Dollar Up, Market Down

Gravity says, "What goes up, must come down." 

Market Says...

When the dollar rises, equities fall. Values never change. It is just the machinations of currency exchange. This is part of the thinking, "Don't fight the Fed!"

We called for the dollar to bounce back in January when it held resistance at 100. We said that we think that it will rise to 106. This price action has put pressure on the market. So far, we are correct. The market is falling and the dollar is rising. 

Commodity Trouble

Dear Reader, you know by know that we like the precious metals and oil is a necessity. It is sad that it is a big pollutor, but until someone can achieve a new, safe energy source, it is what we got. 

Dr. Copper, has done a full fibonacci upward price move from $3.13 to $4.36. It should retrace with the dollar strength. Then, we will find out if China reopening can effect its price? The calendar must also include the next Fed meeting.

Gold, has already begun its retracement. We would like to see that it holds $1800, but we think it will find resistance at $1798. The precious metals have shown solid pricing power in the face of the Fed interest rate hikes. We believe it will rise over $2,000 this year. 

Oil, we are not hypocrites! We may support the Sierra Club, but the need for oil is basic to our way of life. We do not want to get into the politics of the environment group, but we do not follow all their beliefs. Anyway, oil appears to be forming a head and shoulders pattern on a daily chart. If it completes the configuration, oil should fall to test the lows at $70. Then, like with copper, the reopening of China could change the price after that point. 

Now, we like to address the State of the Union Speech...

We love "Made in America" however President Biden has done little to make that happen. His quote about the supply chain is nice BS, but action speaks louder than words.

He gave a few truths. Our infrastructure is 13th. We have stated this many times. We are not in the top ten in all categories that matter. We lead in homelessness. Poverty is a growth category - action speaks louder than words.

$400,000 tax free! Get freaking real! President Obama showed that he was out of touch when he used the income level of $200,000. People, if you make $400K per year, you are wealthy. Biden did point out one truth that corporations made $40 billion in profits and paid no taxes. We need to tax them all, especially the ones who outsourced jobs. We need higher tariffs! We need a fairer tax on income and we need to balance the budget. Does anyone realize that last month, we had $968 in the RED in our import/export column. Does this sound like a supply chain made in America? Action speaks louder than words.

Defense, is led by incompetent idiots! Their lack of action says it all. When they do act, they usually  make the wrong choices. God, please, help us.

Summation: Biden said, "Hooray for our side." The Republicans offered nothing. The only truth is a point about the American people, "Never bet against America!"    Peace.

Barbarians at the Gate

 Market Outlook: We called a retracement last week. We feel that we are correct with the outlook. $King Dollar has shown resistance at 101. It moved up last week. We see a possible return to 106. If we are right, the market will pullback until this level is reached. At that point and time, the market will be deciding on the Fed's next move in the late March meeting. Inside the market, the Bulls and shills have put forth many reasons for the return to a bullish market. 

We do not see what they see. We are in a stagflation economy. Prices are at levels where even those who received a wage increase, find that it does not make ends meet. We are worse than paycheck-to-paycheck. We are credit card bill-to-credit card bill. Who buys eggs at $6.00 per dozen? EV cars begin over $32,000. The GDP report reflected the strong demand for military uses. When you spend billions of dollars, you move indexes. This does not help the masses. The unemployment report at 3.4% is one big lie! 

With that said, we are very upset, angry and fearful concerning the Spy Balloon. We are in Rant Mode!

Dear Reader, the military cannot be trusted. We are talking the Pentagon. This so-called "weather balloon" by the Chinese is a slow, moving 19th century device. It should have been tracked the moment it left the air-space of Asia. When the upper air currents took it over the Pacific Ocean and over the Aleutian Islands (an archipelago off Alaska) action should have been taken. It wasn't. This is how stupid and egotistical our military leaders are. We feel that this should be known. During WWll, the creative and crazy minds of the Japanese came up with this idea. They would float air balloons filled with gasoline. They would be carried by the jet stream to the West Coast where they would crash and cause many wildfires. Some of these balloons completed the journey. The Chinese are only copying the idea like they copy and steal many of our ideas by hacking. Public concern has alarmed President Biden. He says, "We'll take care of it." He is a phony politician who does not have the balls to go against the pentagon like JFK did in the Cuban Crisis. With modern technology, the damage is already done by this balloon. It gets worse. When they shoot it down, (they did) they will not reveal any truths in what they discover. Again, our military cannot be trusted. And then again, worse still. With public pressure, it is revealed that the military now says that they know of three other episodes of Chinese spy balloons passing out our nation. With all their money, satellites and other tools, how incompetent is our military. They all should be fired except they will be replaced by the same thinking that is taught by the present leaders. These are the people that we have watching and protecting out homeland. We are in serious trouble with a caoutal "T."

