the corner.

Things don't happen to satisfy my expectations.  But I am quite pessimistic.  This recovery has been over-long for quite a while already, so we're way over-due for a major correction.  Trump's economic and trade policies are based on abysmal ignorance, have already done significant harm, and those buzzards will be coming home to roost some time soon. If you think the national debt level is important, it has ballooned under Trump - contrary to his campaign lies. Unsecured consumer debt is at a historically high level.  Our economy is about 70% dependent on consumer spending.  How can that continue when wages have been static for 40+ years, even when inflation is low?  This is why personal debt is high.  People have leveraged their livelihood, and are badly over-extended.  Where are future profits going to come from?  If things get tough and lay-offs occur, spending and profits will take bigger hits. This is how things spiral out of control.

Maybe there is some reason for optimism that I'm overlooking.  If so, point it out in comments.



Tuesday, September 3, 2019

Taking Stock

My bold prediction on FaceBook a week ago today was that within 2 to 3 weeks we'll see the DJI below 23,500, and under 22,000 in a few weeks after that. Yes, I am anticipating the worst.

As of today's closing, the DJI is down 285.16 points, ending at 26,118.09. The attached chart is the DJI daily closing values over the last few months. It includes a mid-day value, when the DJI was down about 360, instead of today's closing.  But that changes nothing.

DJI closings since May 1.  Data from Yahoo finance.

The purple lines near the top and bottom of the chart are the borders of the long-term trading channel, since the 2009 recovery.

The current short-term trend channel is indicated in orange. [Yes, there are channels within channels.] It takes a while to determine that a new channel has been established. This one began no later than the first week of July, and looks pretty sound. Of course, a trend only lasts until it doesn't.

The thin green line was the top of an old trading channel from 2002 to the crash in 2008, projected across time to the present. It converges with the top of the current orange channel on Sept. 27.  Resistance and support lines can switch identities over time, so what happens between now and then will be interesting. You can see it's already acted as a support line within the orange channel. Interestingly, the bottom of the 2002-2008 channel [not shown] converges with the red line [see below], right about now. So there could be a cluster of support lines near 2400 - 2500.

One of these is the yellow line, the midline of the very broad trading channel continuing from the 2009-on recovery. A meaningful break of that line will probably indicate that we are in serious bear market territory.

The red line is projected from the Feb 2016 and Dec 2018 bottoms. It is also a possible support line.

The bottom purple line is the lower border of a decade-long trend channel, and the most important support level. It that is breached, there will be a panic, and all hell will break loose.

Monday, May 27, 2019

Memorial Day - Who Should We Remember?


This is the day we quite properly remember those in our various military services who lives were lost in either gaining or preserving our freedom - the American revolution, civil war and world wars I and II. We’ve lost many more service people since then, including over 4000 in Iraq. Sadly, all of these lives were lost in vain. Our freedom was never an issue in any of these incidents. They were fought for a variety of far less worthy reasons. Perhaps the best of them is due to an ideology. Though that is far from noble. The worst of them is to line the pockets of war profiteers like Dick Cheney.

So I honor the memory of those who died in a noble cause, but grieve in profound sadness for those whose lives were not only lost, by wasted for poor or terrible reasons.
And who else should we grieve for? How about the innocent civilians - men, women and children - of Hiroshima, Nagasaki, Dresden and My Lai? And the many 10’s of thousands of Iraqis who were victims of our unjust and unjustifiable aggression?
What about the Japanese and German soldiers who gave their lives for their respective countries? Should we spare a thought for them? Didn't they have mothers, fathers, siblings, children, lovers?
Consider the kidnapped Africans and their generations of offspring whose freedom was taken for our economic benefit. Shouldn’t we honor their memory as well? Their lives were also sacrificed for us and our freedom.
Let's also not ignore the genocide our government and military perpetrated against Native Americans. Wasn’t that a part of American expansion? Weren’t those lives given for our benefit?
So my feelings are mixed on memorial day. Pondering these questions makes me deeply uncomfortable.


Saturday, May 25, 2019

Life, the Universe, and Everything

I'll start off saying that I'm an agnostic with atheistic tendencies.  Only my general skepticism about everything keeps me from being a complete atheist.  I do believe that if we happen some day to discover that there is indeed such a thing as a God, She/He/It/They will have scant, if any, resemblance to what is portrayed in any of the religions popular among humans.  Given all of that, though, I can call myself a Christian, in complete sincerity, and with no sense of irony.  More on that later.

Way back in the shrouding mists of prehistory, early man started grappling with the important and ultimate fundamental questions of life, the universe and everything.  These are, in my estimation --

1) What in the hell is going on here?

2) What am I supposed to do about it?

Two approaches to grappling with these vexing conundrums are science and religion.  Some people don't like the idea that these two vastly different approaches spring from the same basic human quest for knowledge, and I've been ridiculed for proposing it. This is generally because someone has a personal bias toward one or the other.  But if you think in terms of the fundamental questions, it all makes sense.

