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Since last update, the market followed through a little on its initial reaction to blue resistance:
This was not outside the realm of possibility, and SPX dropped down toward the small blue "or iv' label that was on Monday's short-term chart:
In conclusion, nothing too surprising YET... but in the event that the current decline were to turn into a larger impulse, then we would at least keep alert to the possibility that ALL OF Bull: 3 completed at the ATH, which would turn the current correction into the larger bull: 4. Other than to bring awareness to that option, no real change so far. Trade safe.
Last update expected that the first upside target would be captured, so let's start with that chart, where we can see SPX perfectly tagged the blue trend line, sparking Friday's mini-selloff:
Looking at the near-term and breaking down the micro count, it appears Friday's mini-waterfall was probably just a micro fourth wave within bull: v of bull: 3; if that's correct, then bull: 3 is still unfolding:
What sometimes happens when a third wave is facing a major trend line (such as the blue line on the first chart) is that the peak of 3 actually runs beyond the trend line (third waves are strong waves, so that's where the market is most likely to power past prior resistance or support), then the fourth wave falls back to test the old broken trend line... then new highs are made again in the fifth wave, after that first "successful" back test. That's certainly at least something to watch for here. Trade safe.
Last update expected the Fed day to follow recent patterns, and it did not disappoint in that regard, following that description to the letter. It also noted that there was at least the possibility of a small corrective fourth wave, but it appears the market has chosen to extend the current (micro) fifth wave instead, forestalling that small correction until later.
Bigger picture, at today's open, SPX should capture the upside target from October 25:
In conclusion, again no change, and the trend still remains up for now. The first bigger picture upside target should be firmly captured at today's open. Trade safe.
For roughly the past two weeks, "bull: 3" has been hovering above [whatever the current price was for each day] the market at higher prices, but yesterday, we finally got into that zone:
So we are finally at least into the lower edge of the bull: 3 target zone, though it can run a bit higher if it wants before correcting into bull: 4 (or before completing black C, which bears would love, as it would lead to a revisit of last month's lows).
The 10-year Trash-ury yield is interesting here, and worth keeping an eye on:
Today is, of course, a Fed day, which -- if the last few years are any guide -- means the market will act like it's going to go crazy during the first half hour it's open, then will settle into a trading range and try to put everyone to sleep, then will go crazy again right as the announcement is made... then MAYBE will actually do something for the last couple hours, or may just do another head-fake/whipsaw.
"Fed days are fun!" -- Nobody
It will be interesting to see if there's any reaction to the blue "bull: 3" or black bear C zone, though. Trade safe.
As is typical in a trending market, there's not much to add since last update. The near-term preferred count (that bull: 3 was still unfolding, per 10/25 annotation; and last update's presumption that the trend remained up) proved good with the new all-time high on Friday. It's three waves up from 4551 to the new ATH, so there is an option for bull: iv to become more complex if it so chooses. Otherwise, we're in the midst of another small subdividing rally wave (counting up from 4551) that of itself will need a small iv and v.
No change to the bigger picture, either:
In conclusion, trending markets are... well, trending, so until that changes, there's not much to add after you've identified that trend. Trade safe.
[I originally wrote most of this in early 2019, but it's been sitting in my drafts folder since then, so I'm just going to publish it.]
Today, I'm going to depart completely from the market and write a "bonus article" about something that's been kicking around in the back of my head for a while, which is: My firsthand observations about the media coverage of the 2018 eruption of Kilauea Volcano in Hawaii.
As most readers already know, I live in Hawaii. Accordingly, I had a unique, ongoing and firsthand perspective on the 2018 eruption (which destroyed about half of a subdivision known as Leilani Estates) -- this unique firsthand perspective allowed me to knowledgably compare what was actually happening against how it was being reported by the national news media.
I assure you, I did not start off with that comparison as my intention. I started off, like most other residents of Hawaii, in complete awe of the power of nature. (In my family's case, we lived far enough away that we were extremely unlikely to be impacted directly.) Point is, "How is the media covering this?" was not even on my mind, initially. However, shortly after the media arrived, I began getting panicked phone calls, texts, and emails from friends and family on the mainland -- sometimes several times per day -- that always went something like this:
"OMG, I just saw the news! ARE YOU GUYS OKAY??? HOW ARE THE KIDS??? WHY ARE YOU STILL THERE?!?"
To people on the mainland with no common frame of reference, such reactions probably seems completely justified. As I will outline, though, they made very little sense to those of us living here -- meaning: Such reactions made little sense to those of us who had a NON-MEDIA-INSPIRED perspective on the event.
(Above is a photo that I personally shot from ground zero, only a couple weeks after the eruption began. This is lava shooting roughly 150 feet into the air, out of a fissure that was maybe half
a mile off from where I had parked. This photo has been reprinted with my own permission,
though I may later decide to sue myself anyway, because I can't have people stealing my work.)
Anyway, after receiving many panicked phone calls and text messages, I began to piece together that the media was not exactly reporting the event in what we might traditionally call an "accurate" manner.
Pretty far from it.
The unreliability of our "news" media does, of course, have much broader implications, especially in our modern media-driven world -- but for now, let's just stick to talking about the volcano.
To understand the outrageous reporting I'm about to discuss, it's first necessary to understand what was actually going on here.
And to understand that, the first thing that's required is an understanding of how large the island of Hawaii actually is. Hawaii consists of five huge volcanoes (one is dormant (last erupted 4500+ years ago), one is extinct, three are considered active, but one of those hasn't erupted in 220 years) joined together. Two of these are literally the largest mountains in the world (Mauna Kea and Mauna Loa) -- larger than Everest when measured all the way down to the sea floor -- and they rise more than 13,000 feet above the sea.