Cameras...

...that you see everywhere are almost all made in China. They are on in all our military bases. Could the teck in the balloon be passing updates to these cameras? Maybe uploading data on base movements and other info. That is only one fear. There are many others, but space is limited. When you consider the last days of Rome, our nation is following history. Rome debased their currency and we did too. Our Federal Reserve has too much power and influence. They not only hurt US citizens, but they anger the global community with their policy and actions. Recently, China flew a hyper-sonic jet around the world. Russia has one too and we don't! Our space satellites are interconnected. The danger is if you knock one out, the rest get knocked out. We are still building air-craft carriers in an age where smart bombs and torpedoes can find and sink any ship. Imagine the loss of 5,000 men, planes and equipment in one minute?! We are being led by egotistical, arrogant idiots! Pray for peace because things are looking very bleak. I could go on about civil unrest, but forunately, the calendar says the Super Bowl is coming. It connects all of us. Let us keep that thread of unity for the coming year. Peace.

Retracement

 - Whatever goes up, must come down = Gravity.

- Isaac Newton

Recent Market

It has bounced. It still has not touched or breached the last high. We, at Evolution say it has run out of gas. The Federal Reserve will make its annoucement later today. It does not matter what the hike becomes, as long as they show a committment to continue to fight inflation. The only thing that the Bulls will view is the outlook. Will they pivot in March? In any event, King Dollar should also end its decline. It should bounce. Together, these points will cause the market to pause, reflect. This points to a possible consolidation period leading up to the March Fed meeting.

Meanwhile...

The market continually hears big firms laying off people. Newell and Coinbase join 3M and a host of teck companies that are issuing pink slips. Bankruptcies are growing. You can add Serta Simmons for an appearance in court. At some point in time, this has to be added to the market's thinking and price action. 

Then, the ongoing debate over the debt ceiling. Dear Reader, there is no debt ceiling. Our leaders only know one thing, SPEND! Their playbook says, "Add debt to existing debt. Inflation makes everything cheaper because we can always print more money." This is another reason why we say we need a new third politcal party with a platform that puts citizens first as in the constitution (promote the general welfare) and end all foreign entanglements. Speaking of which, last week the GDP came out. It stated that the economy grew by 2.9%. This is also misleading. Billions of those growth figures came from the military. We are running a military economy with ammo, weapons, drones, etc. No one is buying cars.  Many of those who purchase a big item are falling behind on payments or they are overloading their credit cards. Not good.  There is one chart comparison that everyone should read, understand and keep in mind. It displays the last 20-years to the present.

              Last Two Decades                                                               Today                                                 low interest rates                                                                    higher rates                                                     high stock P/E ratio                                                                   low P/E stock ratio                                     Buy theDip                                                                                Sell the rally                                                Risk-On                                                                                     Risk-Off                                                      Innovation - no worry about profits                                          Seek assets that generate cash                    Stocks rule                                                                                 Bonds and Commodities                            growth firms                                                                              value firms                                                  Institutions move the market                                                     Retail influence returns                              Market depends on economic policy                                 Ideology influences economic policy.

Today's Fed action and outlook will have a hold on the market until their March meeting...Peace                                                    

Odds and Ends: January 2023

Divergence

This is the word to describe the present state of the market. The Dow's rally had little strength. It showed its weakness last Friday to which was options expiration day and it had no volume or energy. On the other hand, the NAASDAQ rose on strong volume. This is not harmony. The market is calculating too many aspects with no clear determination on any of them. The war in Ukraine? The unmentioned conflict of national currencies? Inflation? Will the Fed slow their rate hikes and pivot? Will their be an earnings season with plus surprises? Will China opening up versus COVID be a worldwide pump to global nations? What about Davos? The Chinese Lunar New Year? These and many other questions is the easy part to the equation. The hard part is the correct answers.   

Where to Begin?

King Dollar is always the centerpiece. However, teck is offering the first salvo. Job cuts were sprinkled into the news last week and this. When giants like Amazon drop 18,000 people, you take notice. They are not alone. FB = 11,000,  Google = 12,000,   Microsoft = 10,000, Shopify = 6%, 3M = 2,500 and a host of other players in the teck field giving pink slips to another 70,000. People are losing jobs and these are better paying occupations. This is not good for the economy. By the way, the CEO of Rocket Mortgage sold a large portion of his shares at the high of his companies share price. What does he know? What does he see? Whatever your conclusion, it will not be a positive to the economy.  

