Is This Sucker’s Rally Ending?

It was a fun ride, but now it’s time to look at the downside. [The Rude Awakening] February 27, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Is This Sucker’s Rally Ending? - Both the Dow and IWM retested the August highs and failed. - The SPX is retesting the 50- and 200-day MAs. - Will rates continue to rise and put a cap on the stock market? [URGENT: Your $557 Credit Is Now Available.]( I am pleased to announce that you've got an immediate $557.00 credit for our research you can take advantage of… [Please click here immediately to learn how to claim this credit.]( **DISCLAIMER: Please note, this offer is limited to the first 1,000 that take advantage today** [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Monday from soggy Piedmont. I’m thrilled it’s raining because we need to refill our reservoirs forthwith. Our soil is getting dry, which is terrible for planting season. Hopefully, the drought will end soon. But instead of going all climate science today, I’ll head back to the charts and the markets. We’ll keep it short, as it’s a Monday. Before We Start… I read a good piece of analysis by John J. Murphy, one of the writers for stockcharts.com. But Murphy isn’t just any writer. Who’s John J. Murphy? John J. Murphy is a well-known author, technical analyst, and trader in the financial markets. He has authored several technical and intermarket analysis books, including Technical Analysis of the Financial Markets, Intermarket Analysis: Profiting from Global Market Relationships, and The Visual Investor: How to Spot Market Trends. Murphy has over 30 years of experience in the financial industry and has worked for various institutions, including Merrill Lynch, Shearson American Express, and Thomson Reuters. He is also a frequent speaker at conferences and seminars and has taught numerous courses on technical analysis. Murphy is also considered one of the pioneers of intermarket analysis. What’s intermarket analysis? Intermarket analysis is a type of market analysis that studies the relationships between different markets and asset classes to understand better how they interact with each other. The main idea behind intermarket analysis is that different markets are connected and influence each other in numerous ways. For example, the price of crude oil can impact the prices of other commodities, such as gold or silver, and stocks in energy-related industries. Similarly, changes in interest rates can impact the prices of bonds, currencies, and stocks. By analyzing these intermarket relationships, investors gain a broader perspective on the financial markets and identify potential profit opportunities. For example, if an investor notices that the price of crude oil is rising, they may anticipate that the prices of energy-related stocks will also rise. By investing in these stocks, the investor profits from the price increase. Intermarket analysis can also help investors manage risk by identifying potential market correlations. For example, if an investor holds a portfolio of stocks in energy-related industries, they may also hold positions in commodities like crude oil or natural gas. If the price of these commodities declines, it may negatively impact the value of their portfolio. By understanding these intermarket relationships, investors can better manage their risk exposure and potentially avoid losses. Overall, intermarket analysis can provide investors with a more comprehensive understanding of the financial markets and help them identify potential opportunities for profit while managing their risk exposure. I wanted to let you know who’s responsible for most of this analysis and why I trust him! Now, let’s get to what Murphy thinks about the current market. The Dow Like many finance professionals, I don’t pay as much attention to the Dow as I should. Most professionals use SPX, as it’s an index of the 500 largest US companies by market capitalization. The Dow is picked at the whim of The Wall Street Journal editors. Be that as it may, the Dow can still be useful to us. Take the chart below. Ignore the top two panels and focus on the price chart with the red horizontal line through it. That’s what Murphy is looking at right now. [SJN] Credit: [stockcharts.com]( The Dow just couldn’t get back above 34,300. And it tried many days recently. From Murphy himself: The Dow is the first of the major stock indexes to give back all of its 2023 gains. It has also fallen below its 50-day moving average and now appears headed for a test of its December low and 200-day moving average. Next, let’s look at the small caps. The IWM The small caps deserve much credit for holding up the way they have. Mom and Pop have done an excellent job keeping their heads above water during this economic tomfoolery. [SJN] Credit: [stockcharts.com]( With that said, the Russell couldn’t get back above 200, and now looks to be heading south. From Murphy, again: Small-cap stocks also helped lead the recent stock rally. But they too are weakening. Chart 2 shows Russell 2000 iShares (IWM) also backing off from major resistance at their August peak and are now retesting their fourth-quarter highs. Daily momentum indicators in the upper boxes have also turned down. The IWM may be dropping toward a test of its moving average lines. What it does there will help determine if a more important top has been completed. Finally, let’s see what’s going on with the S&P 500. [Urgent Notice From Paradigm CIO Zach Scheidt!]