As you know, we do not rationalize price. We do not rationalize constant tweeting that everything is wonderful when it is not. We do not rationalize “China wants a deal” uttered every day. We do not rationalize massive easing by central banks. We do not rationalize recession predictions and even some depression predictions. We do not rationalize $17 trillion of negative yields and what that may be saying. We just care about price because for us…IT’S NOT THE NEWS, IT’S HOW THINGS REACT TO THE NEWS.

Very simply, vital support held…and now we get 3 nice gaps to the upside in a row off of all that stuff we just mentioned.

Just keep in mind that before you get all bullish on a move up like you would get bearish on an 800 point down day:

The DOW is where it was Jan 2018.

The S&P is a tad higher than where it was March of 2018.

The NASDAQ/NDX is where it was a year ago.

The TRANSPORTS are where they were  Oct 2017.

The RUSSELL 2000 is where it was Oct 2017.

The FINANCIALS are where they were Oct 2017.

The REGIONAL BANKS are where they were Nov of 2016…that’s 2016.

Many areas are worse. Foreign markets are worse. This includes the past 3 days move to the upside off of the again, “calming” of trade tensions.

The good news is longer term support has held. But everything remains below highs and in what is becoming long ranges. Hopefully, some start moving out. Others have no chance as they are way down in their ranges…with some downright bearish.




Bearish flags in the big 4 big cap indices.

Bearish wedge in the SEMIS.

Small, mid, foreign, transports still acting horrid.

FINANCIALS no friends. REGIONALS much worse.

Fewer and fewer working. More and more not.

Do bearish patterns have to resolve bearishly? Normally, yes…but these days, a good tweet or a large rate cut could change the playing field. but normally, yes.

To be clear, if the lows pf the past few weeks get taken out, we suspect and expect institutions to recognize and act accordingly. React first, ask questions later.

GOLD/SILVER still en fuego.

BONDS still en fuego.

Extended can become more extended in GOLD/SILVER/BONDS. Just know, eventually, all revert back to the norm which is eventually the 50 day moving average.



Gap to the upside on fake news yesterday and gap to the upside on the same fake news today. The White House never spoke to China.

But we don care when we scan…we do not rationalize. Two gaps get a bunch of Friday back but major indices remain range-bound with the average stock much worse as the small, mid and the transports act terrible, not to mention foreign markets.

But also do not forget…easier money on the way.

Traveling today. Bigger report before the open tomorrow. Today and tomorrow, special 2 part radio show…listen at 606 pm et or archived soon after…2 parts on how bear markets start and how they play out. Of course, never ever going to have areal bear market again.


