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And don’t miss today’s “Life” section where I tell a story about the ballons that caused the only combat casualties on U.S. soil during WWII.
Trust me, you won’t want to miss it.
Before we jump into this week’s Lund Loop, last week, the folks at Trade-Ideas were kind enough to have me speak on an “active traders” panel at their Summit 2019.
It was basically me and four Millennial traders, and after reviewing video from the event, there’s only one inescapable conclusion - I need to get hair implants or shave my head.
Stay tuned to the Lund Loop to see how this dilemma plays out.
For those who want to watch the full panel, click here.
For those, like me, who are a little more Brian-centric, here are my cliff notes;
Overall it was a fantastic event and I look forward to going back next year.
*Click any chart to enlarge. Please read disclosures at the bottom of this page.
Wow, just wow!
If this week’s Lund Loop was an image of my face, all you’d see was an ear-to-ear smile, because almost every major chart we follow did what we want it to do from a technical standpoint - at least if you’re long.
How great was this week? The worst performing asset class - cash - was up 0.04%.
That’s a pretty solid week.
I’m not going to go into much detail on each because the pictures really do tell the whole story.
It’s enough to get giddy - which if you’re a trader, usually means things are going to reverse on you, so let’s keep perspective and continue to let the technicals objectively guide us.
No matter how super double boss bitchin’ the charts look right now. 😉
S&P 500 Index (SPX)
NASDAQ-100 Index (NDX)
Like a duo of synchronized swimmers executing a flawless routine - the SPX and NDX charts are a thing of beauty as they both continue to move up, closing the week at all-time highs.
We’ve been all over AAPL as a proxy for market strength since it broke out at the beginning of October. This week the strength continued as it closed up 3.75% and at ATHs.
Steve Jobs who?
Dow Jones Industrial Average (DJIA)
Even the sad-sack DJIA broke out this week, closing at ATHs as well.
Russell 2000 ETF (IWM)
But perhaps the best news of the week is that IWM looks like it’s finally about to break out of this 273-year range. Of course, it’s teased us many times before, but I think this time it might actually deliver.
A week of consolidation below the breakout line would set this move up perfectly.
S&P 500 Volatility Index (VIX)
We’ve been looking for the VIX to test that lower support level and next week might be when it finally does.
iShares MSCI Emerging Markets ETF (EEM)
iShares Trust China Large-Cap ETF (FXI)
Great moves in both the EEM and FXI show that it’s not just the U.S. stock market that is getting healthier. These charts also provide more clues that the China-U.S. trade war may be ending sooner than later.
Bank of America (BAC)
JPMorgan Chase & Co (JPM)
Wells Fargo & Co (WFC)
Financial Sector SPDR (XLF)
For months now, we’ve been all over these bank stocks like a comforter soaked in Mercury (the heaviest liquid, hello?) They’re all doing the Lord’s work by moving higher.
Even dogshit financials like WFC are providing alpha.
And XLF breaking out into multi-year highs is nothing but great.
SPDR S&P Homebuilders ETF (XHB)
XHB continues to edge higher and is nearing ATHs.
VanEck Vectors Semiconductor ETF (SMH)
Just another ATH here in SMH.
US Dollar Currency Index (DXY)
CBOE Interest Rate 10-Year T-Note (TNX)
DXY still looks like it’s going to take a run at that trendline, while TNX continues to consolidate.
SPDR Gold Trust (GLD)
iShares Silver Trust (SLV)
From last week’s Lund Loop;
Both GLD and SLV made sloppy breakouts this week. They both need some more consolidation if a move higher is going to stick.
The consolidation continued this week, which is good for higher prices.
West Texas Oil (WTIC)
Oil remains in a range.
ETFMG Alternative Harvest ETF (MJ)
Bitcoin is forming a nice little bull flag right at a former resistance level.
S&P 500 +1.46, Dow +1.44%, Nasdaq +1.74%, and the Russell 2000 +1.79%
The best asset class returns this week were International Treasuries (+1.91%) and the worst was Cash (+0.04%).
Potential market-moving data next week: Jobless Claims (Thur).
