Wall Street Newsletter 10 : I told you so, some of you listened. Others didn’t. Part 2 ( August Predictions ) via /r/wallstreetbets #stocks #wallstreetbets #investing


Wall Street Newsletter 10 : I told you so, some of you listened. Others didn’t. Part 2 ( August Predictions )

Bear market over ? or Bear market rally ?

Disclaimer :

This post is for you passionate "Reddit Traders & Investors" because many of you people were thanking me in Dm's how this post accurately predicted the bottom. So today i thought why not do a proper follow up to this post and what exactly is it telling us about the future strictly based on "Technicals". So all the fundamental analysts are going to be harmed in this post. So please don't mind that.

Tl;dr peeps : Go straight down and start reading conclusion and result. I apologise for the scrolling.

Before we begin :

Let's clarify this debate once and for all. "Are we in a recession or not" ?

My thoughts : After drinking a bottle of whiskey last night ( stupid bear market rally ) and lying on the floor unconscious i have reached to a conclusion that nope we aren't in a "Recession". How dare you guys call it a recession and blame media, politics for not calling it one. Many of you guys will be like "Wooaahh bro what happened. Did Biden fever got you too". or "Go take you Meds" etc. No guys i'm perfectly fine and i do believe we are not in a "Recession". But what i do believe in is we are in "Stagflation". Now the case remains to be seen is if its going to be "Stagflationary recession" or "Stagflationary depression"

P.s. I got inspired by the government last week so i changed the definition of "Stagflation" to "Stagflation – High unemployment" ___________ . xD

Philips curve equation : π = πe​−b(U−Un​) + v where π = inflation rate, πe = expected inflation rate, b = constant, U = unemployment rate, Un = natural rate of unemployment, v = supply shock

Reasons of stagflation : The Fed cannot hike rate so aggressively that it causes economic slowdown ( did i used "cannot". Oh wait they can't. Fed funds goes 4-6% bid your farewell to USA. Currently its projecting 3.4% with rate cuts in Feb-march 2023) and neither can they let inflation run out of control to double digits. They have to navigate somewhere in middle if they are looking for a soft-ish landing. Meaning in the Philips curve unemployment will slowly start its progress towards somewhere in the middle of natural rate of unemployment Un and the extreme right side of NAIRU ( non accelerating inflation rate of unemployment ) for some rate hikes ( coz more we live on extreme left side of lower unemployment higher the chances of wage price spiral and increased inflation ) and these some rates hikes breaks just one leg of inflation i.e demand side and bring it down to half of about 4-5% inflation. But the inflation will still be above 4% ( due to constant v called exogenous supply shocks more by China "Recession" and the Russia "Winter Oil" ) and the unemployment in upcoming times will be more than 5% ( the curve has high slope ). The real growth i.e Gdp adjusted for inflation will also be lower than 1%. Hence this would complete the definition of word "Stagflationary recession" by end of this year or by 2023 ( Inflation around 4-5% + Unemployment 5-6% ). If this keeps up for 2-3 years then you get my favorite "Stagflationary Depression".

How did i reach this conclusion? Ask yourselves these 2 simple questions

-> How much higher should Fed funds go ? And will it be enough to fight inflation. If that no > 3,4% i can assure you stock market will make a lower low. Reason : June 14-16. Bond market yields peaked and stock market bottomed.

-> Will unemployment number go up as earnings recession comes at the end of year.

Note :

-> Just to clarify i have not ruled out a 'Deflationary Recession" (bonds coming from 3.4% 10yr yields) or "Deflationary Depression". ( preceded by Stagflationary recession and depression. So coming from govt bonds with yields greater than 4% ) The first Deflationary recession is still in the card if USA marries Russia, China and peace is brought back in the global financial institutions. Currently market is projecting this scenario and believe inflation will come down too fast. Meanwhile supply chains, oil crisis will resolve the problem itself either due to peace or demand just drops way too fast. And also unemployment will go up.

-> Yes you smart Fed officials or knowledgeable economists i don't know the "Keynesian Philips curve". The reason being i slept in my Ecom 301 class. Hence i chose "Classical Philips curve"

Do it yourselves and teach me and rest of us in comments section 🙂

Moving on :

So now we have clarified some things but one might ask how do we use this above information. Well folks when the Fed will try to fight inflation and not try to win a war over inflation. Thereby we are gonna get disinflation. And then in these time small caps to mid cap stocks are gonna rise so much with long term bonds price. And then Fed will be like Ooff its too much lets cool it down a bit. Then inflation will start tickling up and go for double digits. In this case the stocks will do a kangaroo, bonds will get hammered with yields shooting up and gold prices will go parabolically up. After that we shall see what happens coz then the situation will get so much complicated even for the best of the best investors in the world.