—-Greetings from Kotor, Montenegro…and may we say…spectacular!—-

—–This is a fair assessment of the facts starting with July 31.—-

—-On July 31, all was calm. The big 4 indices were near their all time highs. The fed was back in easing mode. Central banks around the globe were in serious easing mode. The internals of the market were not so great but still hanging in there.—-
—-And then the tweet. The president, out of nowhere, again, changed his mind. The president decided to put 10% tariffs on a bunch of stuff from China. This was another in a series of complete 180s. After all, coming out of the G20, the president decided NOT to put on these tariffs. This, after promising to put on these tariffs. We can work our way backwards but our brains would explode.—-
—-Markets were rattled. But of course, the motto of the day is DON’T BLINK. The president then, out of nowhere, took the 10% tariffs off of all the so-called important consumer goods. Kudlow, Navarro and even the president then contradicted themselves by telling the country this was “a gift” to the consumer by getting rid of some of the tariffs. But how is it a “gift” if the consumer was NOT paying for the tariffs as we have been told since day 1 by the administration? We know that answer.—-
—-But something happened. China…you know, the China that had everything to lose, the China that had to cut a deal, the China that is the weaker of the two…yes, that China gave the president “the Beijing middle finger” by slapping back. What? How can a country who has been weakened do that? Well, they did.—-
—-And a break in the action with:—-
—-The president compared Jay Powell to the dude from China.—-
—-A famed, a very famed economist (sorry, not mentioning) who defends this president said, and we are not kidding, that $1 trillion+ deficits are fine because interest rates are low. Yup…a famed economist who has railed against deficits forever now says $1 trillion yearly deficits…meh!—-
—-And back to our regular programming: Back and forth we go. Tit for tat we go. The president immediately slapped back. You bid 10. We’ll add another 5 and another 5 and another 5…—-
—-Which takes us to moving into this weekend. Again, we believe a fair assessment.—-
—-1A) After China retaliates, the president kinda sorta orders U.S. business to not do business with China…kinda sorta invoking some sort of emergency clause.—-
—-1B) The president’s aides now say he was not ordering business to move out of China.—-
—-2A) The president is all in on the trade war.—-
—-2B) The president is having second thoughts on the trade war.—-
—-2C) The president did not mean he was having second thoughts on the trade war and in fact, wanted higher tariffs than what he announced.—-
—-We believe this is a fair assessment of what’s been happening since July 31. And we must say we left out other happenings in this report. Frankly, we are surprised markets are not worse. We do not know how markets are able to put up with this. We are not dealing with ordering carpet and tile for buildings and hotels. This is about the economic policy of the engine of the world.—-
—-So currently:—-
—-All 4 major indices remain in the bear flags we told you about but now they are sitting at those lows. The “duh” observation is that if these levels get taken out, not good. It is not good considering those same weak internals we have told you about have worsened markedly while the big 4 got hit. The small and mid caps, the transports and foreign markets continue to act horrid. It will not take a lot more to roll the big guys over.—-
—-Notice we gave no opinion on the president…yet! We just reported to you what has actually happened. The problem for the markets both here and abroad is there is no way of knowing what is next. There is no way to pin down a moving target. To be clear, it has become a moving target as all evidence in, we have no clue what is next out of the White House. But don’t worry. Remember what we have told you, if the markets take another leg down, there is always the other enemy of the people in Jay Powell.—-
—-THE PRESIDENT came in and did exactly what should have been done. He lowered taxes and started to get rid of a ton of OBAMA-ERA regulations as Obama was the king of regs. What happened? The economy flourished. As we have said forever, just set good conditions and get the hell out of the way of the great American people.—-
—-The president says too much. The president tweets too much. The president changes his mind too much. The president antagonizes too much…seems like just for the sake of antagonizing. The president does not understand that less is more.
The president mis-played his hand with China and is now letting ego in the way. Ego with a small deal on your own business is a no biggie. Ego with the two biggest economies is a biggie. The president needs to recognize it is not what he thinks of China but what China thinks of China. The president is now boxed in like mixed nuts as he does not want to look like the one who caved. The president needs to somehow come to some sort of a near-term truce with China or else. What is else? You are dealing with asset bubble, debt-laden, leverage-laden, central bank-induced economies around the globe. It will not take a lot to touch off a vicious cycle.—-
—-In case you didn’t know, we are policy people here. We are not into personality. We are not with the schmuck psychiatrist on CNN who just said the president was Hitler. We are not with the dolt from CNN who did not push back. (He says it was technical difficulty!) Funny guy!—-
—-We are not Trumpians, Trumpsters or whatever you want to call them who when the president puts on a tariff, they say China deserves it and when he takes that same tariff off…crickets. We just want good sound policy and right now, it is a moving target. There is no way markets can be happy. There is no way business can plan. There is no way any good comes from constant motion and differing words coming out of the president, his advisors and the White House. The shame of it is all the president needs to do at this point…is nothing. Negotiate. Negotiate behind closed doors. Negotiate with closed mouths. Get any kind of deal done in the short term. And then get a grand deal done over time. Unfortunately, we doubt he will listen to us.—-
—-AND NOW THIS  MORNING…The president states they talked to China and and that China wants to make a deal. We find out that this did not happen. Futures are still up because at least the president is showing he knows something must get done. Hopefully, this is enough to move the needle.—-