TRADING & INVESTING
*Click any chart to enlarge. Please read disclosures at the bottom of this page.
Let’s take a look at some previous Lund Loop setups.
GRMN was a setup from last week which closed 8.29% higher.
Phillips 66 (PSX)
Another 3.48% this week in PSX, which is up 14.4% since we first flagged it.
Again from last week, AVGO is starting its breakout, closing up 1.28%
The Bank of New York Mellon (BK)
A “meh” breakout, but as we mentioned last week, this is a change of trend setup and likely takes a long time to play out fully.
Abbott Labs (ABT)
A pullback just below the breakout point in ABT is not great. But let’s see if it holds and continues back higher.
Okay, let’s look at the coming week.
Activision Blizard (ATVI)
A holdover from last week, ATVI is still looking like it’s ready to move higher.
After a big move on earnings, INTC is doing some high-level consolidation. Watch for a break out of this box.
Microchip Technology (MCHP)
We’ve been watching this for three weeks now, but patience may pay off here soon.
Limelight Networks (LLNW)
High-level consolidation with volume drying up here in LLNW. Watch for a move higher with expanding volume.
Rite Aid (RAD)
Another potential change of trend setup. Watch for a break above this resistance level.
Markets, Trading & Finance Links:
This is it! The book that EVERYBODY is talking about - The Man Who Solved the Market. (Amazon)
Will we ever see another Great Depression? (A Wealth of Common Sense)
It is over for stock pickers? (The Wall Street Journal)
Wealth, like most things, exists on a wide spectrum. (The Collaborative Fund)
Exactly what I’ve been saying. Too many highs to count. (All-Star Charts)
Learning to trade? Step #1. (TraderFeed)
The market is at all-time highs. So why did this billionaire hedgie shut down his fund after just eight months? (The Wall Street Journal)
Ken Fisher has lost just over $4B in AUM since putting his foot in his mouth - repeatedly. Now he’s fighting to stem the (still small) tide of outflows. It’s not going well. (Dealbreaker)
On the fallacy of real estate investments being better than investing in stocks. (Klement on Investing)
Americans have the most money in money market funds since 2009. The bull case: OMG! What happens when that money starts to come back into the stock market? (Disciplined Investing)
The standard narrative among Sinophiles is that China’s youthful demographics will drive its economic engine and eventually topple our capitalist hegemony. But China’s median age will soon surpass America’s. 🤔 (The Economist)
Every October, my hometown hosts The Great Pacific Airshow. In the days leading up to the event, the skies above Orange County fill with jet fighters practicing their daredevil acrobatics. The roar of the engines is awe-inspiring.
On 9/11, I heard those same roars overhead in the night’s sky and instinctively knew I was being protected, but for enemy combatants, that same sound means something decidedly different.
The history of battle has shown that with higher ground comes a tactical advantage. Occupying elevated terrain, the towers and walls of castles, even the sky itself, is a crucial component of military strategy.
The specter of attack from above also carries with it a mythology of avenging angels and their patron gods dispatching indiscriminate death upon those they’ve set in their sights.
An attack not just on the enemy’s body but on his soul as well.
For most of America’s history, we’ve been immune from such attacks, protected by friendly, expansive nations to the north and south, and flanked by vast oceans on either side.
Even as late as WWII - decades after aerial warfare had become commonplace - the distance our enemies had to traverse made an attack on the homeland technologically impossible.
Or so we thought.
In retaliation for the Allies regularly bombing their cities, the Axis powers were determined to attack the continental U.S. in kind. Germany tried to do so by developing the “Amerikabomer,” a long-range strategic bomber capable of striking New York City.
Ultimately, its prohibitively high cost and questionable feasibility caused the project to be abandoned, ensuring that Germany would never succeed in inflicting casualties in the United States.
However, Japan would.
On November 4th, 1944, a Navy patrol craft spotted what looked like a giant balloon floating in the ocean 60 miles west of San Pedro, California. By the end of November, similar balloons had been found in Wyoming and Montana.
More balloons continued to arrive in Oregon, Kansas, Iowa, South Dakota, Nevada, even as far east as Detroit.
