A Flash Crash Can Come At Any Time

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,554
S&P 500: 2,943
Nasdaq Comp.:8,161
Russell 2000:1,599
Tuesday, April 30
, 2019   6:45  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NOTE: Investors first read will not be published Wednesday through Friday
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA:26,401;S&P 500:2,933; Nasdaq Comp.:8,101
Minor Resistance: DJIA:26,581; S&P 500:2,946 ; Nasdaq Comp.:8,173
A break beyond support or resistance increases the odds that the market will move further in that direction.

………………………………………………….
Monday (Apr. 29)
ECONOMY:
      MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
…………………………………………………………….
EARNINGS:
      On a brighter note, Q1’s earnings for the S&P 500 may not be a bad as the expected minus 2.5% rate, and may even end up a smidge positive, though a number of major companies have yet to report, including GM, Apple, Alphabet, GE, McDonald’s and Under Armour.
………………………………………………………….
THE FED:
The FOMC meets this week followed by a press conference by Fed Chief Jerome Powell at 2:30 Wednesday. The Fed did an abrupt about face on policy January switching to a “no action” policy of raising rates from one a steady rate increases. The Street will be parsing comments by Powell for clues to whether the Fed will lower rates in coming months to prevent a recession in a presidential election year.
SUMMARY:
      I continue to urge caution and a healthy cash reserve in line with one’s tolerance for risk.  Odds favor a correction after the sharp 25.2% rebound in the S&P 500 since late December.
Additionally, I think we are in the early stages of a recession, though the Fed will do everything in its power to head it off. Companies continue to buy back stock, a major contributor to the bull market’s buoyancy – so much for the 40% tax
rate cut !!
News of progress on U.S./China trade talks my hit this week, though most of that is already priced in current levels.

Friday (Apr. 26, 2019)
The first estimate for Q1 GDP came in today well above projections at a plus 3.2% (annual rate), but futures trading indicates a mixed open for stock prices.
Give the Street  a chance to digest this surprise announcement before concluding the BIG money is selling into the news.
At this point, we  don’t know how effective the Fed’s January flip-flop in policy from raising rates to a hold will be.
Retail sales have picked up but individual, consumer, business and government debt is uncomfortably high, indicating spending power going forward is suspect.
The stock market has recouped all of its Q4, 20% loss since the Fed reversed fields.  Economists do not expect a cut in interest rates this year, I do, if the economy begins to tank.  I expect the Fed to do everything in its power to head off a recession in an election year. Their problem will be if the economy heats up. Do they raise rates ?
This is a late-stage, overvalued bull market with a lot more downside risk than upside potential. At some point here, the BIG money will exit, after which the plug will be pulled and the market will plunge a buyers vanish and selling increases. Beware !  A VERY DANGEROUS MARKET.
………………………………………………
Thursday (Apr. 25, 2019)
We are in the late stages of a bull market where money can be made quickly, because traders and investors are quick to jump on anything moving up.  Tops feature a euphoric mania  that masks overvaluation and looming risks.
That is why market tops are hard to read. There is an overriding mentality among investors that drive them to score one more time.
Bad news and warnings are ignored, bears are despised for raining on the parade.
It’s all obvious several months after the market crashes and reality sets in, investors wonder why they didn’t see the warning signs  that were so clear.
This pattern of human behavior is consistent at tops, as is overriding fear at bottoms that prevent investors from buying in at bear market bottoms.
        I can only urge readers to have a cash reserve, selling out entirely is out of the question.  Anyone who is on margin at this point is at HUGE RISK.
The Fed sees a greenstick fracture in the economy and is trying to head off a recession in an election year, which would devastate the Republican party. Nine of the last 10 recessions  have occurred with a Republican in the White House.
………………………………………………………..
Wednesday (Apr. 24, 2019)
The S&P 500 and Nasdaq Comp. should hit new all-time highs today, but the DJIA has a ways to go to beat 26,951.81.
The S&P 500 has only to top 2,941.91, the Nasdaq Comp. 8,133.29.
What does this mean ?
A lot of press and White House hype, and possibly a flurry of buying.
What should investors do ?
Raise some cash if they haven’t already.
The Street is excited about earnings reports to-date coming in better than expected.  Generally, the Street  low-balls projections for this reason, i.e. easier to beat.
United Tech (UTX) was up 2.3% and Coca Cola (KO) up 1.7% on earnings beats. Verizon (VZ) beat projections, but was down 2.1%
The Street was heartened by a 3.3% jump in New Home Sales Tuesday, but ignored a 5.4% drop in Existing Home Sales Monday.
       In late stage bull markets investors tend to focus only on good news, not wanting to consider the party will soon end.

Tuesday (Apr. 23, 2019)
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 GDP Growth of 3.2% Misleading

