So the week of the 4th March begins with volatility. start of something greater?
the Dow closed down 206 points but it had a 540 point range a high of 26155 to a low of 25611. big range. The SPX had a 60 point range. big range but closing just 10 points down. many are saying oh the china trade deal has been priced in so what next. well earning and economic activity need to lift for a sustained push higher in the indices. the bulls came in and bought at support levels in the US last night many bulls out there. this enthusiasm of the bulls need to be crushed for the bear to play. no sign of that at the moment. sustained sell downs would make a dent of course.
this year is the Chinese year of the earth Pig. Pig years normally are quite bullish. previous pig years include 2007, 1983 and 1995. in particular in 2007, the year of the fire Pig , we had the push up to all time highs in the XJO before the final tsunami in 2008 the year of the earth rat.
why am I telling you this - the rat and the pig are both deemed water elements in Chinese feng shui. so 2008 we had the year of earth over water (rat) and this year happens to also be the year of earth over water (pig). the comparison of similar elements normally leads to similar outcomes. the setup from last October 2018 gave this analysis credibility, ie 2019 could possibly turn out to be a 2008 type year.
What makes the pig year in 2007 different from 2019 you might ask. well 2007 was the year of fire over water (pig) fire represents the greatest form of enthusiasm which marked the peak of the cycle leading into the year of earth over water.
however the conflict we have is that the bull run since the 24 Dec 2018 has the characteristics of a typical bullish pig year and if it continues to form the indices could continue its rise for the rest of the year supposing the bulls continue to come in and buy on dips.
this brings me to my dilemma - this is a year earth over water characterised previously by the events in 2008. so could an inverse bullish pig year come into play and cause a 2008 like financial meltdown in the indices which I had in my thinking coming into 2019 given the setup in oct through to dec 2018?
march and april in the Chinese fengshui represent wood months. wood normally sparks enthusiasm. so we going into a period which is normally bullish.
if you are not confused by all this I am. while the bear case makes sense the bull case also does according to history.