So for perspective, let's begin with a to-scale map of the island and lava flow, which I originally drew to calm my relatives, but then also sent to the USGS through their Twitter feed. (USGS Volcanoes then retweeted my map to all their followers, which was kinda fun.)
As you can see on that map, the actual lava flow -- all that incredibly impressive destruction that you probably saw on TV -- was confined to a tiny little section of the island, about 1% of our land. The island of Hawaii is more than 4000 square miles of land mass (just this one island is roughly the size of the state of Connecticut), so from most of island, you couldn't see anything at all. In fact, from most of the island, if you didn't already know an eruption was occurring, you would NEVER have known without turning on the TV.
For example, here's what the eruption looked like at the end of May 2018 (when it was in full force) from Pohoiki Bay, which is literally only a couple miles away from Leilani Estates:
See it? Me neither.
Here's what it looked like from MOST of the island:
See it there? It's over to your left, off the frame, behind the 13,000 foot mountain (which doesn't even fit in the frame). You could see nothing, in other words, even if you were looking.
Anyway, point is, for those of us outside the immediate eruption zone, it was basically as if nothing was happening at all. But you'd never know that from watching CNN, et al. At one point a CNN reporter said, and I quote: "Lava just running all throughout the island!" I wish I could find that clip now, but I burst out laughing and called my wife into the room, so I remember it clearly. Needless to say, hyperbole such as that understandably alarmed our relatives.
If you want to watch some of the archived footage, below is a link to one of the silly coverage examples. A few quotes, followed by my commentary:
CNN: "...and spewing lava... that's what MANY PEOPLE ON THAT ISLAND HAVE BEEN ENDURING." -- "Many" people is ridiculous hyperbole. As I just outlined, it was basically one housing development. Most of the island was completely unaffected. "Many" people on the island were not "enduring" anything.
CNN: "And MANY having only MINUTES to escape the lava from the Kilauea volcano. People are now being told to RATION THEIR WATER even." -- There's that "many" again. Also: Nobody was told to ration water, except possibly the small handful of people who had to evacuate their homes. We never heard anything about water rationing.
CNN: "IF THEY DO REMAIN ON THE ISLAND." -- as if remaining on the island were dangerous! This is the type of commentary that subconsciously paints a picture of an entire island devastated by the eruption. Who dares to remain?!?
CNN: [cuts to correspondent]: "As if it's not enough to not know where one of these fissures, where the lava is spewing forth out of the Earth, where they're going to pop up..." -- Actually, we knew exactly where: Leilani Estates, which is on the literal rift of Kilauea (rifts are the only places fissures form) in Lava Zone 1 (the most dangerous zone). And pretty much nowhere else.
And that's just the first 41 seconds of coverage!
I'm not going to do this for every errant news report, because it would probably turn this into a 50,000 page article. Suffice to say that this was typical of the type of misleading coverage (in fact, the video I included was literally the very first video I pulled up on a search just now, so I didn't have to look far to find examples!) the mainstream media produced repeatedly.
Anyway, this was all very eye-opening for me. I realized, "Hey, if they're getting so many basic facts wrong on this, what else are they getting wrong where I would never know any better? Probably a lot of things."
I think many people have had a similar experience... yet many go back to trusting the news anyway. The question is: Why? Why forget the lesson? Why play pretend? Do we secretly realize that the news is "for entertainment purposes only," but want to be outraged and upset as if it were real, to keep ourselves amused? I don't know the deeper psychological motivation behind "defending" the news as if it were "mostly" accurate. I suspect those who defend it don't know why they do it, either. Desire to fit in with the perceived dominant culture, maybe? Fear of being labeled a "conspiracy theorist"? Lack of faith in one's own critical thinking skills? Or perhaps it's just simple misplaced trust. Who knows. All I know is that too many people treat the news as if it were gospel, and it simply isn't.
"If you don't read the newspaper, you are uniformed. If you do read the newspaper, you are misinformed."-- (commonly attributed to) Mark Twain (but unknown)
"Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle. The real extent of this state of misinformation is known only to those who are in situations to confront facts within their knowledge with the lies of the day. I will add, that the man who never looks into a newspaper is better informed than he who reads them; inasmuch as he who knows nothing is nearer to truth than he whose mind is filled with falsehoods and errors."
-- Thomas Jefferson
Michael Crichton once talked about the Gell-Mann Amnesia effect:
There's a profound truth about the news business in this brief clip from the movie The Shipping News:
So if you want to know why I don't trust the news anymore, it's simply because I've experienced their magnificent errors and hyperbolic inaccuracies firsthand, and it would be foolhardy to put the blinders back on.
Now, here's the most interesting part in all this: Remember the panicked relatives I mentioned earlier? Well. After talking to them and reassuring them that the news was making things seem much worse than they actually were, most of our relatives calmed down. But not all of them. A few of them refused to accept our firsthand accounts because, by God, they had seen it on CNN, so it must be true! Surely we were just trying to be reassuring, and we were no doubt dodging lava bombs even as we spoke.
And that, my friends, is the absolute power of mainstream media misinformation. And it should terrify all of us. Because (mis)information shapes opinions, opinions shape votes, and votes shape America's future. When the mainstream media falls, and it has fallen, America either wakes up -- or eventually falls with it.
Last update suggested that some backing and filling might be in order, and that's what we've had since, with SPX running sideways since Wednesday's update:
I mentioned on the chart above that it's not entirely impossible for this to be a completed wave -- IF, and only if, the mess near the low was a running triangle. That's probably an underdog, so we're presuming the trend remains up for now, but it's worth at least knowing the possibility is there. Blue "bull: iv" could have completed at 4551 SPX, or may become more complex and head toward the lower label on the chart above. Other than that, not much to add. Trade safe.
