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The Battle of the K Wave

The Battle of the K Wave

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K Waves in Commodities and Corporate Profits are attempting  reversions to baseline growths present day. The baseline growth glide path was contributed by the FED in lowering the interest rate from 19% in the earlier 1980’s to present day Zero Lower Bound. The baseline growth was artificial in nature due to cheap monies. Fast forward today, and growth is anemic with a crashed commodity complex as the interest rate sits on the ZLB. Next attempt in spuring growth was NIRP. The ECB and BOJ have been experimenting with such policies to only find unintended consequences much different from academia.

 Yellen entered the US Economy into a tightening cycle mimicking the dual mandate of 1999/2000 FED of the Dotcom era. She’s preparing the US Economy for a mean reversion via reduced inflation and unemployment before the economic shock. Cracks in the system are already evident as an earnings recession is nearing the 4th consecutive Q Y/Y, which would be the worst since the great recession. On the subject of earnings recession, the word recession means a deviation from a glide path, but reverts in an intermediate timeframe. This time around a much larger cycle known as a K wave could transition the earnings recession of current date into a more prolonged timeframe. We’re merely seeing signs of mean reversions. Prepare wisely.


What are K-Waves? 


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Corporate Profits vs. Interest Rates 

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Commodities vs. Interest Rates

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Bubble Patrol: MCD

Bubble Patrol: MCD 

MCD total Revenue has violated baseline growth since the early 1990s. The market has built an elliot wave guide path with 3 up and 2 down. Currently, the 5th wave is in construction with total revenue negative diverging breaking multi decade ascending baseline. The $20 billion stock buyback program is perhaps whats giving this dying breed its last final breadths. Our unfair high ceiling is to be called at 1.272-1.618 extensions. Time vs. Price cannot be maintained and we expect the 5th wave to be completed before 2021 to then start the great migration to 1/1. MCD has to innovate otherwise other food trends will come and go taking market share away from this giant, but there is a silver lining. American’s are getting poorer and the middle class is falling apart. Welcome to America’s Restaurant feeding the poor and perhaps the middle class due in partly to the FED, and their policies which have destroyed financial markets. Screen Shot 2016-04-06 at 12.51.16 PM

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Google Keyword: Earnings Recession

Google Keyword: Earnings Recession 

The dissemination glide path of generating a narrative in a developing pattern, as depicted below in a SYM triangle. Then comes the distribution phase of such narratives to ripple through the audience.

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Then distributed to the masses

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Update (4-8-15)

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How it works on an S curve

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Diagram: Correcting a Stall

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Major Imbalance SPX matured HVN. Ready for Price Migration

Price Migration 

2050 HVN is maturing signaling a migration in value. We believe the migration will be to the downside. Screen Shot 2016-04-06 at 9.06.31 AM

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Teddy Vallée & His Rendition of the SPX Comparison Bubbles

Teddy Vallée & His Rendition of the SPX Comparison Bubbles

http://pervalle.com

We agree with Teddy’s comparison of rounding tops of the 1999/2000 vs. present day. The overseer of the wave function is the FED i.e. Yellen, and her past research supports tactical maneuvers similar to Dot.Com FED, and their accomplishments in deflating the economy. Yellen’s dual mandate is lower unemployment, and low inflation taking a page from the 1999/2000 FED. Unconscious to many, Yellen started deflating the US Economy with the USD talk up, not the /FF tick up, which could mean the clearing stage is in an intermediate timeframe. Winter is before spring. Screen Shot 2016-04-06 at 7.19.04 AM

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Carry Trades & the Shanghai Accord

Carry Trades & the Shanghai Accord 

The ECB and BOJ should be asking themselves was the Shanghai Accord really worth it? Post-Feb, EURO and YEN have appreciated levels which are concerning t0 their respected governments and central banks. Also, the leverage in each of these trades carried to another financial vehicle yielding higher return is immense. The unwinding of these so called carry trades has put stress on global financial markets in a time of conditional liquidity. We compare SPX in particular.


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(Update) Bloomberg has picked up on the story, as their headline states: ” YEN Strength Trips UP US Stocks” 

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Liquidity vs. Conditional Liquidity

QE provided constant liquidity in 2009- 4Q14. We measure the liquidity by determining the average premium above the 200sma. Post-QE conditional liquidity has set in with price at a discount to 200sma forcing the moving average to print at a negative slope. We believe without expanding the money base, the markets at serious risk for a reversion. Monetary tightening started in Dec’15 in conjunction with an earnings recession. Screen Shot 2016-04-05 at 9.11.24 PM

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AAPL 30% Downside

Tech Deflation 

AAPL has 30% downside to the 1/1 GANN, as the market is in a controlled liquidation. The pattern is known as a flag, and will be locked in until a violation outside the pattern is sustained.

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30 Years of Bubbles: DOW Industrials

30 Years of Bubbles: DOW Industrials 

3 noticeable bubbles the FED has inflated, along with deflated. Price tends to revert to a mean started in 1984. Currently, price sits an an unfair high ready for a reversion back to the mean Screen Shot 2016-04-05 at 8.32.50 PM

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