Friday was, neatly, exactly the last day of the quarter, and we kick off the final quarter of this so-far glorious year today. Let’s look at a variety of important ETFs using quarter bars (each bar represents a full three months, instead of the typical single day0 to get a crude, long-term picture as to where the markets stand.
We begin with commodities which, thank largely to oil and precious metals, has traversed to the bottom of its multi-year ascending channel. What we want to see next here is a break, which I am anticipating will happen thanks to continued weakness in commodities.
The Dow peaked at the start of this year, and we’ve been tracking lower in a descending channel. I am anticipating a more substantial drop in the months ahead, resembling what we saw during the financial crisis but, ultimately, even worse.
Although U.S. markets ultimately peaked early this year, the emerging markets have been in a bear market for a full year and a half so far.
Looking at worldwide markets (sans North America), we’ve just finished our third large red bar, echoing, once again, the wipeout around 2008.
Asian markets have been weak, with Chinese (by way of FXI) showing persistent weakness, and the old age colony known as Japan is finally succumbing to gravity, in spite of literally quadrillions of yen in “support” being burled at their broken, kabuki theatre “markets.”
Which brings us to gold. Poor, poor old gold. The so-called inflation fighter, which has been a wretched pig. It has lost a full 20% of its value, defying its “precious” moniker utterly. We are presenting at major support, although I wouldn’t past this rock to break that as well.
Looking at the long-term chart of the Nasdaq is truly nauseating. Just take a look at the steady ascent, particularly what was taking place from 2013 to 2019. There’s not a downtick in sight. It’s as if a medium-sized green bar was required by government edict every single quarter for years on end. Anyway, one doesn’t pay for fourteen years of fraud by having a few weak months. This channel is at risk of failure, although there’s no doubt a lot of the froth has been blown off the top of this beer, as the hundreds of 90%+ losers can attest.
The same “a green bar every single quarter” freak show can be witnessed in the S&P 500. My hand to God, I don’t know how I survived.
Shield your eyes, Frank. It’s time for bonds. As you can plainly see, the demolition of bonds is unprecedented on this chart. Complete devastation, mayhem, and gnashing of teeth. It’s up to the hairless choads at the Fed to see how much longer this bonfire burns.
Finally, there are the banks, by way of the XLF fund. The wedge pattern provided a perfect repulsion point, and now we have a completed top. If this top fails, that could set into motion the 2008 scenario immediately.
As I enter Q4 2022, I am 100% loaded on the short side with January 2023, March 2023, and even January 2024 puts. Godspeed.