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,543
S&P 500: 2,939
Nasdaq Comp.:8,146
Russell 2000:1,591
Monday, April 29
, 2019   9:07  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NOTE: Investors first read will not be published Wednesday through Friday
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
ECONOMY:
      MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
…………………………………………………………….
EARNINGS:
      On a brighter note, Q1’s earnings for the S&P 500 may not be a bad as the expected minus 2.5% rate, and may even end up a smidge positive, though a number of major companies have yet to report, including GM, Apple, Alphabet, GE, McDonald’s and Under Armour.
………………………………………………………….
THE FED:
The FOMC meets this week followed by a press conference by Fed Chief Jerome Powell at 2:30 Wednesday. The Fed did an abrupt about face on policy January switching to a “no action” policy of raising rates from one a steady rate increases. The Street will be parsing comments by Powell for clues to whether the Fed will lower rates in coming months to prevent a recession in a presidential election year.
SUMMARY:
      I continue to urge caution and a healthy cash reserve in line with one’s tolerance for risk.  Odds favor a correction after the sharp 25.2% rebound in the S&P 500 since late December.
Additionally, I think we are in the early stages of a recession, though the Fed will do everything in its power to head it off. Companies continue to buy back stock, a major contributor to the bull market’s buoyancy – so much for the 40% tax
rate cut !!
News of progress on U.S./China trade talks my hit this week, though most of that is already priced in current levels.
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA:26,507;S&P 500:2,937; Nasdaq Comp.:8,140
Minor Resistance: DJIA:26,621; S&P 500:3,112 ; Nasdaq Comp.:8,594
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. ………………………………………………….
Friday (Apr. 26, 2019)
The first estimate for Q1 GDP came in today well above projections at a plus 3.2% (annual rate), but futures trading indicates a mixed open for stock prices.
Give the Street  a chance to digest this surprise announcement before concluding the BIG money is selling into the news.
At this point, we  don’t know how effective the Fed’s January flip-flop in policy from raising rates to a hold will be.
Retail sales have picked up but individual, consumer, business and government debt is uncomfortably high, indicating spending power going forward is suspect.
The stock market has recouped all of its Q4, 20% loss since the Fed reversed fields.  Economists do not expect a cut in interest rates this year, I do, if the economy begins to tank.  I expect the Fed to do everything in its power to head off a recession in an election year. Their problem will be if the economy heats up. Do they raise rates ?
This is a late-stage, overvalued bull market with a lot more downside risk than upside potential. At some point here, the BIG money will exit, after which the plug will be pulled and the market will plunge a buyers vanish and selling increases. Beware !  A VERY DANGEROUS MARKET.
………………………………………………
Thursday (Apr. 25, 2019)
We are in the late stages of a bull market where money can be made quickly, because traders and investors are quick to jump on anything moving up.  Tops feature a euphoric mania  that masks overvaluation and looming risks.
That is why market tops are hard to read. There is an overriding mentality among investors that drive them to score one more time.
Bad news and warnings are ignored, bears are despised for raining on the parade.
It’s all obvious several months after the market crashes and reality sets in, investors wonder why they didn’t see the warning signs  that were so clear.
This pattern of human behavior is consistent at tops, as is overriding fear at bottoms that prevent investors from buying in at bear market bottoms.
        I can only urge readers to have a cash reserve, selling out entirely is out of the question.  Anyone who is on margin at this point is at HUGE RISK.
The Fed sees a greenstick fracture in the economy and is trying to head off a recession in an election year, which would devastate the Republican party. Nine of the last 10 recessions  have occurred with a Republican in the White House.
………………………………………………………..
Wednesday (Apr. 24, 2019)
The S&P 500 and Nasdaq Comp. should hit new all-time highs today, but the DJIA has a ways to go to beat 26,951.81.
The S&P 500 has only to top 2,941.91, the Nasdaq Comp. 8,133.29.
What does this mean ?
A lot of press and White House hype, and possibly a flurry of buying.
What should investors do ?
Raise some cash if they haven’t already.
The Street is excited about earnings reports to-date coming in better than expected.  Generally, the Street  low-balls projections for this reason, i.e. easier to beat.
United Tech (UTX) was up 2.3% and Coca Cola (KO) up 1.7% on earnings beats. Verizon (VZ) beat projections, but was down 2.1%
The Street was heartened by a 3.3% jump in New Home Sales Tuesday, but ignored a 5.4% drop in Existing Home Sales Monday.
       In late stage bull markets investors tend to focus only on good news, not wanting to consider the party will soon end.

Tuesday (Apr. 23, 2019)
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.

Monday (Apr. 22, 2019
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investors Should Use Market Strength to Raise Cash

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,462
S&P 500: 2,926
Nasdaq Comp.:8,118
Russell 2000:1,575
Friday, April 26
, 2019   9:14  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
The first estimate for Q1 GDP came in today well above projections at a plus 3.2% (annual rate), but futures trading indicates a mixed open for stock prices.
Give the Street  a chance to digest this surprise announcement before concluding the BIG money is selling into the news.
At this point, we  don’t know how effective the Fed’s January flip-flop in policy from raising rates to a hold will be.
Retail sales have picked up but individual, consumer, business and government debt is uncomfortably high, indicating spending power going forward is suspect.
The stock market has recouped all of its Q4, 20% loss since the Fed reversed fields.  Economists do not expect a cut in interest rates this year, I do, if the economy begins to tank.  I expect the Fed to do everything in its power to head off a recession in an election year. Their problem will be if the economy heats up. Do they raise rates ?
This is a late-stage, overvalued bull market with a lot more downside risk than upside potential. At some point here, the BIG money will exit, after which the plug will be pulled and the market will plunge a buyers vanish and selling increases. Beware !  A VERY DANGEROUS MARKET
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA 26,556; S&P 500: 2,921; Nasdaq Comp.: 8,081
Minor Resistance: DJIA:26,631; S&P 500: 2,933; Nasdaq Comp.:8,119
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. ………………………………………………….
Thursday (Apr. 25, 2019)
We are in the late stages of a bull market where money can be made quickly, because traders and investors are quick to jump on anything moving up.  Tops feature a euphoric mania  that masks overvaluation and looming risks.
That is why market tops are hard to read. There is an overriding mentality among investors that drive them to score one more time.
Bad news and warnings are ignored, bears are despised for raining on the parade.
It’s all obvious several months after the market crashes and reality sets in, investors wonder why they didn’t see the warning signs  that were so clear.
This pattern of human behavior is consistent at tops, as is overriding fear at bottoms that prevent investors from buying in at bear market bottoms.
        I can only urge readers to have a cash reserve, selling out entirely is out of the question.  Anyone who is on margin at this point is at HUGE RISK.
The Fed sees a greenstick fracture in the economy and is trying to head off a recession in an election year, which would devastate the Republican party. Nine of the last 10 recessions  have occurred with a Republican in the White House.
………………………………………………………..
Wednesday (Apr. 24, 2019)
The S&P 500 and Nasdaq Comp. should hit new all-time highs today, but the DJIA has a ways to go to beat 26,951.81.
The S&P 500 has only to top 2,941.91, the Nasdaq Comp. 8,133.29.
What does this mean ?
A lot of press and White House hype, and possibly a flurry of buying.
What should investors do ?
Raise some cash if they haven’t already.
The Street is excited about earnings reports to-date coming in better than expected.  Generally, the Street  low-balls projections for this reason, i.e. easier to beat.
United Tech (UTX) was up 2.3% and Coca Cola (KO) up 1.7% on earnings beats. Verizon (VZ) beat projections, but was down 2.1%
The Street was heartened by a 3.3% jump in New Home Sales Tuesday, but ignored a 5.4% drop in Existing Home Sales Monday.
       In late stage bull markets investors tend to focus only on good news, not wanting to consider the party will soon end.

Tuesday (Apr. 23, 2019)
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.