Meanwhile,

$King Dollar is retreating. Since it touched 114.75 last September, it has dropped straight down. It has given up 13-points. This is huge! It is in the range of its last breakout. Between now and 1 February when the Fed declares its next interest movement, the next direction of the dollar will be determined. If it rises, the market sinks. If it continues to fall, the rally will have legs. Keep in mind, the dollar effects everything from US corporate profits to commodities and ultimately, global trading. Divergence.

Speaking of Commodities,

the word from Davos is copper is in play in 2023. Elite analysts cite its many uses, supply levels and future production. Now, the good doctor is known as the bellweather of economies. If you need copper, then, you must have many strong points to your economy. This forecasts a rising stock market, but high prices is the best medicine for less demand. Divergence.

Continuing,

on commodities. Oil is showing strong resistance at $75. However, it really depends on what happens in China. If their demand is not what it use to be, oil could fall below support level. Staying in China, their lunar year begins at the end of the month. Will they run-around and visit this holiday season? Will they resume buying gold with the price at its high? Whatever will take place, usually has a quiet period in all commodities until their joyful season is over. After the first week in February, oil and gold will receive their direction. This is not divergence, but an unknown. 

Real Danger...

...in the world came with the knowledge that China shot a hypersonic missle around the world. US soldiers reported seeing a UFO. People, this was this rocket. Now, Russia fired a similar missle around six months ago. Putting the two together, the world is totally unsafe. Any world location could come under fire. The arms race is resuming...This is reflected with the Doomsday Clock moving to the end of civilization by another 90-seconds. Climate change could see a point of no return, if any of us are left? Getting closer to home...

What Kind of Society...

...do we have? There are two scary reports and this stat, the US has had 40 mass shootings in 24 days. Now, the reports. The first says that 25% of ALL New England children are obese. We are raising "fat" kids. This tells me that the anti-PF group are so, so, very WRONG! Not only do we need PE, but we should declare a war on junk food just like the cigarette firms. If there is no real food in your product other than fat, these bastards must put it on the label. It should read, "No nourishment. Bad for your health." Speaking of idiots that have too much influence, kids can become more than bullies. They can become monsters. There is a place for corporal punishment in our schools. Kids have no male role models. We have too many broken homes. Until we can address this, we need some form of real punishment in schools. Detention is a joke. While on the topic of reform, consider our foster care system? 

The second report says that 17% of juveniles, held in custody, were at one time in our foster care system. What does that tell you about the care in the system? We need to cut back on wasteful military spending, start taxing the rich and put that money into mental help and care. 

Oh, yeah! In the battle between our two greatest cities, LA has nudged ahead of New York with the most homeless. That aspect alone tells you that government reports on unemployment is BS! The more scary point to this is the lack of affordable housing and there are 1.2 million on the border. They seek a better life. They will receive our low-level jobs to which caused our homelessness and this will cause the sad situation to get worse. Everyone cannot live in America. Afrer we address our citizens needs, then we can admit immigrants. By the way, let's pray that the idiots stop listening to the warmongers. And let's also pray that the chickens get better and lay some eggs. The cost of a dozen has become a luxury item.    Peace. 

Pick Your Reason

- Sometimes you win, sometimes you lose and sometimes the blues will get a hold on you.

- Life thoughts from JFL

We made our outlook on the market very clear in the last few months. There are influencers in the market that say differntly. They have deeper pockets. They come up with slogans that are repeated so often that they are used to define the market. One of them is...

Forward Looking

This says that the market has calculated all aspects of price pertaining to the market. The present price of the market is accurate. In its present price level, these analysts (we call them shills) say that the market has already included a recession with its pricing. This thinking is flawed! When, and if, the market believes that we are in a recession, the drop in pricing will create fear. This will cause the indexes to fall like an elevator losing its support cables. 

Every Day, Every Week...

...the market re-evaluates stocks and their price levels. In most cases, this is after earnings are announced. We have a short list to prove our point. This also reveals the misconception of the market using forward looking pricing. How about...

TOST

It also shows how IPOs can be used to manipulate people to purchase stock. The IPO came out in 2021 at $40. This is a company that has never made money. The forward looking price hit $70. Last Friday, it was $19.96. We see it falling to $13.50. They still do not make money!

KBH

This is a good home construction firm. They offered an outlook of sales of their homes. They said 2,000. It came in at 700. Forward looking had it price in May of 2021 at $56. Today, it is $35. It will probably drop to $24. Thanks to the Fed. 