The deflationary scenario being disinflation ( stocks up bonds up in price with metals falling ) will start turning to deflation and then stock market drops bonds prices rises up even more exponentially ( Hence i told you to buy them b/w May 15- June 15 ) and gold prices collapse even more but then Fed comes rescue us by QE+ mooning stocks, metals and everything else. The Fed one and only "Fed put".

Here's the 3 trailer of three different movies titled "High inflation" in ascending order :

1970-80 : The two peak 15%+ Inflation. Currently i believe we have completed peak 1 or are close to peak 1 ( Area 4 or 5 )

1940-50 : The 20%+ inflation where we dealt by yield capping 10yr to 2.5% w/o increasing balance sheet

1915-21 : The 25%+ high inflation with letting free markets decide. No yield capping, no changes in balance sheet

We are gonna leave this problem for now because i'm in a bit hurry and getting calls from my Illuminati job. Unfortunately they want me back. ( Do tell in comments if i should say f you to them or just do their bidding xD ) . So, it's for you guys to play with this and figure out the inflation i.e CPI yoy vs Gold vs 10yr bonds vs Stock market problem. Find a logic that applies and works for all three situation. Got it. I know you guys can figure this out. Hence i leave this task up to you.

Previously on Wall Street : I told you so post. ( 3-4 months ago )

Nasdaq :

– Stoch RSI bottom with numbers matching left and right. Meaning no significant down move possible with room for a slight leg up in the bottom, though ( like 2008 )

– RSI has a history of bouncing b/w 40-45.

– PVT(O) is already in the max pain accumulation zone. Meaning some big whales will be buying here.

– Two red candles and similar bar charts pattern.

– Ketlner channel has a history of bounces from red zones.

– Fib retracement bounce zone of 50% – 61.8%

– 50wMMA is lying in the channel of fib and red zone.

Result: Rally starts after June fomc. Two green strong months are coming. Est : July , August.

SPX :

https://preview.redd.it/o2n4trtbk1f91.png?width=1920&format=png&auto=webp&s=46696f4211c82ad5f13378814db2cae69b371949

– Stoch RSI bottom.

– RSI at 40-45 zone. Possible chances of bounce.

– PVT(O) not full red. Meaning not many whales are accumulating right now.

– 50wMMA can come, but there is also a probability it won’t. But there is zero probability it goes straight down from here without an exit liquidity rally bounce of 2 months.

– Ketlner red channel

Result : Rally starts after June or July FOMC and gonna be volatile months. One green month is coming in August. Rally doesn't look strong in comparison to Nasdaq.

Housing :

https://preview.redd.it/10zoru7bj1f91.png?width=831&format=png&auto=webp&s=ecc05cb9c8ce37d152bfddbc211f2a98ba36b1e8

Now : We shall calculate the top of this Bear market rally using 6 "Technical principles Analysis".

The stuff below is Supernatural xD

So since you guys know i am a huge fan of two Youtube channels and i suggest you guys giving it a try too. So shout out to

"All in Money" podcast which releases video once every week. ( Sir if you're reading this i gotta say i'm a huge fan )

and the other is "Everything money" ( Sir you guys are amazing. Love your 8 pillar analysis. Not a huge fan of mocking others though )

These guys inspired me to create a basic principle in investing and trading.

So here are these 6 technical principles which i created on my own by comparing them with price action :

-> Candlesticks.

-> Stochastic RSI + RSI ( Reading and divergences ) + Volume ( Just divergences )

-> Moving averages / Exponential MA' ( Mostly 50,100, 200 MA and 233 EMA on daily, weekly, monthly )

-> Elliot wave + Fib Retracement / Fib trend extension + Trend based fib time ( rarely )

-> Ketlner channels, Ichimoku Clouds ( Sometimes )

-> PVT(o)

Let's go and apply them :

Experiment : Predicting Top of bear market rally.

Instruments :

Nasdaq : SQQQ

SPX : SPXU

Housing bubble : DRV

Hypothesis :

-> Comparing things with 2008 coz it worked for us initially. Also the fact that due to housing bubble explained below in Step 3.