Monday (Apr. 22, 2019
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Late, Late Stages of an Aging Bull Market

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,597
S&P 500: 2,927
Nasdaq Comp.:8,102
Russell 2000:1,588
Thursday, April 25
, 2019   8:04  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
We are in the late stages of a bull market where money can be made quickly, because traders and investors are quick to jump on anything moving up.  Tops feature a euphoric mania  that masks overvaluation and looming risks.
That is why market tops are hard to read. There is an overriding mentality among investors that drive them to score one more time.
Bad news and warnings are ignored, bears are despised for raining on the parade.
It’s all obvious several months after the market crashes and reality sets in, investors wonder why they didn’t see the warning signs  that were so clear.
This pattern of human behavior is consistent at tops, as is overriding fear at bottoms that prevent investors from buying in at bear market bottoms.
        I can only urge readers to have a cash reserve, selling out entirely is out of the question.  Anyone who is on margin at this point is at HUGE RISK.
The Fed sees a greenstick fracture in the economy and is trying to head off a recession in an election year, which would devastate the Republican party. Nine of the last 10 recessions  have occurred with a Republican in the White House.
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA 26,496; S&P 500: 2,916; Nasdaq Comp.: 8,081
Minor Resistance: DJIA:26,631; S&P 500: 2,933; Nasdaq Comp.:8,119
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. ………………………………………………….

Monday (Apr. 24, 2019)
The S&P 500 and Nasdaq Comp. should hit new all-time highs today, but the DJIA has a ways to go to beat 26,951.81.
The S&P 500 has only to top 2,941.91, the Nasdaq Comp. 8,133.29.
What does this mean ?
A lot of press and White House hype, and possibly a flurry of buying.
What should investors do ?
Raise some cash if they haven’t already.
The Street is excited about earnings reports to-date coming in better than expected.  Generally, the Street  low-balls projections for this reason, i.e. easier to beat.
United Tech (UTX) was up 2.3% and Coca Cola (KO) up 1.7% on earnings beats. Verizon (VZ) beat projections, but was down 2.1%
The Street was heartened by a 3.3% jump in New Home Sales Tuesday, but ignored a 5.4% drop in Existing Home Sales Monday.
       In late stage bull markets investors tend to focus only on good news, not wanting to consider the party will soon end.

Tuesday (Apr. 23, 2019)
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.

Monday (Apr. 22, 2019
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.
Thursday (4/18)
      I didn’t like yesterday’s market action. Patient sellers showed up throughout the day after a spike up in early trading. (See “Technical” below).
At any moment, a flash crash can develop taking the market down 12% – 16% in a week or two. Be prepared.
The Street would like to pump prices higher, even to new all-time highs, so the big players can use the news media hoopla to sell big positions at lofty prices.
The minutes from the FOMC March 20 meeting were released yesterday showing most board members resigned to keeping rates at current levels.
I don’t buy that.  Given even a smidgeon of bad news, the Fed will cut rates determined to head off a recession in 2020, a presidential election year.
A heavily redacted Mueller report will hit today, stirring controversary from both sides.
If the market gets hit, it will be because it is overvalued and due to get hit, not due to the Mueller report unless it is so damaging to Trump’s prospects in 2020 he won’t run for re-election or will face certain defeat.
That is all assuming the Street is still bullish on Trump. While they got their massive tax cut, the S&P 500 has appreciated  63% through April 12 under Obama vs. 28% under Trump in the two president’s first term.
………………………………………………
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Is BIG Money Selling Into the New All-Time Highs Hype ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,656
S&P 500: 2,933
Nasdaq Comp.:8,120
Russell 2000:1,585
Wednesday, April 24
, 2019   8:59  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
The S&P 500 and Nasdaq Comp. should hit new all-time highs today, but the DJIA has a ways to go to beat 26,951.81.
The S&P 500 has only to top 2,941.91, the Nasdaq Comp. 8,133.29.
What does this mean ?
A lot of press and White House hype, and possibly a flurry of buying.
What should investors do ?
Raise some cash if they haven’t already.
The Street is excited about earnings reports to-date coming in better than expected.  Generally, the Street  low-balls projections for this reason, i.e. easier to beat.
United Tech (UTX) was up 2.3% and Coca Cola (KO) up 1.7% on earnings beats. Verizon (VZ) beat projections, but was down 2.1%
The Street was heartened by a 3.3% jump in New Home Sales Tuesday, but ignored a 5.4% drop in Existing Home Sales Monday.
       In late stage bull markets investors tend to focus only on good news, not wanting to consider the party will soon end.
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA 26,587; S&P 500: 2,926; Nasdaq Comp.: 8,048
Minor Resistance: DJIA:26,737; S&P 500: 2,943; Nasdaq Comp.:8,156
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. ………………………………………………….
Tuesday (Apr. 23, 2019)
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.

Monday (Apr. 22, 2019
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.
Thursday (4/18)
      I didn’t like yesterday’s market action. Patient sellers showed up throughout the day after a spike up in early trading. (See “Technical” below).
At any moment, a flash crash can develop taking the market down 12% – 16% in a week or two. Be prepared.
The Street would like to pump prices higher, even to new all-time highs, so the big players can use the news media hoopla to sell big positions at lofty prices.
The minutes from the FOMC March 20 meeting were released yesterday showing most board members resigned to keeping rates at current levels.
I don’t buy that.  Given even a smidgeon of bad news, the Fed will cut rates determined to head off a recession in 2020, a presidential election year.
A heavily redacted Mueller report will hit today, stirring controversary from both sides.
If the market gets hit, it will be because it is overvalued and due to get hit, not due to the Mueller report unless it is so damaging to Trump’s prospects in 2020 he won’t run for re-election or will face certain defeat.
That is all assuming the Street is still bullish on Trump. While they got their massive tax cut, the S&P 500 has appreciated  63% through April 12 under Obama vs. 28% under Trump in the two president’s first term.
………………………………………………
Wednesday (4/17)
About my Headline:
The new normal has been the flash crash, a vertical plunge in prices that happens so fast investors are down 12% – 16% before they can say “sell.”
Under these conditions, it is prudent to maintain a cash reserve in line with one’s tolerance for risk to take the sting out of a flash crash and give an investor some cash to buy-in at lower prices.
………………………………………………………
The market averages are notching up, a pattern that reflects automatic buying by institutions, i.e., computers are making decisions to buy and occasionally sell stocks without much human input – kind of an artificial intelligence without the latter.
So, what are these computers programmed to do, other than blindly buy ?
Don’t know.  I still contend, self excluded, that the human brain is the best computer on earth, not the fastest, but generally free to think weigh in on the unexpected.  Put another way, computers can hit a fast ball, but not a sinker.
What is my point ?
Cover your backside, because this will have a bad ending, when reality sets in. We may have to hit new all-time highs to trigger sellers, intent on taking advantage of the hype by the press about new highs, to unload big positions as the public rushes in absolutely sure the bull has a lot further to go.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Stock Market Deserves More Respect

