Thanks!

Just wanted to say thanks to the unknown benefactor who promoted Clouds of Venus today.  It's always nice to see a mysterious spike in free downloads.

To the new readers out there, I hope you enjoy the book.  :) 

Turf battle

Many people have mentioned that the appearance of the Joro spider in their yards has resulted in the native garden spider getting pushed out.  This was a concern of mine.  I like the Joros, but I don't like the idea of them thriving at the expense of the native species' right to exist.

Luckily, there's some good news.  There's a garden spider in the bearded irises.  The Joros have been here in my yard since 2022, but the garden spiders are also still here.  I'm encouraged by this.

I really hope the two species can find a way to coexist. 

Heat wave

Much of the country is dealing with a heat wave right now.  On Tuesday, it was 99 degrees here with a heat index of 111.

If you have to get outside to do yard work or sports or whatever, make sure you not only drink enough fluids but also replenish your body's salt.  Sports drinks like Gatorade are good for this.

Stay cool, folks. 

Hallucination rates on the rise

UPDATE:  I picked up some shares of Google today in spite of this post.  Since I now have a financial interest in the company, I'm disclosing that when necessary.

 

Well, this is a bit surprising.  I knew LLMs hallucinate from time to time, but I didn't expect that hallucination rate to rise.

https://finance.yahoo.com/news/rates-hallucination-ai-models-google-173138158.html

Are these things actually getting worse, or is this just a statistical blip?

Personal anecdote time:  A few days ago, I googled "what events happened on (my birthday)" to see what Google's search AI would say about it.  I typed out the exact date and spelled out the full name of the month so that there was no excuse for interpreting the date incorrectly.  The LLM gave me several events.  The first two events did NOT occur on my birthday but rather a month earlier according to Wikipedia.  But the AI said in its answer that they happened on (my birthday).  It straight-up lied to me.

This is a very easy thing to get right.  There's no excuse for this. 

To see the sun again

The month of May was rainy and cool.  I wouldn't be surprised then to see June be hot and dry.  That's the way things roll around here.

Even so, I'm eager to see the sun again.  I've seen and felt too little of it lately.  Gloomy weather enervates me, and I really want to feel more lively.

This week is supposed to be sunny with highs in the mid-80s.  Sounds great, man.  Let's hope it happens. 

New highs, but are we overheated?

My own stock portfolio made a new all-time high last week.  Naturally, I'm pleased about that, but it also makes me wary, because that often means a correction or consolidation is imminent.  So let's look at some charts and see what we can see.

DISCLAIMER:  This post, and all other posts of this sort, are for entertainment only.  They are not to be construed as personalized investment advice.  If you want personal investment advice, hire a financial advisor.

First, the S&P 500:

 

 

As you can see, we have not only completely recovered from early April's "tariff crash" and broken through the 50-day moving average to the upside, but we smashed right through the 200-day average, too.  This is a solidly bullish signal.  If the 50-DMA crosses over the 200-DMA to the upside while the S&P is above both, then we should be off to the races.  Hello, summertime bull market!  :D

But let's hold our horses for a moment.  There's a gap up around May 12th, and the old trader's axiom is that gaps want to be filled.  That space between about 5680 and 5800 is pulling like a magnet.  The 200-DMA will act as support, though, so you've got opposing forces at work here.  However, that gap exists on this chart, but it's not on the equally weighed version of the S&P:

So, because the gap is largely the result of the Mag-7 stocks, I think that gap might not get filled even if there's a pullback this week.  I think the rest of the market will keep the index buoyed.  Let's see if the transports support this theory.

 

 

There's a gap there, but that gap can be filled without breaking the 50-DMA support line.  I think that support will hold, and I think that will keep the market consolidation from dipping too far down.

And I think there will be a pullback this week--or, at latest, next week--due to the oscillators.  The RSI on the first chart is at 69.76, just a quarter of a point below "overbought" level, and the MACD is not only up but has had a wide signal line spread for a while now.

While we're looking at charts, let's check out the VIX:

 

The last time the VIX bounced off a bottom, it did it at around 17, and that's where we're at right now.  In the few months prior, the VIX bounced at around 15.  So I'd look at 15 as the next place the VIX will bottom out, though it's also possible it has already bottomed out and will head higher in the next session.

Conclusion:  I think the likeliest course is for there to be a consolidation over the next few weeks starting when the VIX touches 15 if not before, and then when we get the 50/200 crossover, we go to the moon in a summertime bull market of surprising strength.

Naturally, there are lots of ways we can get derailed from this course.  If India and Pakistan decide to nuke each other, for example, that might cause a bit of a kerfuffle in financial markets.  But barring any such news events, what I've outlined is what I think is the most likely outcome.

Surprising market strength

Stocks finished up after Friday's session, but that's not the surprise, at least not for me.  What surprised me was the strength in the Dow transports.  That index closed at its highest level since early April.  It's now getting close to the 50-dma curve faster than I anticipated.

 

 

Here's something to keep in mind: there's a meeting of the Fed next week.  If there's going to be a rate cut, they'll announce it Wednesday.  Are we seeing some traders betting on a rate cut by buying in the days prior?  I don't know, but it's a possibility.

The real test will be the 200-dma.  If the transports can break through that in the next few weeks, then I suspect the market will be off to the races.  We'll have a bull-market summer, an oddity but not unheard of.  An interest rate cut would probably be sufficient to make that happen.