-> Technical Analysis is a prism to see through the boundaries of space and time and fundamental analysis just screws up with your mind. xD

Procedure :

Step 1 : The Nasdaq Analysis ( Ticker : IXIC since it is the far dated one. Technically solid. )

The Monthly chart

Monthly Time Frame Analysis : ( Bottom : June 2022, March 2008 monthly candles )

  • Candle Sticks : The first bullish engulfing ( July close ) in a long time for 2022 hence we compared things from March-April 2008 times. ( April close )
  • Stoch RSI : In deep water will come for a touch to 30 just like 2008
  • Moving Average : Tested 50 MMA and now will head upwards for middle Ketlner bands.
  • Fib Retracement : There are two fibs taken here. First fib is for the upwards move upto where this bear market rally 2 will go. It's mostly looking like it will go to 0.5 – 0.618 levels. So loadddd up those shorts there. If the candle closes above 0.618 on monthly TF that will be my invalidation case. The other fib is for downwards projections wherever this upcoming crisis will take us. The ans is 1.618.
  • Ketlner Channels : Notice there are two upper green, two lower red and one middle line ( changes color ). So a two green and two red lines makes a green and red band. And one middle line. Right now as you can see we have bounced from a red band in both scenarios. And now are heading to changing color line.

The Weekly chart

Weekly Time Frame Analysis : ( Bottom : 13 June 2022 , 17 March 2008 weekly candle )

  • Candle Sticks : As you can see we have currently breached that wall at may – june and are working towards for region b/w 0.5 – 0.618.
  • Stoch rsi & RSI with moving averages : As you can see the pattern of Stoch rsi and RSI there is a difference this time around.

In 2008 we had lower high Stoch rsi and RSI with price action lower high and touching those beautiful 50 and 100w MA after bouncing from 200,233 MA and EMA respectively. Meaning a bearish divergence of class B under reversal section.

In 2022 now we have higher high Stoch rsi and RSI with price action waiting to be seen if it will breach those 50 and 100w MA after bouncing from 200,233 MA and EMA respectively. In my opinion they wont. The reason being a death cross of 50 and 100w MA is coming. So what will happen is a price action of lower high with oscillators higher high. Meaning class A bearish divergence of hidden continuous section.

  • For divergences the references is below.

Key thing to note is "History doesn't repeat it rhymes". So as you can see in 2008 we tested 50wMA after bottom. But here in 2022 we already did that after bouncing from 100wMA before bottom. So there is a slight chance we could drop sooner but definitely not later. Just don't forget that. So the takeaway is we will have a touch of 50wMA but does it happen two times or just one time or maybe not at all after June 15 bottom remains the case to be seen.

The Daily chart

**Very tricky

Daily Time Frame Analysis : ( Bottom : 16th June 2022, 17th march 2008 daily candle )

  • Candle sticks : Current one looks like Inverse h&s.
  • Stoch rsi & RSI : In 2008 we could see a bearish divergence on daily did the trick. Lets see how it will happen in 2022.
  • Moving Average : This is so beautiful guys. Look at that beauty. In 2008 we greased the 200dMA two times after bottom. Just like 50 on weekly. This times it's looking similarly that we will grease those 200dMA. Just like weekly the case remains to be seen will be it two times or just one time or no time after June bottom. This is the reason guys i flip flopped and told you to sell coz the crash could very well come early ( In references down below ) . But personally i believe its gonna come after touching 50wMA and 200dMA atleast one time. I hope i'm making it very clear guys. If you have any problem feel free to ask in comments section.
  • Fib retracement : You know this by now. Just draw a fib top to June 16 bottom. Then remember 0.50 – 0.618 the loadddd up those shorts zone.
  • Notice those extra green and orange lines. They are for letting you know dates for temporary bottom reversal and the second touch.

So now you might be wondering what the hell bro why did you do a IXIC ( Nasdaq top 30 companies analysis ). Should've a done a US100 analysis or NDX. Well my folks it's not that easy. The way we Illuminatis work is by looking at charts which go far back. These two above charts don't go to 1970's time. So friends this was also the reason i didn't do a Pvt(o) analysis coz it doesn't even show there in trading view. Hence i have created these 3 charts on 4hr, daily and weekly time frame. And this is what's gonna blow your mind even more. And then you might realize why i flip flopped and told you to sell above 2% from June 16 Swiss Franc bottom.

Left : 4hr , Right : Daily Chart with Pvt(o) , Elliot wave , Ichimoku cloud.