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,511
S&P 500: 2,907
Nasdaq Comp.:8,015
Russell 2000:1,560
Tuesday, April 23
, 2019   8:56  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
We are still locked in a cruise control market where algorithms make the decisions and execute the orders, resulting in a market that automatically notches up without regard for over-valuation or the potential for bad news.
One of the first things I learned when trading the market was to RESPECT it, because it can suddenly turn ugly.
What we are seeing here is a combination of late-stage bull market arrogance and greed.  Amazing that Q 4’s 20% crunch wasn’t a wake up call.  Give the Fed credit for converting a technical rally into a full recovery of all that was lost, as it abruptly changed its policy from rate increases to no rate increases.
I don’t see respect here, what I see is an investment community that thinks every correction will be followed immediately by a rebound. That is a good way to get blindsided and buried with losses.
      Investors simply do not want to heed warnings in late-stage bull markets; they believe they can stay for just one more score before it’s over.
They never sell…..……… until the losses become unbearable, which is often the time they should be buying.  Humans being humans.
No one wants to liquidate their entire portfolio, but why not establish a healthy cash reserve just in case the BIG money walks away and the Street tweaks its algos to lock in gains and cut back  its buying.
…………………………………………
TECHNICAL: (No change from Thursday)
Minor Support: DJIA 26,517; S&P 500: 2,908; Nasdaq Comp.: 8,013
Minor Resistance: DJIA:26,626; S&P 500: 2,919; Nasdaq Comp.:8,047
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. ………………………………………………….
Monday (Apr. 22, 2019
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.
Thursday (4/18)
      I didn’t like yesterday’s market action. Patient sellers showed up throughout the day after a spike up in early trading. (See “Technical” below).
At any moment, a flash crash can develop taking the market down 12% – 16% in a week or two. Be prepared.
The Street would like to pump prices higher, even to new all-time highs, so the big players can use the news media hoopla to sell big positions at lofty prices.
The minutes from the FOMC March 20 meeting were released yesterday showing most board members resigned to keeping rates at current levels.
I don’t buy that.  Given even a smidgeon of bad news, the Fed will cut rates determined to head off a recession in 2020, a presidential election year.
A heavily redacted Mueller report will hit today, stirring controversary from both sides.
If the market gets hit, it will be because it is overvalued and due to get hit, not due to the Mueller report unless it is so damaging to Trump’s prospects in 2020 he won’t run for re-election or will face certain defeat.
That is all assuming the Street is still bullish on Trump. While they got their massive tax cut, the S&P 500 has appreciated  63% through April 12 under Obama vs. 28% under Trump in the two president’s first term.
………………………………………………
Wednesday (4/17)
About my Headline:
The new normal has been the flash crash, a vertical plunge in prices that happens so fast investors are down 12% – 16% before they can say “sell.”
Under these conditions, it is prudent to maintain a cash reserve in line with one’s tolerance for risk to take the sting out of a flash crash and give an investor some cash to buy-in at lower prices.
………………………………………………………
The market averages are notching up, a pattern that reflects automatic buying by institutions, i.e., computers are making decisions to buy and occasionally sell stocks without much human input – kind of an artificial intelligence without the latter.
So, what are these computers programmed to do, other than blindly buy ?
Don’t know.  I still contend, self excluded, that the human brain is the best computer on earth, not the fastest, but generally free to think weigh in on the unexpected.  Put another way, computers can hit a fast ball, but not a sinker.
What is my point ?
Cover your backside, because this will have a bad ending, when reality sets in. We may have to hit new all-time highs to trigger sellers, intent on taking advantage of the hype by the press about new highs, to unload big positions as the public rushes in absolutely sure the bull has a lot further to go.
…………………………………………………
TUESDAY (4/17):
      I really don’t trust this market. It cruises along on auto-pilot, as if nothing can interfere with its serenity.
That can change in a heartbeat with a one/two week 12% plunge. This is the new normal, and all it takes is for a piece of unexpected bad news, or for buyers to walk away, looking to return after a correction..
 So far, the Street is not spooked by the prospect of Q1 earnings coming in negative. However, disappointing earnings will punish stocks as with Goldman Sachs (GS), which reported Q1 net of $5.71 vs. $6.98 a year ago on a 13% drop in revenues. GS declined 7.93 points (3.8%) in trading yesterday.
At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
These mini-crashes happened in April/May 2010 with the S&P 500’s  8-day, 12.6% plunge; August 2011 with a 6-day 15.8% plunge; 2015 an 18-day 11.5% plunge; 2016, a 13-day 12.9%; 2018, a 10-day 11.8% plunge.
Fortunately, the market recovered each time, but abrupt plunges like these are scary and the overwhelming tendency is for investors to sell out a good part of their portfolio after the plunge, when it looks like a bear market is under  way, and they don’t get back in until the market has risen substantially.
Bottom line: Don’t get greedy, maintain a decent cash reserve even in steady markets, because the flash crash can happen at any time, and we are now in a place where that can happen.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Tiring After Four Month Run

