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Seven Things You Need to Know Right Now

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1. Beware the Ides of... Ahem, June?
Just when we assumed that the debt ceiling crisis was behind us, a stark reminder from the White House that perhaps the worst still lies ahead.

"A sense of urgency about the debt ceiling has grown at the White House and officials are moving aggressively to seek a deal with Congress," reports the Wall Street Journal. "The Treasury says the U.S. will hit the debt limit no later than May 16 and could default by July 8."

Conor Sen, meanwhile, in an email notes the proximity of this May 16 to July 8 window to a number of important dates. "The Armstrong date is 2011.45, which is June 13th. The midpoint of May 16th and July 8th is June 11th. Additionally, the end of QE2 is scheduled for June and there's an FOMC meeting on June 22nd... fascinating how it's all lining up."

2. What Are These So-Called Armstrong Dates Anyway?
Others have detailed the curious case of Martin Armstrong in great detail. Armstrong, who was recently ordered released from prison, produced his first post-confinement writing on April 6. Those two links can provide greater detail on Armstrong's case and current forecasts, but since Conor brought up the approaching Armstrong date this is the crux of what what Armstrong calls the 8.6-year global business cycle.

According to Armstrong, he discovered this apparent business cycle in the early 1970s while studying past market panics. The formula was relatively simple: divide the major market panics throughout time yields an apparent 8.6 year pi cycle which he believes is predictive. Read The New Yorker piece linked above if you want to know more about Armstrong's case, but the accuracy of his predictions, decades ahead of time, and his refusal to share his computer work with both the CIA and apparently the Chinese government is what Armstrong claims was the driving force behind his incarceration.

3. Long-Term DeMark Indicators
Speaking of cycle work (note: Tom DeMark was also interviewed and mentioned in The New Yorker's Armstrong article), Tom DeMark also discovered a patterned approach to markets based on comparing opens and closes to one another on various time frames. TD Sequential forms the basis of Tom's work. TD Sequential consists of two phases, the setup phase followed by the countdown. A setup must precede the countdown, but a countdown does not necessarily have to follow from the setup. In a TD Sequential sell setup, we observe nine consecutive closes greater than the close four periods earlier. A period can be defined as a day, a week, a month, even an hour or 30 minutes. In the case here, we are looking at a long-term chart covering a monthly period.

Monthly S&P 500

What this chart shows is we have completed 8 of 9 closes greater than the close four bars earlier, dating back to September, 2010. Once we get the 9th close, next month, in May, Tom's work tells us we should expect a corrective move lasting one to four bars. There are obviously other, more subtle components to Tom's work, but that is the bare bones basics of TD Sequential. Interestingly, a 9 in May would put squarely within the window Conor noted. 

4. Consumer Debt Revulsion Continues to Increase

Below is a chart via Bloomberg showing consumer revolving debt balances dating back to 1998.

This chart paints a far more worrisome picture in terms of economic activity than the surface headlines of the Federal Reserve's February credit survey. While the total of outstanding consumer credit increase at a 3.8% annualized rate in February, the bulk of the increase came via student loans and auto loans. What the chart above illustrates is the ongoing decline in consumer revolving debt. Take away December's 3% increase (thank you, Santa) and consumer revolving debt has declined for 30 consecutive months. As well, consumers have taken balances down to levels last seen in 2004.

Also, as Bloomberg economist Richard Yamarone noted this morning, a Federal Reserve Bank of Boston survey shows consumers have significantly increased their use of cash over their Visa and Mastercard or AMEX cards.

5. Japan Now Formally Admits Nuclear Crisis Severity On Par with Chernobyl
"Japan raised the crisis level at its crippled nuclear plant Tuesday to a severity on par with the 1986 Chernobyl disaster, citing high overall radiation leaks that have contaminated the air, tap water, vegetables and seawater."

6. Negative Social Mood Trend Predicts Gender Blurring
One of the predictive elements of Socionomics makes the case that as social mood trends negative, traditional gender roles and identities become blurred. The point is not that gender identity and confusion is necessarily a negative, but that when social mood trends negative the acceptance of challenging traditional gender roles increases. So, informed by a Socionomics perspect6ive,  this J Crew ad is something we might have anticipated given the prevailing trend in social mood.

This weekend is the inaugural Socionomics Summit: New Horizons in the Study of Social Mood. I'm scheduled to speak about zombies.

7. Do You Have What It Takes to Make It at Bridgewater?
New York Magazine takes a look at the "billion-dollar aphorisms of Ray Dalio." Dealbreaker gets mentioned favorably for leaking excerpts of the now-public Dailo manifesto "Principles."
POSITION:  No positions in stocks mentioned.