One of the balloons descended in the vicinity of the Manhattan Project’s production facility in Washington state, short-circuiting the power lines that supplied electricity to the reactor’s cooling pumps. Fortunately, backup generators kicked in, thus avoiding a nuclear meltdown.
The arrival of these mysterious balloons coincided with a spike in reports of unexplained explosions and fires throughout the western United States. Upon further investigation, the military discovered that the balloons were weaponized, armed with loads varying from antipersonnel bombs to incendiary devices.
Almost immediately, it was determined that the balloons were sent by the Japanese military.
But from where?
There was no way they could have made the 6500-mile trip from mainland Japan as the hydrogen that kept them afloat would have dissipated long before they reached U.S. shores. Initial speculation was that they might have been launched from submarines off the coast or from internment camps.
What the military did not know was that these balloons were indeed being launched from Japan, and were designed to take advantage of a phenomenon where high-speed winds above 30,000 feet traveled up to 250 mph.
At the time, this phenomenon - later called the “jet stream” - was unknown to almost everybody outside of Japan – though not by design.
The existence of a jet stream had been discovered in 1926 by Japanese meteorologist Wasaburo Oishi, a quirky man who, in an attempt to reach a universal audience, had published nineteen research reports on the subject by 1944.
Esperanto is a language created by Polish ornithologist L.L. Zamenhof in 1887. Zamenhof was a dedicated internationalist whose goal was to unite the world’s population - irrespective of borders, cultures, or nationalities – via a singular, constructed language.
Unfortunately, despite his lofty goals, for much of its existence, Esperanto has been an obscure, often unknown language, currently spoken by less than 1/10th of one percent of the world’s population.
Wasaburo Oishi’s reports were ignored by the rest of the world because as President of the Japanese Esperanto Institute and a hardcore Esperantist – one, who as agreed upon by the first World Esperanto Congress in 1905, speaks Esperanto and uses it for any purpose – he, as you’ve probably guessed by now, wrote them all in Esperanto.
I told you he was quirky.
But quirky or not, it was Oishi’s research that prompted the Japanese Military to come up with their plan to attack America with Fu-Go, or fire balloons.
With scant clues to go on as to the source of these balloons, U.S. investigators called in experts from an unusual place - the Military Geological Unit (MGU).
Fu-Go balloons were outfitted with an ingenious system for navigating the jet stream.
In daytime, as the hydrogen expanded, threatening to burst the balloon if it went too high, a relief valve at its base automatically vented excess gas. At night, when cold temperatures could cause it to drop out of the jet stream, an altimeter triggered a small charge, cutting loose sandbags it carried for ballast.
This system controlled the balloon’s oscillation for three days of flight, at the end of which it would – in theory – be over the United States.
Once below 30,000 feet, a final charge was triggered, releasing its ordinance while simultaneously lighting a fuse, which 84 minutes later, ignited a flash bomb designed to destroy the balloon.
The intent was to create mysterious explosions, fires, and noises of unknown origin, thus inciting mass panic among the population and undermining their will to fight Japan. But many balloons malfunctioned, often leaving their ordinance, ballast, or even the whole device behind.
And it was the sand used as ballast that provided the clues as to where the fire balloons originated.
On initial examination, the MGU quickly eliminated North America as a source of the sand but found forams - tiny skeletons of microscopic organisms that feed on the ocean bottom – indicating that it had come from a beach.
Some of the foram species identified had been previously described only in Japanese geologic papers dealing with beaches north of Tokyo, on the eastern shore of Honshu.
Further examination revealed that the sand was devoid of any coral but contained small mollusk fragments. In Japan, coral grows along the coast of the main island of Honshu, only as far north as Tokyo Bay.
The individual sand grains were identified as granite, but with an unusual set of trace minerals. The MGU geologists narrowed the source for these minerals to the north-eastern shores of Japan.
An analysis of Japanese pre-war geologic studies allowed them to narrow the source area by another 80%, determining that the sand samples likely came from one of two locations; Shiogama beach, close to Sentai, or Kujūkuri Beach in Ichinomiya.