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,559
S&P 500: 2,905
Nasdaq Comp.:7,998
Russell 2000:1,565
April 22
, 2019   9:13  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
     Q1 earnings are posting, but it is too early to determine if the Street is looking beyond an expected poor showing this year to 2020 when it expects more robust growth. In recent weeks, the Street has been ratcheting down its projections for Q1 and Q2.  If that spills over to 2020, it would be bad news for the bulls.
The Fed’s reversal of policy from steady increases in its benchmark interest rte (fed funds) to one of ease has forced mortgage rates down to levels more attractive to home buyers.
      Existing Home Sales for April will be reported at 10 o’clock today and New Home Sales reported tomorrow at 10  o’clock, which may give us a read on whether the industry is bouncing  back.
We are on a recession watch, and housing is a key indicator.  The Fed will try to prevent a recession, which is why I expect a rate decrease this year.
Either way, the market is historically overvalued with the Shiller price/earnings ratio more overvalued than at any time in the last 100 years, except during the dot-com bubble (1999-2000), which precipitated an ugly bear market taking the S&P 500 down 50% and Nasdaq Comp. down 78%.
TECHNICAL: (No change from Thursday)
Minor Support: DJIA 26,427; S&P 500: 2,897; Nasdaq Comp.: 7,8878.
Minor Resistance: DJIA:26,517; S&P 500: 2,914; Nasdaq Comp.:8,016
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. A smaller correction would take the DJIA down 1,000 points to 25,500; the S&P 500 to 2,786, and the Nasdaq Comp. to 7,787.
………………………………………………….
Thursday (4/18)
      I didn’t like yesterday’s market action. Patient sellers showed up throughout the day after a spike up in early trading. (See “Technical” below).
At any moment, a flash crash can develop taking the market down 12% – 16% in a week or two. Be prepared.
The Street would like to pump prices higher, even to new all-time highs, so the big players can use the news media hoopla to sell big positions at lofty prices.
The minutes from the FOMC March 20 meeting were released yesterday showing most board members resigned to keeping rates at current levels.
I don’t buy that.  Given even a smidgeon of bad news, the Fed will cut rates determined to head off a recession in 2020, a presidential election year.
A heavily redacted Mueller report will hit today, stirring controversary from both sides.
If the market gets hit, it will be because it is overvalued and due to get hit, not due to the Mueller report unless it is so damaging to Trump’s prospects in 2020 he won’t run for re-election or will face certain defeat.
That is all assuming the Street is still bullish on Trump. While they got their massive tax cut, the S&P 500 has appreciated  63% through April 12 under Obama vs. 28% under Trump in the two president’s first term.
………………………………………………
Wednesday (4/17)
About my Headline:
The new normal has been the flash crash, a vertical plunge in prices that happens so fast investors are down 12% – 16% before they can say “sell.”
Under these conditions, it is prudent to maintain a cash reserve in line with one’s tolerance for risk to take the sting out of a flash crash and give an investor some cash to buy-in at lower prices.
………………………………………………………
The market averages are notching up, a pattern that reflects automatic buying by institutions, i.e., computers are making decisions to buy and occasionally sell stocks without much human input – kind of an artificial intelligence without the latter.
So, what are these computers programmed to do, other than blindly buy ?
Don’t know.  I still contend, self excluded, that the human brain is the best computer on earth, not the fastest, but generally free to think weigh in on the unexpected.  Put another way, computers can hit a fast ball, but not a sinker.
What is my point ?
Cover your backside, because this will have a bad ending, when reality sets in. We may have to hit new all-time highs to trigger sellers, intent on taking advantage of the hype by the press about new highs, to unload big positions as the public rushes in absolutely sure the bull has a lot further to go.
…………………………………………………
TUESDAY (4/17):
      I really don’t trust this market. It cruises along on auto-pilot, as if nothing can interfere with its serenity.
That can change in a heartbeat with a one/two week 12% plunge. This is the new normal, and all it takes is for a piece of unexpected bad news, or for buyers to walk away, looking to return after a correction..
 So far, the Street is not spooked by the prospect of Q1 earnings coming in negative. However, disappointing earnings will punish stocks as with Goldman Sachs (GS), which reported Q1 net of $5.71 vs. $6.98 a year ago on a 13% drop in revenues. GS declined 7.93 points (3.8%) in trading yesterday.
At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
These mini-crashes happened in April/May 2010 with the S&P 500’s  8-day, 12.6% plunge; August 2011 with a 6-day 15.8% plunge; 2015 an 18-day 11.5% plunge; 2016, a 13-day 12.9%; 2018, a 10-day 11.8% plunge.
Fortunately, the market recovered each time, but abrupt plunges like these are scary and the overwhelming tendency is for investors to sell out a good part of their portfolio after the plunge, when it looks like a bear market is under  way, and they don’t get back in until the market has risen substantially.
Bottom line: Don’t get greedy, maintain a decent cash reserve even in steady markets, because the flash crash can happen at any time, and we are now in a place where that can happen.

MONDAY (4/15):

Q1 earnings are underway. They will not compare well with 2018, but the Street expects this, so the impact on the stock market is uncertain.
      Earnings next year are expected to rebound, but no one knows at this time by how much.
The Street may simply ignore earnings reports this year and project valuations out into 2020.
      At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
FRIDAY (4/12):

MarketWatch published an article, “Risk of earnings recession rises, as S&P 500 profits to fall for first time in 3 years.”
This is not news to readers here, I have warned of this for months, but now the Street sees it.  Will they care ?
Yes, the market has been going up, possibly because of expectations of a trade deal or Fed rate cut, or even because they are looking ahead to 2020, but FactSet’s senior earnings analyst, John Butters notes that companies have been cutting guidance more than usual causing leading analysts to make bigger cuts to their forecasts.
He goes on to add, that more important for the outlook for the stock market is that blended EPS growth estimate for the second quarter slipped into negative territory on Wednesday, to minus 0.2% (that is news to me, FactSet had been tracking  a plus 0.1%)
I think the trade deal and expectations of a rate cut to head off a recession before the 2020 elections are mostly built into current market prices, though a brief rally would accompany the news anyhow.
I do think  the Street is ignoring 2019 earnings and focusing on 2020 when it expects  a strong earnings rebound, which may push the market up in coming weeks.  The key will be, will the BIG money use that push to sell ?
If the Street suddenly begins to revise 2020 projections downward, it spells bear market.
As  noted below, the  Shiller price/earnings ratio is calculated by the S&P 500’s price divided by a moving average of 10 years of earnings adjusted for inflation.  At 31.13, it is higher than it was when the market plunged 20% in Q4 last year,  higher than it was before the Great Recession’s 50% plunge, as high as it was in 1929, but not yet as high as the dot-com bubble burst high in 1999, which hit the S&P 500 for 51% (Nasdaq:78%), a time when high priced stocks with near zero earnings dominated the market. It is close to twice as high as its mean of 16.6.
THURSDAY (4/11):
………………………………………………………
We are in the late stages of the longest bull market in 155 years and it will be hard to shut off. Speculative frenzy usually drives late stage bulls to absurd  highs.
As noted below, the blue chips are overvalued given the outlook for earnings and a softening economy, worse abroad.
This is the point prudent investors get sucked in by the media headlines and others brag about their newly discovered  genius as stock pickers, but eventually get their clock cleaned.
Most savvy traders know how to play it, quick to bail out before getting picked off second base. Major corrections and bear markets begin with a sharp sell-off that looks like a buying opportunity at first, since bull markets have relentlessly rebounded. Thinking this is a gift (never are in this business), investors jump in only to get ripped by the next down-leg.
One or several more tempting surges may occur – easy does it, one of these will be a “trap door.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