( [Click here to learn more]( Hi, Zach Scheidt here… I’m the Chief Income Officer at Paradigm Press. With inflation raging (and showing no signs of coming to an end any time soon), almost everyone in America is feeling the pain in a big way. Which is why, several months ago, I set out on a big mission… my goal was to create a [complete, step-by-step plan to surviving and beating inflation]( one that anyone could take advantage of. Today, after hundreds of hours of research, I’m revealing all of my findings. [Simply click here now to see how to survive America’s deadly inflation crisis](. [Click Here To Learn More]( The SPX First, Murphy: The daily bars in Chart 3 show the short-term trend for the S&P 500 also weakening along with momentum indicators in the upper boxes. Although the SPX fell well short of its August peak, last week's message showed it having regained half of last year's losses and suggested that was a normal spot to expect some profit-taking. The SPX is approaching an important test of its 50- and 200-day moving averages. But it's also testing a rising support line extending back to its October low (green line). That's another important test of the staying power of the market's four-month rally. If that support doesn't hold, the next support is seen at its late December low. That puts support at 3,800. [SJN] Credit: [stockcharts.com]( Of course, what’s concerning Murphy is the Fed continuing to hike rates. Murphy says: Stocks don't usually do well when the Fed is hiking interest rates to combat rising inflation. Which it's doing now. The big question is how much higher will rates go, and what effect that could have on stocks. If we only knew… Wrap Up We’re heading back down, all other things remaining equal. Most of the moves are Fed-driven, which a technician like John Murphy would have no trouble admitting. The point of technical analysis is first to determine what the market is doing. Only then can you hazard a guess as to where it’s going. Until tomorrow. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening In Case You Missed It… China Takes the Gloves Off [Sean Ring] SEAN RING Happy Friday! We made it. Grab your cup of coffee and sit down for this one. I had thought of doing a light Rude as it’s a Friday. But China tossed me a grapefruit I had to swing at. It’s staggering from a diplomatic standpoint. Extra! Extra! The Chinese government isn’t taking America’s shit anymore. And China has made its displeasure known publicly and loudly, something they’re not known for. Oh, and they did it in English. That’s what blew me away. Before I continue, please understand I’m in no way a proponent of the Chinese Communist Party (CCP). Or any other damn commies, for that matter. Truth be told, a far more accurate way to describe China’s governmental system is totalitarian fascism. That is, the state and business work together and suffer no opposition. Whatever they call their system, the Chinese people aren’t free. To be fair, they don’t complain much about that, either. Let me tell you what happened. Byron King Writes Yesterday, I wrote about [how China and Russia went public](. In that piece, I wrote the following: There’s one playbook everyone needs to have read before dealing with the Chinese. It’s The Art of War. I’ll summarize it in one word: Lie. Here are a few more: Subterfuge. Deception. Misdirection. That’s how they do things. This straightforward stuff is a Western invention they want no part of. Because as a Western diplomat scolds a Chinese one, you can rest assured that the Chinese diplomat is working out how to screw his opposite number behind his smile. Now, I love nothing more than getting an email from my good friend and colleague Byron King. As a former US Naval aviator, geologist, and lawyer, Byron may be the best guy in the world to bounce ideas off of. Byron wrote me this: What were you saying about doing diplomacy w China??? Something about Sun Tzu and lying? About not placing them in a position to lose face? You mean like this? Threats of more sanctions??? And he sent me a link to this Epoch Times article: [SJN] Credit: [The Epoch Times]( I saw the headline and shook my head, once again. The usual bluster started off the piece. US State Department Spokesman Ned Price said: We have been clear with the PRC that consequences would befall them if they were to provide lethal assistance. We have been clear. We will not hesitate to target Chinese companies or individuals who violate sanctions. The usual blah blah. But then the spokesman unintentionally steered into comedy. [A $557 credit has been applied to your account.]( [Please click here to learn how to claim it.]