This definitive evidence, which coincided with the purely accidental discovery of the jet stream by long-range U.S. bomber pilots, proved that the balloons came from mainland Japan.
The military now had two choices; alert the public – risking a panic, while also confirming to the Japanese military that their strategy was working – or say nothing. They opted for the latter, ordering news agencies to censor any reports of the balloons.
This would turn out to be a deadly decision.
Despite the military’s clampdown, rumors about the fire balloons spread, though in a time before the internet, they spread slowly, and the information most people received was opaque and incomplete.
Yuzuru Takeshita went by John, which was not unusual, as most ethnic Japanese who, like him, had been born in the U.S., also had “American” names.
John had heard the rumors of the balloon bombs but didn’t know if they were real.
He and his two brothers often stood outside for hours looking to the sky to see if they could spot one. Not from the front yard of their home in Alameda, California, but from the yard of the internment camp where his family was sent after Pearl Harbor was bombed.
Archie Mitchell had also heard a vague rumor of balloons, but he had more important things on his mind.
As a minister with the Christian and Missionary Alliance, he had recently been assigned a role as pastor of a small church in Bly, Oregon, and he was busy getting to know his congregation. And if that wasn’t enough, he was also newly married with a baby on the way.
Tanaka Toshiko did know about the balloons – she was making them – but had no idea what they were intended for.
As a fifteen-year-old in Yame, Japan, all she had known for her short life was war - first with the Chinese, and then with the Americans. So when her girls’ school was suddenly converted into a factory in late 1943, and the student body asked to act as unpaid workers for the war effort, she didn’t question it.
Sixteen hours a day, seven days a week, she and her classmates worked to make washi, a thick paper material made from Mulberry trees. When these paper sheets were done, other classmates pasted them together on a frame using konnyaku – a glue made by adding the pulp from a Konjac plant to a cauldron of boiling water and then stirring it non-stop for hours on end.
John, Tanaka, and Archie didn’t know each other, but soon, their lives would be forever intertwined.
Bly, Oregon is much the same today as it’s always been, a small mill town where you know your neighbors and generations live side by side. Fifteen miles northeast, just off Highway 140, is a small picnic area that sits on the edge of the Fremont-Winema National Forest.
From the parking lot, a narrow gravel path takes you past the dogwoods and trilliums to a stand of trees ringed by a chain-link fence.
The proximity of one of these trees to a bronze and stone memorial distinguishes it from the rest – its scarred bark attesting to its role as witness to the memorial’s genesis.
It is here that the only combat casualties on U.S. soil during World War II occurred.
May 5th, 1944 was a Saturday, and by all accounts, a beautiful, clear day. That morning, Archie Mitchell, his wife, and five of their Sunday school students headed north of town for a picnic. Archie knew of a nice spot just off the highway, not far from a stream, and he drove as close as he could to it, so the kids and his pregnant wife didn’t have far to walk.
After dropping them off, he drove back up to the highway to park.
As he returned, he heard one of the children yell that they had found something in the woods that looked like a balloon.
Having heard the rumors, Archie shouted a warning not to touch it, but just as he did, a massive explosion went off.
When he reached the group, they were all dead.
Killed that day in the explosion were Elsie Mitchell, 26, and five children: Sherman Shoemaker, 11, Jay Gifford, 13, Edward Engen, 13, Joan Patzke, 13, and Dick Patzke, 14.
The only combat casualties on U.S. soil during World War II.
After the war, John forgot about the balloons.
So did Tanaka.
It wasn’t as easy for Archie, but he tried.
Two years after his wife’s death, he married Betty Patzke - the older sister of Joan and Dick Patzke – with whom he had four children of his own. And eventually, they moved away from Bly so that he could continue his missionary work.
Then in 1985, John came across an article about the Fu-Go balloons and began researching the story. That led to his discovery of the tragedy in Bly, only 60 miles away from where he was interned in Yule City, California.
It also led him to Tanaka.
A Japanese legend says that someone who folds 1,000 origami cranes will be granted a wish.
