Hugging the Trigger Line

What I am referring to is our more detailed in-house version of our Fed Influence chart that we have shown here before. What we have been seeing is a broadening trigger window with the Apex of the pattern holding. To me the pattern of the window is very important. In most cases it allows one to get on a trade at a better initial price level. Obviously one could wait for the trigger to be hit and then initiate the trade.

The Real Question, how long can the market stay disconnected from reality?

Here is the Fed Influence Chart updated though 10:00 AM CDT today. Before you look at it, put this thought in the back of you mind to ponder.

‘The Black Swan Canary in the coal mine, interest rates fueled higher by huge increases in debt, both government and corporate. ‘

You will note that this version of the chart has two lines added, a smoothed signal line, and a trigger line. As you can see the smoothed signal line has been moving to the right just above the trigger line since about a week ago. We will notify readers when and if the trigger is made on the most definitive market closing basis.

First, it may be important to review what the Macro Signal entails. It is not just about the stock indexes. It is also about interest rates, precious metal protection issues, commodity prices, and real estate prices.

Secondly, the item in the Macro index that gets all the glitter and publicity is the stock indexes. In the past 3 1/2 years the Donald has made it clear that the stock market is his personal measuring tool and what he is focused in order to get a second term. The result of that focus is a market that is totally unhooked from reality, with huge risks for investors when reality comes back.

Thirdly, the COVID-19 Pandemic has brought a whole new level of risk. The administration has taken the posture that started calling it a hoax and then backing off to ignoring it, and recently saying it is about over.

The market has bought the story and has taken the approach of pushing the markets up to levels that assume everything will be back to the old normal by the first quarter of 2021 (originally it was the third quarter of 2020). Who knows exactly how this will play out, but saner heads are pointing to a number of factors that illustrate that a lot more reality may be needed.

Some other views on COVID-19 at the moment:

  1. There may not be an effective vaccine in the near future (less than 2 or 3 years). Antibody strength and longevity are seen to be short lived in some early research. So while we could have vaccines, it may be that we will have to be vaccinated repeatedly.
  2. The University of Washington, IHME COVID monitoring group now projects total deaths of 309,000 by December 1. (this was Trump’s favored group early on in March, but then lost favor as he didn’t like their forecasts,)

Bottomline, hope is good, reality may need to be increased.

The Black Swan Canary in the coal mine, interest rates fueled higher by huge increases in debt, both government and corporate.

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