( — Customer Service, Paradigm Press [Click Here To Learn More]( Rules-Based International Order In its purest sense, the term “rules-based international order” refers to the post-WW2 world and is centered around the UN. Cynically speaking, you now hear the term all the time because the US and the EU are trying to maintain a facade that doesn’t exist. And every time the Chinese hear the term, they probably visualize something like this: [SJN] The reason is that the US bends, fractures, and outright breaks those rules whenever it damn well pleases. And the Chinese must have been shocked when Price said of them and the Russians: We are concerned because these two countries share a vision, they share an intent. It is not a vision of a rules-based order, of a liberal order of democracies living peacefully side by side. It is a vision that hearkens back to a previous era. An era in which big countries could bully small countries, borders could be redrawn by force. An era in which might could make right. Reports indicate Price said this with a straight face. Reports also noted Price failed to mention Serbia, Iraq, Afghanistan, Libya, and Yemen. That’s ok, because the CCP didn’t forget to mention them at all. The Chinese Response Again, please don’t mistake my giddiness for a love of the CCP. But this is the biggest guffaw-inducing bird-flipping in the history of diplomacy. [pub] Credit: [USAmbChina]( The Chinese had had enough of the US’s impoliteness a few days ago. So they published an online pamphlet titled “[US Hegemony and Its Perils]( Here is its table of contents: Introduction I. Political Hegemony—Throwing Its Weight Around II. Military Hegemony—Wanton Use of Force  III. Economic Hegemony—Looting and Exploitation IV. Technological Hegemony—Monopoly and Suppression V. Cultural Hegemony—Spreading False Narratives Conclusion And here’s the thing: it’s in English…. grammatically perfect English. That means they put a lot of effort into the document. It’s a clean, short, and easy read. Here’s the Introduction in full: Since becoming the world's most powerful country after the two world wars and the Cold War, the United States has acted more boldly to interfere in the internal affairs of other countries, pursue, maintain, and abuse hegemony, advance subversion, and infiltration, and willfully wage wars, bringing harm to the international community. The United States has developed a hegemonic playbook to stage "color revolutions," instigate regional disputes, and even directly launch wars under the guise of promoting democracy, freedom, and human rights. Clinging to the Cold War mentality, the United States has ramped up bloc politics and stoked conflict and confrontation. It has overstretched the concept of national security, abused export controls, and forced unilateral sanctions upon others. It has taken a selective approach to international law and rules, utilizing or discarding them as it sees fit, and has sought to impose rules that serve its own interests in the name of upholding a "rules-based international order." This report, by presenting the relevant facts, seeks to expose the U.S. abuse of hegemony in the political, military, economic, financial, technological, and cultural fields, and to draw greater international attention to the perils of the U.S. practices to world peace and stability and the well-being of all peoples. Here’s what the report had to say about the War in Afghanistan: The two-decade-long war in Afghanistan devastated the country. A total of 47,000 Afghan civilians and 66,000 to 69,000 Afghan soldiers and police officers unrelated to the September 11 attacks were killed in U.S. military operations, and more than 10 million people were displaced. The war in Afghanistan destroyed the foundation of economic development there and plunged the Afghan people into destitution. After the "Kabul debacle" in 2021, the United States announced that it would freeze some 9.5 billion dollars in assets belonging to the Afghan central bank, a move considered as "pure looting." Here’s what it says about USD hegemony: The hegemony of U.S. dollar is the main source of instability and uncertainty in the world economy. During the COVID-19 pandemic, the United States abused its global financial hegemony and injected trillions of dollars into the global market, leaving other countries, especially emerging economies, to pay the price. In 2022, the Fed ended its ultra-easy monetary policy and turned to aggressive interest rate hike, causing turmoil in the international financial market and substantial depreciation of other currencies such as the Euro, many of which dropped to a 20-year low. As a result, a large number of developing countries were challenged by high inflation, currency depreciation and capital outflows. This was exactly what Nixon's secretary of the treasury, John Connally, once remarked, with self-satisfaction yet sharp precision, "the dollar is our currency, but it is your problem." There are many more nuggets in the report. I highly recommend you read it. You can easily do it in one sitting. Wrap Up This kind of diplomatic rebuke is staggering. Again, this isn’t a country the US can just throw over. It must deal with China. But the Chinese have, in the strongest possible terms, told the US it’s no longer taking its bad behavior. Have a wonderful weekend! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting Rude Awakening.](