The quest for excitement goes off the scale!

The quest for excitement goes off the scale!

At certain manic times, such as the one we are currently in, the quest for speed goes hyperbolic.  In the 1920s, it was all about air speed races, road races and speedboat races (Donald Campbell in Bluebird). There was an ongoing race among ocean liners to beat the latest passage times (the Blue Ribband) from Southampton to New York. One major theme of the age was to design everything aerodynamically, from cars to planes to bicycles (!) and even to buildings (the iconic art-deco BBC building in Portland Square is reminiscent of a fast ocean liner).

And near mood peaks, this speed quest captures the public’s imagination, and it receives much more MSM coverage than usual.

This quest for speed is always a symptom of the end of a lengthy positive social mood that is near a peak and in the 20s, this culminated in the stock market bubble and then crash.  Speed and adventure go hand-in-hand with a manic bull market because they are driven by the same basic human impulses and usually unrealistic over-bullish feelings about the future.

Speed freaks get the same adrenaline rush as winning day traders today!

So last week, the news emerged that a ‘supersonic’ Bloodhound car will undergo 200 mph tests and then go for a speed record of an amazing 1,000 mph next year!  The current record is 763 mph.  Usually, a new land speed record is made by increments on the previous speed, but this, if successful, will be a massive 30% jump.  That’s a massive vote of confidence in the future alright!

I have mentioned previously the push to self-driving electric vehicles that promises to transform personal travel.  I’m sure there will be many bumps along that road for this vision to become widely adopted.

This unbounded confidence (mirrored by stock market bulls) is matched by the rocket men who are planning tourist trips to the moon, and even to Mars.  All together, we appear to be on the cusp of faster speeds, adventures to our moon and another planet, self-driving vehicles.  What could possibly go wrong?

But this thrust into the future only appears when social mood is extremely positive – and about to turn down (as in 1929).  The last time it happened was in the 1960s, we had the Apollo moon landings, muscle cars (I was the proud owner of a Chevrolet Camaro in 1969!) and the quest for more and more speed and adventure was on.  But all of that came at the end of a vigorous bull stock market that got started in the early 1940s.  The 1970s were not so kind to the stock market.  The same will be said for the 2020s.

I believe this current quest for speed and adventure is the manifestation of the same phenomenon – it captures maximum confidence in the future that accrues after a lengthy build-up. And that is when negative surprises happen that shocks the majority, and produces huge stock market collapses.

But despite a small sign the bull was flagging on Tuesday with a swoon, the S&P pushed into new highs on Friday as Amazon and Google revealed huge results.  Here is the daily

I had thought Tuesday’s close to below the upper blue tramline highlighted an ‘overshoot’ that usually heralds a trend change.  But the dip was turned around as the market tested the inner blue tramline support – and it held.  That little episode did produce purple wave 4 which was a textbook three down:

Also note that the Law of Alternation was demonstrated with wave 2 on the daily chart a complex A-B-C, while wave 4 was a simple A-B-C.

But by my reckoning, we are in the final five up to the Big Top as fifth waves of many degrees of trend complete.  Accordingly, there may be one more push up next week to complete  purple wave 3, then a wave 4 dip and then a final push in wave 5.  Note the looming mom div on the daily.  If that persists on any further rally, it will add fuel to the downward fire.

I had penciled in a major high by early November and so far, we are on track.  At this year’s November 5th anniversary of the Gunpowder Plot, more fireworks than usual should be seen.

The elephant in the Wall Street traders’ room is of course the massive global debt that has accumulated in recent years. China is a ticking time bomb of debt, as are most nations.


Are commodities back on the rise?

A curious thing happened yesterday – a wide variety of commodity prices rallied as if in unison (with the notable exception of natural gas) – and this from general corrective downtrends.  For example, here is Arabica Coffee – a market that can move very fast and produce large moves.  When you catch a  move, it can produce very large gains

I noted the very large downward sloping wedge in a textbook A-B-C.  When the upper wedge line was penetrated in the summer, it signaled a bull market ahead.  But what a frustrating experience trading it!  We had some large moves both up and down and only recently did I feel I have a handle on the outlook.

I now have a small pink wedge on a momentum divergence and a break up yesterday of the upper pink line.

I am setting up VIP Traders Club members for a campaign in coffee.

But the driver of these moves was the pivotal crude oil market.  Brent crude made it to the $60 level yesterday which is a multi-year high.  Sentiment remains quite bearish on crude but I have had a $60 target on US crude for some time – and we are getting closer.

with the push up out of my wedge yesterday in what is a C wave. I also have a secondary target at around $70 which could loom into view as the rally progresses. I imagine there are many buy stops just above the A wave high at around the $56 area that should add  more fuel to the fire.

VIP Traders Club members have been long for some time.

Not to be left out, silver successfully tested my last chance saloon Fibonacci 78% support level

at the 16.60 level and appears to have made an impulsive rally.  A move above upper wedge line will confirm uptrend intact.  I am not so sure of the medium-term wave labels – I admit they have me stumped.  But I am going on the idea we are still in a bullish relief rally that has not yet completed.

VIP Traders Club members remain long.

Of course, these bullish commodity moves are entirely consistent with the fast-declining T-Bond market as higher commodities is usually associated with rising Producer Price Index which has been rising in the US for some years. Treasury yields generally rise with commodity prices.

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