FOR THURSDAY: (4/6) We told you this would be a wild week and so far it’s living up to its billing and not over yet and should get wilder as we move into Friday. At this point we had some clear reversals on Wednesday but now need to get 62% retracements of them to get in better.
It started off so well: the blistering ADP payrolls report, the highest in over two years (despite disappointing PMI and ISM reports), sent stocks soaring off the bat with the Dow jumping nearly 200 points higher, rising as high as 20,887, and the S&P knocking on the all time high 2,400 door again, and AMZN to new all time highs, and making some wonder if the reflation trade had returned.
It was not meant to be, because while it took the market some time to digest the Fed’s minutes, the FOMC delivered one of its loudest warnings to date that it was focusing not so much on inflation or employment, but was seeking to deflate what even “some members” of the FOMC agree is a stock bubble, warning that stock prices are “quite high”, and warning that its forecasts face “downside risks” if “financial markets were to experience a significant correction.” –zerohedge.com
BACKGROUND NOISE CONTINUING: We’re moving into a potentially intense week politically and could spill over into the markets. On the calendar is a Trump meeting with China, and we have to think that N. Korean games could heat up this week. Spring cycles suggest a repeat of the June cycle that led to the trigger of Brexit and that cycle kicks in the week of April 3. Britain is invoking Article 50 on March 29, which will lead to a 2-year transition. This cycle also suggests more revolutionary energy for France on May 7 and eventually Italy. We last saw this cycle around Brexit and it created massive moves in the market, so the week of April 3 could also produce something like that. That in connection with an intense fear cycle could lead to a major turn if there’s a trigger. There is also the start of a 7-year cycle kicking from April 2017-2024 that will increase military and technological development, and it has an 84-year synodic period. It signals unpredictable, sudden occurrences, such as May 2010’s “flash crash,” when the Dow dropped 1,000 points in 5 minutes, wiping out many small investors. This cycle is connected electricity, shock, computers and inventiveness and social activism. It will be running for the next 7 years.
All of this puts us on alert not to take a lot of positions home unless you are clear on patterns and cycles and can manage risk.