Rally Failure Would Signal 3%-4% Correction

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,449
S&P 500: 2,900
Nasdaq Comp.:7,996
Russell 2000:1,567
Thursday, April 18
, 2019   9:13  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
I didn’t like yesterday’s market action. Patient sellers showed up throughout the day after a spike up in early trading. (See “Technical” below).
At any moment, a flash crash can develop taking the market down 12% – 16% in a week or two. Be prepared.
The Street would like to pump prices higher, even to new all-time highs, so the big players can use the news media hoopla to sell big positions at lofty prices.
The minutes from the FOMC March 20 meeting were released yesterday showing most board members resigned to keeping rates at current levels.
I don’t buy that.  Given even a smidgeon of bad news, the Fed will cut rates determined to head off a recession in 2020, a presidential election year.
A heavily redacted Mueller report will hit today, stirring controversary from both sides.
If the market gets hit, it will be because it is overvalued and due to get hit, not due to the Mueller report unless it is so damaging to Trump’s prospects in 2020 he won’t run for re-election or will face certain defeat.
That is all assuming the Street is still bullish on Trump. While they got their massive tax cut, the S&P 500 has appreciated  63% through April 12 under Obama vs. 28% under Trump in the two president’s first term.
TECHNICAL:
Minor Support: DJIA 26,427; S&P 500: 2,897; Nasdaq Comp.: 7,8878.
Minor Resistance: DJIA:26,517; S&P 500: 2,914; Nasdaq Comp.:8,016
A break beyond support or resistance increases the odds that the market will move further in that direction.
        The risk of a flash crash will exist for at least 6 weeks. A smaller correction would take the DJIA down 1,000 points to 25,500; the S&P 500 to 2,786, and the Nasdaq Comp. to 7,787.
………………………………………………….
Wednesday (4/17)
About my Headline:
The new normal has been the flash crash, a vertical plunge in prices that happens so fast investors are down 12% – 16% before they can say “sell.”
Under these conditions, it is prudent to maintain a cash reserve in line with one’s tolerance for risk to take the sting out of a flash crash and give an investor some cash to buy-in at lower prices.
………………………………………………………
The market averages are notching up, a pattern that reflects automatic buying by institutions, i.e., computers are making decisions to buy and occasionally sell stocks without much human input – kind of an artificial intelligence without the latter.
So, what are these computers programmed to do, other than blindly buy ?
Don’t know.  I still contend, self excluded, that the human brain is the best computer on earth, not the fastest, but generally free to think weigh in on the unexpected.  Put another way, computers can hit a fast ball, but not a sinker.
What is my point ?
Cover your backside, because this will have a bad ending, when reality sets in. We may have to hit new all-time highs to trigger sellers, intent on taking advantage of the hype by the press about new highs, to unload big positions as the public rushes in absolutely sure the bull has a lot further to go.
…………………………………………………
TUESDAY (4/17):
      I really don’t trust this market. It cruises along on auto-pilot, as if nothing can interfere with its serenity.
That can change in a heartbeat with a one/two week 12% plunge. This is the new normal, and all it takes is for a piece of unexpected bad news, or for buyers to walk away, looking to return after a correction..
 So far, the Street is not spooked by the prospect of Q1 earnings coming in negative. However, disappointing earnings will punish stocks as with Goldman Sachs (GS), which reported Q1 net of $5.71 vs. $6.98 a year ago on a 13% drop in revenues. GS declined 7.93 points (3.8%) in trading yesterday.
At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
These mini-crashes happened in April/May 2010 with the S&P 500’s  8-day, 12.6% plunge; August 2011 with a 6-day 15.8% plunge; 2015 an 18-day 11.5% plunge; 2016, a 13-day 12.9%; 2018, a 10-day 11.8% plunge.
Fortunately, the market recovered each time, but abrupt plunges like these are scary and the overwhelming tendency is for investors to sell out a good part of their portfolio after the plunge, when it looks like a bear market is under  way, and they don’t get back in until the market has risen substantially.
Bottom line: Don’t get greedy, maintain a decent cash reserve even in steady markets, because the flash crash can happen at any time, and we are now in a place where that can happen.

MONDAY (4/15):

Q1 earnings are underway. They will not compare well with 2018, but the Street expects this, so the impact on the stock market is uncertain.
      Earnings next year are expected to rebound, but no one knows at this time by how much.
The Street may simply ignore earnings reports this year and project valuations out into 2020.
      At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
FRIDAY (4/12):

MarketWatch published an article, “Risk of earnings recession rises, as S&P 500 profits to fall for first time in 3 years.”
This is not news to readers here, I have warned of this for months, but now the Street sees it.  Will they care ?
Yes, the market has been going up, possibly because of expectations of a trade deal or Fed rate cut, or even because they are looking ahead to 2020, but FactSet’s senior earnings analyst, John Butters notes that companies have been cutting guidance more than usual causing leading analysts to make bigger cuts to their forecasts.
He goes on to add, that more important for the outlook for the stock market is that blended EPS growth estimate for the second quarter slipped into negative territory on Wednesday, to minus 0.2% (that is news to me, FactSet had been tracking  a plus 0.1%)
I think the trade deal and expectations of a rate cut to head off a recession before the 2020 elections are mostly built into current market prices, though a brief rally would accompany the news anyhow.
I do think  the Street is ignoring 2019 earnings and focusing on 2020 when it expects  a strong earnings rebound, which may push the market up in coming weeks.  The key will be, will the BIG money use that push to sell ?
If the Street suddenly begins to revise 2020 projections downward, it spells bear market.
As  noted below, the  Shiller price/earnings ratio is calculated by the S&P 500’s price divided by a moving average of 10 years of earnings adjusted for inflation.  At 31.13, it is higher than it was when the market plunged 20% in Q4 last year,  higher than it was before the Great Recession’s 50% plunge, as high as it was in 1929, but not yet as high as the dot-com bubble burst high in 1999, which hit the S&P 500 for 51% (Nasdaq:78%), a time when high priced stocks with near zero earnings dominated the market. It is close to twice as high as its mean of 16.6.
THURSDAY (4/11):
………………………………………………………
We are in the late stages of the longest bull market in 155 years and it will be hard to shut off. Speculative frenzy usually drives late stage bulls to absurd  highs.
As noted below, the blue chips are overvalued given the outlook for earnings and a softening economy, worse abroad.
This is the point prudent investors get sucked in by the media headlines and others brag about their newly discovered  genius as stock pickers, but eventually get their clock cleaned.
Most savvy traders know how to play it, quick to bail out before getting picked off second base. Major corrections and bear markets begin with a sharp sell-off that looks like a buying opportunity at first, since bull markets have relentlessly rebounded. Thinking this is a gift (never are in this business), investors jump in only to get ripped by the next down-leg.
One or several more tempting surges may occur – easy does it, one of these will be a “trap door.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS:
For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