Science seeks to understand the universe through rigorous systematic empirical observation, reason and logic.  It's pretty good at addressing the first question; but might not take us very far in addressing the second.  Of course, the scientific study of the results and effects of human actions can reveal some knowledge of what appropriate behaviors ought to be.  Natural phenomena like plate tectonics or global climate change, and policies like supply-side economics can be studied and understood.  Sadly, though, humans are only semi-rational beings, and the clear conclusions of scientific inquiry can become clouded by bias, epistemic closure, and contrary economic or political interest.

Religion on the other hand, seeks understanding through observation that is less systematic and more anecdotal, introspection and mysticism. It involves the assumed validity of prophecies, omens, and the interpretation of natural phenomena as signs from God.  As such, it has a lot in common with superstition - but that is not the field I intend to plow today.  Religion addresses the first question via creation myths - which in themselves can be quite creative, but not particularly useful in obtaining a greater understanding of the physical world - and observations which are far too often seen through the distorting lenses of religious bias, magical thinking and denialism. The second question leads to inquiries about human beings' relationship with and responsibilities toward God, God's relationship with and responsibilities toward human beings, and humans' relationships and responsibilities with each other.

Since the nature of God is unknowable, speculations about any relationship involving Her/Him/It/Them are ultimately totally subjective.  This is why there are so many radically different religions and God concepts around the world and throughout history.  In one aspect, though, almost all God concepts share a single, specific characteristic: the Deity is remarkably human-like.  God may be conceived of as all-good, all-knowing, and all-powerful, but still shows disturbing signs of human frailties like anger, jealousy, tendencies toward wanton destruction, grudge-holding, and an intolerance toward contrary points of view.

So the logical person can justifiably look upon religion with some contempt.

But doing so, at least in the context of Christianity, is often based on reading the Bible literally, and assuming it is - or is professed to be - the inerrant inspired word of God.

I see lots of criticisms that implicitly rely on this kind of reasoning.  Here is an example that generated a long discussion on Face Book.

Source not known

I objected to this as being ahistorical and misleading.  Slavery existed among the Israelites, but it had little in common with the chattel slavery that is such a horrible blight on our own American history.  It was more similar to indentured servitude.  Other New Testament writings refer to what were likely other forms of slavery in the Roman world, giving behavioral advice to both slaves and masters.

But put yourself in the position of someone proselytizing in a world where slavery is a reality, and your ability to change it is exactly 0 to an infinite number of decimal places. What do you do then, as a practical matter if your goal is to bring the world more in line with the teachings of Jesus? [If you are unsure about what these are, the short answer is found here.]  You admonish the masters to treat their slaves humanely, and the slaves to not do things that will incite the master's wrath.  This is simple good sense, and it is the message you find in the Bible.

So this meme is fundamentally unfair on at least two levels, and - in my opinion - is dishonestly motivated.  First, it misrepresents the nature of slavery that the O.T referred to.  Next, it criticizes moral admonishments about attempting to improve current reality from a 2000+ year later perspective.

But it's actually worse than that.  There is an explicitly stated error of composition, assuming that even IF the Bible were morally deficient in its commentary on slavery, that the rest of it's collected writings - assembled by a wide variety of writers over many hundreds of years - would be invalidated.

And still even more worse - to get back to my original point - the meme only makes sense if the Bible is taken to be the literal word of God rather than the situational best efforts of imperfect human beings.  In this way, some critics make the identical error that the fundamentalists and evangelicals make.  As an aside, this argument was not well received on FB, but I'm sticking by my guns - both there and here.

So, what does all this have to do with my claim to be a Christian? First off, though I'm not a believer, I do take seriously that there is - along with a lot of dross - some real wisdom, some valid moral pronouncements, and reasonable advice for living an enlightened life in the Bible, and most particularly in the teachings and example of Jesus. [See the link above.]

I recognize that I am an imperfect human being, with my own sad litany of vices, personality defects, episodes of faulty reasoning and lapses in judgment.  But I look at the way Jesus admonishes us to live and take that advice seriously.  Of course, I sin and falter.  But I get up, dust off, and try to better tomorrow - which is really all anyone can do.

In conclusion, I'll point out that there is no historical proof that the person we call Jesus ever did tread the dusty roads of ancient Palestine with his band of merry men.  Further, the gospels were written no less than 3 decades later than the events they allegedly portray - and almost certainly not by actual eye witnesses.  So the whole Jesus myth might well be a complete fiction.

But - and I mean this with total sincerity - it doesn't matter.  The message, wherever it came from, and by whatever suspect and convoluted means it came to us, is a good one that provides valid guidance for leading a life that respects the lives of others and improves the quality of human life in general.

And that's what counts.