On The Business At Hand

1. mental illness marked by periods of great excitement or euphoria, and overactivity
“many people suffering from mania do not think anything is wrong”

If you’re not scared, you’re not paying attention. Stare at the chart below, then scroll down and, if you’re interested, I’ll tell you what I see.

The peak on the lower left hand corner topped by a circled Roman numeral I marks the top of a Grand Supercycle Bull Market that began in the early 17th century in Amsterdam, peaking in England in 1720. Following that top, a bear market lasting approximately sixty years ended in the 1780s where you see the circled Roman numeral II, giving way to Grand Supercycle Bull Market III, which is ending, I believe, right about now. This is important because, while the amplitude of a bull market is difficult to anticipate, its ultimate retracement is not. All bull market impulse waves retrace in a corrective wave back to the fourth wave of one lesser degree. Wherever Grand Supercycle Wave III ends, it will ultimately give up all the gains since Supercycle wave IV.

Confused? See For yourself: Shift your gaze up and to the right to where you see 377. That was the 1929 peak of Supercycle Wave III, which is one degree of trend below the Grand Supercycle Wave we are presently ending. The Bear Market coming soon will see the Dow Jones Industrial Average plunge to a level between the peak at 377, and the bottom of Wave IV, which was 41 in the Dow.

Why, you will ask, does that have to happen? I will give you my mother’s response in situations like these: “Because I said so.” I’ve been at this since 1968 and this is as near a certainty in markets as I’ve ever run across. Long time readers know that calling the ultimate top has eluded me for some time, but I’ve always done so when the data strongly argued for a top. Those tops were only temporary, but the expectation a collapse to below Dow 400 has never changed. The only thing that has been altered is the magnitude of the collapse.

Look at the 1929 top again and see where it bottomed in 1932 and, just to the left you will see the smaller corrective wave IV of Cycle wave III. Careful study of the markets of the world consistently show the same pattern. And if, like every financial advisor presently give advice, you can find reasons that “This time is different,” you are a full-on participant of the mania. There is no escaping visceral bullishness at tops. I could spend hours on the subject. You would nod your head at times, seeming to agree with me, but you would not sell.

I’ll write a bit more in the days ahead in order to flesh out the argument that when this bull market is over the market will not return to wherever it tops in our lifetimes.

What do I recommend? I don’t make recommendations because I have no skin in your game. I only have skin in my game, so I’ll share what I do, expecting you to make up your own mind. Fat Tony, a Brooklyn-born streetwise trader (very successful) sez: “Fugheddabout the tawlk, Rod, whattaya got in yer account.

I got 2 year Treasury Notes.




This entry was posted in Uncategorized. Bookmark the permalink.