Weekly chart

We have already discussed above the "maximum stretch case" and below down in a reference for "early case". These two charts above is "way early case with no touches.

What's concerning me here

-> What happens if price action touches weekly trend lines with stoch rsi crossing. Pvt(o) breakout is done on weekly which makes me optimistic though that a short to 200dMA will come.

-> But the Pvt(o) on daily scares me. And also the volume and price divergence. And then the Ichimoku cloud too providing huge resistance. Even the trend lines my god.

-> 4hr doesn't scare me at all coz it 4hrs.

Step 2 : The SPX Analysis. It's your turn now guys. I will leave this one to you. Tbh I'm still in hangover.

Step 3 : Housing Analysis.

Cmon, guys do i need to explain this one. Just check the last month Redfin data of housing and also the data coming from China. Last time in 2008 it was just one. This time around we have two largest economy in the world for the housing bubble collapse. But yes some people will come and say housing is still cheap compared to rest of the places in Europe or UK. Just tell those guys that current USA employment rate is under 3.6%. Once those unemployment number goes to 5% then come and talk to me about how are you gonna pay the mortgage for the houses.

Also the rent is about to skyrocket and the tenants will be unable to pay those rents of their household owner. They might leave the place and buy themselves a new home if still employed or they might just i don't know.

A case for housing.

Look i'm not saying entire housing of Usa will collapse but yah most of the parts of America. Sure.!

Step 4 : It's bonds. I have said explained this billion times already. This chapter is closed for now. May 15 – June 15. Only a change in Fed funds or 10yr yield crossing 3.4% will resume this chapter. So when it happens i will make sure to update this.

Step 5 : Metals : My Stagflation _______, My Gold , My Rules.

The strongest Gold rally. This is my reason for double peak Cpi. And not deflationary but a stagflationary recession.

Result :

Nasdaq composite IXIC : Shorting zones for one or two touches. We do nothing for 0 touch except see the global financial system collapse before our eyes.

Entry zones :

By moving averages : 50wMA / 200dMA ,

By dates : 3rd-4th week of august is end of bear market rally. Exact day is formation of two peaks at 15/16 August and 29-30 August. Choose yourself when you want how you want.

Target :

Will be upon your greed levels.

SL :

Close above 200dMA and 50wMA.

P.s. I haven't shorted myself coz how can i. My time machines is broken after my last Wall Street Specials with Peter Lynch. Iykyk 🙂

Conclusion :

*** Remember again : Crash could come early. And it all depends do we go for 50wMA/200dMA two times or one times. Hey maybe 0 times too.

So there are three scenarios :

A) Two touches

First touch will be in last 2 weeks of August making the temporary bottom reversal at 14 October

16 November shall be the second touch to 50wMA/200dMA.

This is a "slow type crash".

B) One touches

Last 2 weeks of August ( 15 august first peak and 29 august second peak ) and then we start the "Mega crash".

This is a "fast crash".

C) Zero touch

The reason i had to flip flop coz crash could start right now in first two weeks of august.

This is the "bullet train crash". The collapse of financial institution.

References :

Candle Stick Patterns

RSI, Stoch RSI Divergences

The early case chart after touching one time. Aka : The \"Fast crash\"

Ahead of Fed September 21 : The data you need to look at

Forward guidance is dead in my opinion so don't listen to other Fed comedians on the way to September Fomc.

  • August 5 : July Payrolls
  • August 10 : CPI
  • August 26 : PCE
  • September 2 : August Payrolls
  • September 13 : CPI

Closing thoughts :

Thank you for making it this far guys. I know this post doesn't contain any great quality. But i thought it was okay. Also i apologize for last image post called "Leaked memo". It was under the meme section guys. Not news or something else.

Anyways i hope you guys enjoy your morning. Time to get on to work this month. Institutions and hedge funds are coming back. Lot of volatility is expected in the upcoming month of August , September and October.

Bank runs are coming, housing is going to get collapse, Powell might shock us in the 'Bearish of all bearish September months", European kiss of death ( Italian electricity dependence crisis and German bund yield collapse ) and the geopolitics is getting interesting b/w Pelosi, Taiwan and China. Don't forget the Russians.

So keep enjoying life guys and make those tendies on the way down. Also again don't forget it's a bear market rally 2. Just trust me on this 🙂

Regards

Uchiha

Submitted August 01, 2022 at 03:01PM by DesmondMilesDant
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