The ball is the stock price. The recent rally is the bounce from the last market correction. When a ball stops bouncing, it rolls for a spell until it stops. The reason is gravity. There are more Bulls than Bears. After the bear growls, the bulls put juice back into the market. However, there is only so much juice. The energy runs out. With the knowledge of charts, we can see the strength of gravity. The chart pattern of the three black crows is being completed. A retest toward the last high, but never eclipsing it. As for the juice, it is stronger to the downside. This tells us at Evolution that another drop is coming. We believe the market will test the last correction at 38,500 of the industrials. If the price is not pierced with stronger volume, than what we stated in the previous piece, a market consolidation.
The ball is rolling until it stops. The market is waiting for something to give conviction. At the moment, it is just playing catch between the bulls and bears.
Enter the Fed
The conviction should come from the Fed decision in September. Whatever happens, the verdict will be seen through the value of the dollar. King $Dollar broke support at 103.5. Last Friday, it closed at 102.3. The market may like a lower dollar, but so does inflation. The two fools running for the top spot only offer ideas that destroy the dollar, our standard of living and most importantly, endanger the dollar as the world's reserve currency. Our currency is becoming unhinged. Wall Street, the government and the media are like the French nobility just before the revolution except no one can afford cake. They forget that the inflationary prices are set. Our citizens cannot make ends meet. Just because they say inflation is falling, does not mean that a dozen eggs are back to $1.25. They are $2.75. Those prices are my regional costs. Yours will differ, but the point is the same. We can see the future in the price of gold. It broke a record last week at over $2500 an ounce. Gold has a value. Paper does not. The two political parties are too egotistical consisting of mostly rich lawyers who have lost touch with reality.
This is Reality
The average home tax on Long Island, New York is $10,000. Could you afford that? If our nation were to lose the dollar as the world's reserve currency, the above number will double as well as whatever you are paying this year. What a knowledgeable candidate should propose is the necessity of a balanced budget amendment. Amen!
By the way, last week's inflation index showed a reading of 5.7% rise in the cost for shelter. It didn't give a mention to utilities which rose everywhere in the nation like in Baltimore at 11%. Ouch! Of course, the three things that we all need everyday, food, shelter and energy are not included in the phony Fed matrix formula for inflation. The BS is because of the volatility within each. Here is the inflation level with just the three needs for life. Food rose 2.9%. Energy 2.2% and shelter up 5.7% = 3.3% for the month of July. You compound the years total and then, you can understand why we say we are in a "stealth recession." This is the sad reality of life.
A long time ago (1965) in a different life, a folk singer sang, "The Eastern world, it is explodin' Violence flarin', bullets loadin'...You can leave here for four days in space, but when you return, its the same old place: fighting and destruction all over the place...And you don't believe we're on the eve of destruction." Thank you P.F. Sloan for your true words and the voice of Barry McQuire. You won't hear that song from the Democratic convention or at a Trump rally. That is our reality. Peace.
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