DOCU

This firm had a great idea. It allows buyers or sellers to use an internet signature. The problem is technology keeps developing. Now, they are losing money by the boatload. In August of 2021, forward looking pricing had the stock at $314. Last Friday, it was $58. OUCH!

SPLK

This company is beginning to continually show a loss in its statement. In November of 2021, the forward looking price was $176, Last Friday, it was $88. We see $65 coming.

Then, there is the garbage, meme stocks. You are better off picking a football team to win than play this game. You could be left holding the bag or no chair to sit in musical chairs. Here are a few.

BBBY, CVNA, PRTY. We could add another ten, but you get the idea. Now, in the concept of truth, here is a stock that we recommended last year. It fell immediately after we announced it. We looked bad. Dear Reader, I can tell you that we felt twice as bad. It is one reason that we fear to back a stock and their company. Anyway, RIG, fell from $4.25 to around $2.30. We declared that we still like the outlook. Last Friday, it hit $5,66. With that fact, remember this truth,

What Goes Up...

...can go down. The bulls are seeking to regain control of the market. Their battle is showing that the market will be in a trading range until the end of the month and the Fed's next move. If you have a firm that you follow, this is a good time to play it. Getting back to RIG. I follow it. It has gone straight up. The highest that we see it going is to $8. With that said, we will look to the oil price for harmony. RIG will make a nice, quick trade short. It should retrace to $4.50. Anyway, that's the plan. Patience!  Peace.

Our Reasons for the Downturn

 A robber puts a gun to Jack Benny. He says, "Your money or your life?" There is an awkward moment of silence. The thief yells, "Did you hear me! Your money or your life?" Jack finally says, "I'm thinking."

The phony Fed chairman has the same dilemna with our economy. He will not take as long as Jack to decide with the question, the economy or your job? He will answer after he has rehearsed a thousand times to show a deep consideration. We, at Evolution know the answer, his job.

Nevertheless, we are at an inflection point. The January Barometer is an old indicator that fundamental funds use to determine their bets. If the market is down for the month, the saying is that this will hold true for the year. The opposite says an up month and that leads to an up year. We do not put faith in this voodoo. We, at Evolution use charting and fundamentals to make our decision. 

There is another indicator that says the third year in a presidents term is positive. This is mostly true as an administration uses its position to push stimulus. However, during inflation periods, this president cycle is not positive.

Over the course of time, Dear Reader you should know that our first indicator is labor and their wages. This has been in decline since the 1970s. New technology and improved techniques have seen the gains by this point go straight to shareholders. The weak CEOs forget that it is their employees who go to work to perform the tasks week after week, year after year, but they never receive any rewards. If there is one positive from COVID, it is this. Workers had a chance to find a new direction with the shortage of labor. The result is better wages. Even the low-paying service and retail had gains. However, this aspect soon lost its value due to inflation. The question is who is responsible for it? We agree with Milton Friedman, money printing. Who prints the money? The Federal Reserve. 

Our next indicator looks at fundamentals. At the moment, the government is controling the narrative. Last weeks jobs report has Biden claiming strong job growth with a new lower unemployment rate of 3.5%. This is decieving and a lie. If you take the big picture with labor participation, it reveals that too many people are not counted by their system. The numbers run in the millions! In addition, the one field that improved labor and wages, technology is laying off workers. 

The leader, Amazon is dropping 18,000. Salesforce is cutting 10% of its workers. Facebook is showing the curb to 11,000. Twitter cut half of its labor force. Overall, teck is losing 150,000 jobs. Even the financials like Goldman is giving pink slips to 4,000. This is the writing on the subway walls. 

Even though the market showed a strong rally last Friday, the highest that it will climb is to the bottom of the last retracement. Our charting with Fibonacci says that the Dow will find strong resistance at 35,000 and NASDAQ at 11,000. Are we right? Wrong? Whatever the outcome, at least we are not vague. We don't hedge or beat around the bush. If you at least agree on that point, please tell two people so that our message gets out and our viewership grows. Thank you. 

King $Dollar...

...is always central to the market. We see it bouncing up to 107. If it does, the 200-day moving average will experience a "death cross." The dollar could finally give up all its gains. This does not happen overnight, but it forecasts the future. If this happens, the commodities will take off. If they take off, inflation will not go anywhere. We are truly in an inflection point. 

Some analysts now think that the market won't pivot until the Fed begins cutting rates again. It would be a clear sign that the economy and his job is in trouble. If, and when they do, the Federal Reserve will create this whole mess again. However, we feel that one of these days, this technique won't work. It will be a day of reckoning. It is just another reason why we say, "End the Fed!"

