We want to hand out the gold star for today’s class session to reader JRN who (going from memory) is up in one of the square states. He was asking about the market dump Thursday. “Was (today) the first chapter of a serialized Minsky moment?”
Let’s begin by letting off some tension. Market futures were up early. DCB (dead cat bounce) is the informal name for it. Which gets us to names—and to this Minsky fellow, whom Wikipedia describes this way:
“The term was coined by Paul McCulley of PIMCO in 1998, to describe the 1998 Russian financial crisis,[2] and was named after economist Hyman Minsky, who noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze.[4] Minsky opposed the deregulation that characterized the 1980s.”
The Vital Three-Part Answer
Since JRN is a Peoplenomics subscriber (and has been with us for more than a decade, in fact) I want to give him a complete answer. You get to read along – on the house – because we are likely rolling into historical times.
Answer #1:
What Minsky Missed: Having walked around with a small international jet airline’s financial model in my head for a couple of years, I think there’s something Minsky (and believers) missed. That is under Elliott, OBV, and other market disciplines, the number of “definable moments” varies based on the scale (think zoom-level) of the data you’re considering.
The “correctness of the zoom-level” is why I wrote What is the “Ebbinghaus-Ure Correlation”?
The bullet points go like this:
- Ebbinghaus was an early quantifier of time and forgetfulness.
- Markets demonstrably forget their previous bubbles.
- Ure extended Ebbinghaus’ hard data into economics as a “bubble delimiter or cofactor.”
- In the calculation process, Ure stumbled over coherence measures in markets.
- This dovetails with our Aggregate Index work.
Minsky was directionally right, but his “moment” is partly an artifact of zoom level: what looks like one sudden failure on a monthly chart may be a whole serialized collapse when viewed day by day. Give me the zoom level and I can make damn near any market event look like one moment—or a whole serial.
So, that’s the first answer: Minsky was sort of right. But as “closeness of fit” goes, it’s sloppy. Minsky didn’t address the core criticality problem in markets: Where did you begin counting—and why there? Ebbinghaus-Ure offers a data-driven method for selecting the zoom level. That will be the subject of an upcoming Peoplenomics paper.
Answer #2: Market Coherence is Developing
Two paths into Future are solidifying. Bouncing down stairs or pushed off the roof. To understand this, my method of pulling predicted future from a succession of moving averages of a market index (or individual asset) may be applied. Here, we offer a view of (sequential) moving averages over time.
Obviously, the “safest” time to invest is in the “coherence zone” shown above. That is when regular expectations are well-anchored and the direction of the elevator is clear. Now, look at the extreme right of the chart: it begins to appear that downward coherence is evolving. Whether that downward coherence strengthens or breaks should become clearer in coming days.
Which circles back to?
Answer #3: Flag Bagged
On the Peoplenomics side, we have been pondering the “terminal phase of hype” for many months. Because the seemingly endless supply of “good news” always runs out. Always.
In the blood-money sport of finance—and particularly in my dog-eared copy of Technical Analysis of Stock Trends (7th edition; the 11th is now current)—our recent debate has centered on whether this cycle would terminate in a blow-off top or in a continuation of the collapse propagating outward from the tech sector.
When what was sketched as a possible pennant blew up this week, our “next stops” have come into view:
As seen, the 85 DMA is toast which tees up successively lower targets such as the 100- and 200-day moving averages.
More problematic (if you have followed our problemology framework) is there’s little reliable way to estimate bounces. Elliott provides for this with a series of “soft rules” and these run from around 18 percent bounces to 100 percent bounces.
That said, additional targets can be inferred depending on which of the moving average support lines marks the turn.
Looking Ahead, Then?
The immediate problem is “Where’s the turn?” I would refer JRN to the older (dustier) sections of the Peoplenomics Master Indexes. Here, there’s an old tool called the BtrainAmp.xlsx and it provides “quick reality checks” that MAY bound arriving Future.
From a pure Elliott perspective (whatever that is), we can consider the decline Wednesday as a possible first wave down of the larger wave 3 down.
On the planning horizon (some prefer dance card) we can:
- Complete a totally violent decline to the 200 DMA.
- Once there, we could have a manic rally into Labor Day.
- We therefore cannot totally dismiss a complete “bottom falling out” for two or three weeks.
However, it’s more complicated than that. From the still-standing all-time high, we appear to have completed Elliott 1 down and a complex Elliott 2 up. If Wednesday gave us Elliott 3(1) down and today’s rally is Elliott 3(2) up, the remaining washout sequence should involve 3(3) down, 3(4) up and 3(5) down. That would complete the larger Wave 3 and could set up a manic false-peace Wave 4 rally toward the 200-, 100-, or 85-DMA around Labor Day—followed by a final Wave 5 down. We have marked the general range where that false-peace rally might occur.
And under Elliott, Wave 5 down may extend. Geopolitics could supply the excuse—including the nuclear kind. A nuclear escalation could accompany the bottom of Wave 3, trigger the Wave 4 reversal, or extend Wave 5. Elliott does not predict the event; it only suggests where the event might fit. Gee, feeling better already, huh?
