FENY and FDVV first... a technical note...
They both share the same pattern I keep seeing everywhere...
Sets of three... a red candle, a higher hanging man, another red candle... then a huge drop to a lower level where you get another set of three... and a drop...
Right now, a red candle on the left, and another hanging man... and on Monday ?
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But, I'm leaning more toward... charts don't matter... and who the hell knows what's going to happen tomorrow... that's not about "continuation" ?
If there's a continuation happening now... what is continuing is that the knife continues falling... and while the dynamic is suspended, as the markets are closed... there's no way to get a feel for where you are in that dynamic... when it isn't dynamic.
Should point out that the charts actually validate that view... because ATR > 6... makes the charts a mirage... essentially introducing a randomizer in relation to "predictability"... which is always and only about a guess in "continuation" of a pattern... The pattern I do see being followed... is the one that mirrors the market in 1929... with no reason to think that means ending the fall now at 20% or whatever, instead of 80% ?
Reality is still... we have some major structural problems in the markets... bubbles built on top of bubbles... AND we have a virus that's going to be shutting down the economy...
Volatility, right now, greatly exceeds threshold limits in which you can expect the positive in any "market pressure" from a chart pattern to contain the choices of behavior in what happens next...
Because its you and me chatting about charts ? If I were trading against you... maybe I could count on your reasoning ability in not going against the obvious in the chart ?
But, there's George in Peoria, who can't go to work tomorrow because of coronavirus... Remarkably enough, he's not heard anything about what's happening in the stock market... just doesn't pay it very close attention... but with the time to kill, he checks his stocks... freaks out... calls his broker.... and NEVER EVEN LOOKS at a chart...
Will the market, on Monday, be dominated by chart readers ?
If so... what will they be likely to do ? And if not... well, they're seeing red... and probably not buying ?
Every indication I see, charts and not... says tomorrow probably isn't a day in which the majority will be bottom fishing for great deals... I think that optimistic impulse, itself, is an artifact of not yet understanding... of not yet fully feeling... that the change we see occurring now is still early... still that as a bull first becomes bloodied by a bear. The bear doesn't just walk away from that first encounter after smelling and tasting the blood ? Is it flowing in the streets yet ?
BTFD And you thought you were above that ? It's ingrained in the culture after years of it working... even us perennial pessimists who see clearly what others have to ignore... are inured of the irrational exuberance routinely over-coming our rational analysis proving TEOTWAWKI is just around the corner...
That, in a nut shell... is why I'm doubting any element in my own expectations right now... ?
So, most will not be bottom-fishing... rather than freaking out about what's happening... just coming to grips with "change" for the first time ? Odds are very high that the non-market happenings that only REALLY TAKE HOLD on Monday... will ALSO dominate the market choices being made. But I also can't discount the efforts of officialdom trying to interfere with normal market functions that don't help THEM... to sell what they're selling. So, will they go nuts (at least saying they're) committing your tax money in futile efforts to back themselves up... propping up the markets with crazy policy initiatives ? You're damn right they will...
They won't get it done on Monday.
But, will they say that... and convince people... on Monday ?
I think it is not likely, even impossible, that they'll have anything in a "done deal" by tomorrow... which still doesn't prevent them from trying to dominate the news with TALK about all the great stuff "they're going to be doing"... ? Trust us... we're going to stop the market from pricing in the events that ARE happening ?
Or, they might just close the market, at some point ?
And, the assumption made in that above... is that whatever they say next... it will be designed or have the effect of a positive ? And, there's an implicit assumption that the news already out now... is fully developed and ensures everyone understands what the issues are ?
There is more bad news that is yet to come... as certainty... the timing mostly driven by math, now...
Coronavirus: Prepare For National Lockdown
Seems the "its just the old people" thing... isn't being borne out in the non-Chinese experience.
People just don't fully understand that, yet. Welcome to your local branch of Wuhan Flu, coming sooon?
The rest... is "buy low". Divvies might get cut, of course, almost always do... making the best long term divvie plays the ones that pay nothing when you buy them at a bottom... and then grow fast enough over time that in a few years the divvie pays you what you paid to buy the stock each quarter...
I do think there's some obviousness in the timing... as far as how long this event lasts. China isn't exactly leaping back to "just like things were before" after 2 + months of a steady descent into hell...
Note the depiction of "Chinese math" in the link above... as the exponential growth suddenly flat-lines ?
When will the market look up and see light on the horizon ? Depends, largely, on how much impact the event has as the ripples spread out, even those ripples being enough that they'll be taking things apart, before that light becomes apparent...
Government action... will be profligate... QE / TARP / Repo has always been FAKE liquidity... channeled into the banks solvency issues, and into the stock market, only... so having almost zero real impact in the real economy... beyond offering the headline shouting "things are great... because look at stocks"...
How much might that change, now... ? No one is anticipating the hot air that's been inflating bubbles in things... being turned off now ? Only expecting more... only expecting more won't be enough ? Yeesh.
But... profligate... doesn't mean only in terms of crazy financial largesse ? They ARE going to impose "lock-downs" if and when required... to "flatten the curve"...
That doesn't work right now... in people's perceptions ? Financially, those are effects that are not being discounted yet in the market... and, then, if all they give us is more of the same in FAKE liquidity ?
Then... the wheels will come off... if the reality isn't matched by the REAL response. They are not going to bluff their way through this. How much can and will Congress do ? And how much impact will that have on people's sanguinity ?
And, what impact will that have on markets ? The markets... really aren't the first priority now ? Just that will be hard for a lot of the market participants to come to terms with...
Thus far... the ATR > 6 argument is winning... because its valid for the entire market... so even individual issues with ATR < 6... are being driven along by the tide in the larger market trends ?
At some point, reason will return to dominate emotion in the trade... and a bottom will get put in.
But that won't happen until the ACTUAL RISK can be perceived as "managed"... When will that be ?
Then, whatever happens on Monday... I don't think its going to define "the bottom"... which almost never is defined in "accelerated" circumstances ? Often, extreme divergences in brief deep lows... are only predicting where the issue will trade routinely without those kinds of accelerations soon enough...
Last verse of The Hollow Men:
Here we go round the prickly pear
Prickly pear prickly pear
Here we go round the prickly pear
At five o'clock in the morning.
Between the idea
And the reality
Between the motion
And the act
Falls the Shadow
For Thine is the Kingdom
Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow
Life is very long
Between the desire
And the spasm
Between the potency
And the existence
Between the essence
And the descent
Falls the Shadow
For Thine is the Kingdom
For Thine is
Life is
For Thine is the
This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but with a whimper.
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