New Highs Likely ! Ignore the Hype – Be a Seller

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,452
S&P 500: 2,907
Nasdaq Comp.:8,000
Russell 2000:1,582
Wednesday, April 17
, 2019   9:13  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
About my Headline:
The new normal has been the flash crash, a vertical plunge in prices that happens so fast investors are down 12% – 16% before they can say “sell.”
Under these conditions, it is prudent to maintain a cash reserve in line with one’s tolerance for risk to take the sting out of a flash crash and give an investor some cash to buy-in at lower prices.
………………………………………………………
The market averages are notching up, a pattern that reflects automatic buying by institutions, i.e., computers are making decisions to buy and occasionally sell stocks without much human input – kind of an artificial intelligence without the latter.
So, what are these computers programmed to do, other than blindly buy ?
Don’t know.  I still contend, self excluded, that the human brain is the best computer on earth, not the fastest, but generally free to think weigh in on the unexpected.  Put another way, computers can hit a fast ball, but not a sinker.
What is my point ?
Cover your backside, because this will have a bad ending, when reality sets in. We may have to hit new all-time highs to trigger sellers, intent on taking advantage of the hype by the press about new highs, to unload big positions as the public rushes in absolutely sure the bull has a lot further to go.
……………………………………………….
TECHNICAL:
Minor Support: DJIA 26,427; S&P 500: 2,903; Nasdaq Comp.: 7,991.
Minor Resistance: DJIA:26,517; S&P 500: 2,914; Nasdaq Comp.:8,016
A break beyond support or resistance increases the odds that the market will move further in that direction.

…………………………………………………
TUESDAY (4/16):
      I really don’t trust this market. It cruises along on auto-pilot, as if nothing can interfere with its serenity.
That can change in a heartbeat with a one/two week 12% plunge. This is the new normal, and all it takes is for a piece of unexpected bad news, or for buyers to walk away, looking to return after a correction..
 So far, the Street is not spooked by the prospect of Q1 earnings coming in negative. However, disappointing earnings will punish stocks as with Goldman Sachs (GS), which reported Q1 net of $5.71 vs. $6.98 a year ago on a 13% drop in revenues. GS declined 7.93 points (3.8%) in trading yesterday.
At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
These mini-crashes happened in April/May 2010 with the S&P 500’s  8-day, 12.6% plunge; August 2011 with a 6-day 15.8% plunge; 2015 an 18-day 11.5% plunge; 2016, a 13-day 12.9%; 2018, a 10-day 11.8% plunge.
Fortunately, the market recovered each time, but abrupt plunges like these are scary and the overwhelming tendency is for investors to sell out a good part of their portfolio after the plunge, when it looks like a bear market is under  way, and they don’t get back in until the market has risen substantially.
Bottom line: Don’t get greedy, maintain a decent cash reserve even in steady markets, because the flash crash can happen at any time, and we are now in a place where that can happen.

MONDAY (4/15):

Q1 earnings are underway. They will not compare well with 2018, but the Street expects this, so the impact on the stock market is uncertain.
      Earnings next year are expected to rebound, but no one knows at this time by how much.
The Street may simply ignore earnings reports this year and project valuations out into 2020.
      At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
FRIDAY (4/12):

MarketWatch published an article, “Risk of earnings recession rises, as S&P 500 profits to fall for first time in 3 years.”
This is not news to readers here, I have warned of this for months, but now the Street sees it.  Will they care ?
Yes, the market has been going up, possibly because of expectations of a trade deal or Fed rate cut, or even because they are looking ahead to 2020, but FactSet’s senior earnings analyst, John Butters notes that companies have been cutting guidance more than usual causing leading analysts to make bigger cuts to their forecasts.
He goes on to add, that more important for the outlook for the stock market is that blended EPS growth estimate for the second quarter slipped into negative territory on Wednesday, to minus 0.2% (that is news to me, FactSet had been tracking  a plus 0.1%)
I think the trade deal and expectations of a rate cut to head off a recession before the 2020 elections are mostly built into current market prices, though a brief rally would accompany the news anyhow.
I do think  the Street is ignoring 2019 earnings and focusing on 2020 when it expects  a strong earnings rebound, which may push the market up in coming weeks.  The key will be, will the BIG money use that push to sell ?
If the Street suddenly begins to revise 2020 projections downward, it spells bear market.
As  noted below, the  Shiller price/earnings ratio is calculated by the S&P 500’s price divided by a moving average of 10 years of earnings adjusted for inflation.  At 31.13, it is higher than it was when the market plunged 20% in Q4 last year,  higher than it was before the Great Recession’s 50% plunge, as high as it was in 1929, but not yet as high as the dot-com bubble burst high in 1999, which hit the S&P 500 for 51% (Nasdaq:78%), a time when high priced stocks with near zero earnings dominated the market. It is close to twice as high as its mean of 16.6.
THURSDAY (4/11):
………………………………………………………
We are in the late stages of the longest bull market in 155 years and it will be hard to shut off. Speculative frenzy usually drives late stage bulls to absurd  highs.
As noted below, the blue chips are overvalued given the outlook for earnings and a softening economy, worse abroad.
This is the point prudent investors get sucked in by the media headlines and others brag about their newly discovered  genius as stock pickers, but eventually get their clock cleaned.
Most savvy traders know how to play it, quick to bail out before getting picked off second base. Major corrections and bear markets begin with a sharp sell-off that looks like a buying opportunity at first, since bull markets have relentlessly rebounded. Thinking this is a gift (never are in this business), investors jump in only to get ripped by the next down-leg.
One or several more tempting surges may occur – easy does it, one of these will be a “trap door.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 WEDNESDAY (4/10):
This bull market has two pieces of news that can move it up. A trade deal, which is mostly built in to current price levels, and a Fed  rate cut, which I also think is built in.
Currently, the Street is looking beyond 2019 earnings slump to a stronger growth rate in 2020. If a recession hits late this year or in 2020, the Street will have to chop their estimates down drastically. With prices at these lofty levels, that spells bear market.
There is no fear on the Street of a bear market and that’s bearish. The only surprise now can be an ugly one.
For this reason, speculative sentiment can run stock prices higher, but it won’t be justified.
……………………………………………………………..
EARNINGS: For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