Sadako Sasaki was two years old when she was exposed to radiation from the bombing of Hiroshima. By age twelve, she had developed leukemia and spent most of her time in the hospital, where she began making cranes, in hopes of receiving a wish for recovery.
Sadako fell short of her goal and died in 1955, but 1000 paper cranes have become an international symbol of peace, and John took inspiration from her story.
First, he located former factory workers like Tanaka and her friends – who never knew what became of the balloons they made or the deaths they caused.
After informing them of the tragedy, he suggested that they do something to apologize to the people of Bly. And in 1987, they decided to fold and deliver 1000 cranes to each of the families who lost loved ones on that May day in 1944.
Over the years, Tanaka and her friends – aided by John’s translations – corresponded with the people of Bly, who harbored no ill will towards the Japanese, and if fact, felt guilty for what had happened to Japanese Americans during the war, like John.
Then in 1995, John and Tanaka brought a group over from Japan to meet the people of Bly in person. At a ceremony honoring the victims, thousands of paper cranes were laid at the base of the bronze and stone memorial, and John receipted a poem he had composed for the occasion.
Many years ago a balloon they sent afar
With a bomb to kill
Today a prayer they send on the wings
Of a thousand cranes
“I couldn’t feel any hatred for them, any more than I could feel hatred for our boys who did what they were told to do during the war,” said Cora Conner, a lifelong Bly resident and the switchboard operator who relayed the news of Elsie Mitchell and the children’s deaths.
“We’re not perfect here. And the Japanese people? I couldn’t feel anger for them. I felt sympathy for those girls, who supported their country in the only way they could, not knowing what those balloons were meant to do.”
Archie Mitchell was not at the ceremony.
On May 30th, 1962, eighteen years after that fateful day in the forest north of Bly, Archie was taken captive by the Viet Cong while performing missionary work in the town of Da Lat, Vietnam.
Initially, the VC intended to take Archie, his wife, and their four children, ranging from age four to thirteen, but he convinced his captors that he would only fully cooperate if they left his family behind - which they did.
After his capture, U.S. and South Vietnamese intelligence agencies tracked his whereabouts for four years, through various sources and tips, and in 1969, they were close to securing his release. But negotiations fell through, and Archie was never seen or heard from again.
It’s Good, It’s Good
Twitter is banning all political ads. The question though, what is considered a “political” ad? (The New York Times)
The 20 defining comedy sketches of the past 20 years. And yes, the “Cowbell” sketch is on the list. (The Washington Post)
I read this article and I totally passed. Seriously, I’m in the clear. Listen you fucking asshole, it’s not me they’re talking about. (Nautilus)
Beer. Popcorn. And the Twilight Zone on the big screen? Off me with a rusty blade when it’s over because it ain’t getting any better than this. (Fathom Events)
President Obama weighs in on woke culture. Get em’ Barry.
Professor Galloway is fast becoming one of my favorite reads. (No Mercy / No Malice)
You know what’s cool? When you realize that there are literally 100’s of thousands of videos from you’re favorite ‘80s artists that you’ve never seen. Side note: I think I might have had a slight crush on Annabella at some point. (YouTube)
A black activist and a neo-Nazi walk into a bar. Trust me, just read it. (The Washington Post)
The chickpea is a miracle food. You’ll be eating more of them in the future, whether you know it or not. (The Atlantic)
In this edition of “California Crazy,” the governor signs legislation banning private prisons and detention centers - without any contingency for where those currently incarcerated will go. As always, wackiness ensues for the citizens of California. (Desert Sun)
No Safe Spaces - a collab between Adam Carolla and Dennis Prager has finally dropped. (No Safe Spaces)
On a personal note: I’m trying to put together the definitive collection of Christoper Hitchens’ books/writing/ephemera. Know somebody I should talk to? Drop a dime and help a brother out, won’t ya?
Thanks for reading this week’s edition of The Lund Loop.
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P.S. It should go without saying - but I’ll say it anyway - all opinions expressed in The Lund Loop are my own personal opinions and don’t reflect the views of my employer, any associated entities, or other organizations I’m associated with.
Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.