NONE OF THIS IS FINANCIAL ADVICE. Living a successful life goes way beyond how much paper (or secret numbers of crypto) you collect. Which is why a few people (like JRN) see the benefit of $40/year for Peoplenomics.
We are all “world observers” existing inside what may be an EarthSim. Our purpose (riding this life ride) is to play “the game of life well” and record what we see. Toward that end, we focus on alignment of inner, outer, and financial coherence. Which seems the worthy task.
We now return to the more plebe-oriented data piles.
Stack 3: GDP, Personal Inc., Jobless Filings
Thought compression hint: These should not rock your soul. These are snow poles for your thinking so you don’t fall over the edge of the mountains of despair:
GDP:
Real gross domestic product (GDP) increased at an annual rate of 1.5 percent in the second quarter of 2026 (April, May, and June), according to the advance estimate released today by the U.S. Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 2.1 percent. The contributors to the increase in real GDP in the second quarter were increases in consumer spending, investment, and exports that were partly offset by a decrease in government spending. Imports, which are a subtraction in the calculation of GDP, increased.
Personal Income
Personal income increased $54.9 billion (0.2 percent at a monthly rate) in June, according to estimates released today by the U.S. Bureau of Economic Analysis (BEA). Disposable personal income (DPI)—personal income less personal current taxes—increased $48.3 billion (0.2 percent), and personal consumption expenditures (PCE) increased $65.2 billion (0.3 percent). Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $70.0 billion in June. Personal saving was $646.1 billion in June, and the personal saving rate—personal saving as a percentage of DPI—was 2.7 percent.
They can really tell ’em, huh?
At the Unemployment Office:
News Compressor: ON
What changed overnight is a renewed escalation in the ongoing US-Iran conflict. After Iran launched ballistic missiles at the Muwaffaq Salti Air Base in Jordan (intercepted with no reported US casualties), the US conducted a heavy wave of airstrikes on Iranian Revolutionary Guard targets including command centers, missile and drone facilities, and coastal sites such as Qeshm Island. Iranian state media reported three killed and two wounded on Qeshm.
An Iranian strike hit a Chinese firm’s building in Kuwait, killing one worker. The US and Saudi Arabia struck Iran-backed militias in Iraq, with reports of at least 20 fighters and several Iranian advisers killed. Drone-related fires were reported on natural gas vessels at Egypt’s Damietta port. Strait of Hormuz disruptions continue to pressure energy markets.
Ukraine claimed overnight long-range strikes on two major Russian oil refineries (Perm and Ryazan regions) hours after a Zelenskyy-Trump meeting. Russian strikes killed at least eight civilians in Ukraine.
Extreme heat warnings expanded in the US West and South; flash flooding hit Colorado burn scars with property damage but no confirmed fatalities in initial reports.
Fauci invoked the Fifth Amendment repeatedly in Senate testimony”
Quality of government is looking more and more immoveable.
Around the Ranch: Selectric Adventure XX
OK – we thought we were done.
If you’re tuning in late? Bought Elaine an old IBM Selectric which she loved during her U.S. Army hitch as an MC/ST Specialist.
Bought it on July 6th. Ran out of patience July 24th. Got the Refund. And the package (still, today) shows as:
EXCEPT – and this is where the Twilight Zone theme fades up: No one came to the house Friday and no one came yesterday, either.
BUT there was a “re”(scrawled in by hand) Delivery attempt.
So, after breakfast, off to town to find out if there’s actually a box there or if these people are failing drug testing, or what? How could they leave a delivery notice in Denver and it shows up in my mailbox Wednesday?
OK, stumped, I’m also trying to figure out how USPS delivers anything because I have never met a person who lives inside their mailbox! There is usually a house around!!!
Be sure and drop by tomorrow. I’m anxious to learn if it is actually here.
Honesty Test
A couple of people have said “Well, looks like you got a free Selectric.”
Well, no. Yes – for now there is a Selectric – bilocating in Denver and Palestine, TX but I am honest to a fault. If the machine is here and IF after bouncing around the countryside it still works, THEN I will insist that I pay eBay and that they, in turn, pay the seller.
Because that’s where a lot of people twist up their karma. By accepting “lucky gains.” OK, works in a casino, but these are all real people with real stakes in life. I have a habit of never accepting unearned rewards. To accept them would be DISHONEST.
And that gets to a core values discussion, but good luck finding anyone to talk about it with. Because we live in a world where core values (not accepting unearned reward) tainting the pure spirit of a being is somehow OK.
Just to be clear, if I enter a lottery, I keep the winnings. PowerBall? Keep. Free Selectric? Nope, I have a duty to honesty.
Good luck finding someone to kick the concept around with. “Guy must be an idiot!”
Nope. Just honest.
To really understand honesty, see the 2013 column Coping: With “Freedom” and Hells on Wheels. Or use the family “pocket definition.”
“An honest person is one who respects the goods of others even when no one is looking.”
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