2023: Near-Term Forecast

 Some wisdom for the new year and all holiday seasons...

- I am not alone at all, I thought. I was never alone at all. And that, of course, is the message of Christmas. We are never alone. Not when the night is darkest, the wind coldest, the world seemingly most indifferent. For this is still the time God chooses.

- Taylor Caldwell

A hundred years ago, two things happened that I love. Yankee Stadium opened and my mother was born. It gives me a positive feeling for the number 23. It didn't hurt Michael Jordan either. However, the number does not mean anything for the new year. The two biggest problems could get worse. We can blame the Federal Reserve for the one that directly effects all of us, Inflation. The other is due to the ego, paranoid leader of Russia with his Ukraine War. 

These two aspects will be the cloud that makes the night darkest and the wind coldest. We told you in past pieces that Milton Friedman hit it on the nose, "Inflation is always and everywhere a monetary phenomenon." It is no wonder that he is never mentioned by economist. He spoke the truth! We, at Evolution can translate him for you in laymen terms, "It's the printing press, stupid!"

The Fed multiplied our currency by four times. It takes time for the effects to effect our lives. It is here, now. The dollar has stayed high due to the hike in interest rates. This has caused a chain reaction around the world because a higher dollar causes inflation in other currencies. They too, have raised their rates, but they did not want to pursue this action. The US is not liked for this response and undercurrents are in progress to replace the world's reserve currency away from King Dollar. If that happens, life in America will get increasingly harder. Homelessness, crime, civil unrest and unemployment will become rampant. It would not be pretty and it could last for a long time. The world will miss using the US as a dumping ground to preserve their economies. The Founders of our nation understood the dangers of fiat. We can only hope that some form of a precious metal is reintroduced to our currency. That will provide stable prices and stop inflation. We need other things too like respect for workers, curtailing outsourcing and creating better paying jobs to stabilize society with a stronger middle-class. The poitive effects by achieving those goals could fill a book. Sadly, not now, not today.

Market...

is showing a clear message, the elevator is going down. For the year, it touched bear market levels, but lifted just outside the zone. We, at Evolution see the market testing the March lows of 2020 which was the middle of the pandemic. If the elevator goes straight down, this says the market could bottom. If it acts like it has been acting with some ups and downs, we will be in dangerous waters. The market will react to whatever the Fed does with rate hikes. Keep in mind that $1.7 trillion in bonds are due in 2023. Those buyers will face much higher levels of interest to survive as a going concern. We have serious doubts. We see delinquencies which leads to bankruptcies which leads to unemployment. All things are connected is the theme of our unpublished work. It will be apparant in 2023.    

Oil and Gold

Oil is always front and center to life. The Fed may not count it in inflation, but we know better and we do. Prices have declined due to various factors. China shut down. Any upsurge will cause prices to rise. Europe needs to establish an energy policy for its people and future. However, drilling and supply take time. Many other nations had lower demand and the pandemic is one of the reasons. Demand will rise. At the moment, supply is stronger than demand. This equation will change. This says inflation is not going away. 

We follow the founding fathers. We believe in a strong currency. Looking at gold, the charts show that it bottomed in 2015. We had a rise to $2089 in 2020. Then, it retraced to $1600 level. Gold attacked the high, but it could not pierce it. Not good. Gold did a retest of the $1600 level. It should eventually rise to $2500-2650 level. Have some patience! 

Stats and Numbers

The government is full of them. Keep in mind that the political party in power chooses people that can play a spin on stats and numbers. Milton Friedman is a perfect example. Speak the truth and doom your career. The opposite is the phony Alan Greenspan. When he was young, he wrote a thesis defending gold. When made the Fed chairman, he did everything to debase gold. This is life in America. Meanwhile, the present head of the Fed says the economy is strong with stats and numbers as well as employment. We already stressed to you, Dear Reader, the labor participation level is below the1980s. We suffer manipulation. The market is under the same influence, but like we stated in the past, if inflation is over economic growth that is stagflation and that means you are in recession.

You can site all the stats and numbers you want, but Tesla is down 65% for 2022. We say, it has a long way to drop further when you consider this aspect. Tesla's market cap is greater than GM, Ford, Toyota and the old Dodge combined! They are not alone. Shopify and Palantir Teck come to mind. The former (SHOP) was $180 last year and now, $34 as of last Friday. The firm says it makes over $1 billion in revenues, but they do not show a profit. This tells us that they do not know what they are doing. The latter (PLTR) was $45 last year and last week it fell to $6.42. Ouch! That should be your warning for 2023...Peace.