New Normal – Flash Crash – Comes Without Warning

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,384
S&P 500: 2,905
Nasdaq Comp.:7,976
Russell 2000:1,579
Tuesday, April 16
, 2019   8:47  a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
      I really don’t trust this market. It cruises along on auto-pilot, as if nothing can interfere with its serenity.
That can change in a heartbeat with a one/two week 12% plunge. This is the new normal, and all it takes is for a piece of unexpected bad news, or for buyers to walk away, looking to return after a correction..
 So far, the Street is not spooked by the prospect of Q1 earnings coming in negative. However, disappointing earnings will punish stocks as with Goldman Sachs (GS), which reported Q1 net of $5.71 vs. $6.98 a year ago on a 13% drop in revenues. GS declined 7.93 points (3.8%) in trading yesterday.
At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
These mini-crashes happened in April/May 2010 with the S&P 500’s  8-day, 12.6% plunge; August 2011 with a 6-day 15.8% plunge; 2015 an 18-day 11.5% plunge; 2016, a 13-day 12.9%; 2018, a 10-day 11.8% plunge.
Fortunately, the market recovered each time, but abrupt plunges like these are scary and the overwhelming tendency is for investors to sell out a good part of their portfolio after the plunge, when it looks like a bear market is under  way, and they don’t get back in until the market has risen substantially.
Bottom line: Don’t get greedy, maintain a decent cash reserve even in steady markets, because the flash crash can happen at any time, and we are now in a place where that can happen.
TECHNICAL:
Minor Support: DJIA 26,341; S&P 500: 2,901; Nasdaq Comp.: 7,963.
Minor Resistance: DJIA:26,426; S&P 500: 2,912; Nasdaq Comp.:7,992
A break beyond support or resistance increases the odds that the market will move further in that direction.

…………………………………………………
MONDAY:

Q1 earnings are underway. They will not compare well with 2018, but the Street expects this, so the impact on the stock market is uncertain.
      Earnings next year are expected to rebound, but no one knows at this time by how much.
The Street may simply ignore earnings reports this year and project valuations out into 2020.
      At 31.3, the Shiller price/earnings ratio is more overvalued than at any time in the last 180 years, except during the dot-com bubble in 1999.   At some time earnings will have to catch up with Shiller or valuations will have to adjust downward.
The Street got a rude awakening in Q4 with a 19.2% 3-month plunge in the DJIA, a 20.2% plunge in the S&P 500, and an even bigger drop in the Nasdaq Comp. (23.9%).
The new normal is the flash crash, where vicious corrections develop out of nowhere. That’s a good reason for investors to have a healthy cash reserve in advance, but that’s hard to do when everyone else is making money.
FRIDAY:

MarketWatch published an article, “Risk of earnings recession rises, as S&P 500 profits to fall for first time in 3 years.”
This is not news to readers here, I have warned of this for months, but now the Street sees it.  Will they care ?
Yes, the market has been going up, possibly because of expectations of a trade deal or Fed rate cut, or even because they are looking ahead to 2020, but FactSet’s senior earnings analyst, John Butters notes that companies have been cutting guidance more than usual causing leading analysts to make bigger cuts to their forecasts.
He goes on to add, that more important for the outlook for the stock market is that blended EPS growth estimate for the second quarter slipped into negative territory on Wednesday, to minus 0.2% (that is news to me, FactSet had been tracking  a plus 0.1%)
I think the trade deal and expectations of a rate cut to head off a recession before the 2020 elections are mostly built into current market prices, though a brief rally would accompany the news anyhow.
I do think  the Street is ignoring 2019 earnings and focusing on 2020 when it expects  a strong earnings rebound, which may push the market up in coming weeks.  The key will be, will the BIG money use that push to sell ?
If the Street suddenly begins to revise 2020 projections downward, it spells bear market.
As  noted below, the  Shiller price/earnings ratio is calculated by the S&P 500’s price divided by a moving average of 10 years of earnings adjusted for inflation.  At 31.13, it is higher than it was when the market plunged 20% in Q4 last year,  higher than it was before the Great Recession’s 50% plunge, as high as it was in 1929, but not yet as high as the dot-com bubble burst high in 1999, which hit the S&P 500 for 51% (Nasdaq:78%), a time when high priced stocks with near zero earnings dominated the market. It is close to twice as high as its mean of 16.6.
THURSDAY:
………………………………………………………
We are in the late stages of the longest bull market in 155 years and it will be hard to shut off. Speculative frenzy usually drives late stage bulls to absurd  highs.
We are well into that stage.  As noted below, the blue chips are overvalued given the outlook for earnings and a softening economy, worse abroad.
This is the point prudent investors get sucked in by the media headlines and others brag about their newly discovered  genius as stock pickers, but eventually get their clock cleaned.
Most savvy traders know how to play it, quick to bail out before getting picked off second base. Major corrections and bear markets begin with a sharp sell-off that looks like a buying opportunity at first, since bull markets have relentlessly rebounded. Thinking this is a gift (never are in this business), investors jump in only to get ripped by the next down-leg.
One or several more tempting surges may occur – easy does it, one of these will be a “trap door.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 WEDNESDAY
This bull market has two pieces of news that can move it up. A trade deal, which is mostly built in to current price levels, and a Fed  rate cut, which I also think is built in.
Currently, the Street is looking beyond 2019 earnings slump to a stronger growth rate in 2020. If a recession hits late this year or in 2020, the Street will have to chop their estimates down drastically. With prices at these lofty levels, that spells bear market.
There is no fear on the Street of a bear market and that’s bearish. The only surprise now can be an ugly one.
For this reason, speculative sentiment can run stock prices higher, but it won’t be justified.
TUESDAY:
The Street and corporations with major stock buy-back programs would like to run the market up to new all-time highs. That would result in front page coverage in all major news media and a stampede of buyers.
This would offer the BIG money a chance to sell as much stock as it wants without depressing prices.  It also fattens stock portfolios and options exercise perks of  executives in the upper tier of corporate management.
The environment for sensible investing stinks. This kind of panic is typical of stock market tops, but investors simply can’t resist the temptation to go all-in.
……………………………………………………………..
EARNINGS: For 2019, FactSet expects a gain of 3.7%. Currently, it tracks  2019 earnings gains/losses at Q1: -4.3%, Q2: -0.4%, Q3: +1.4%, and Q4: +8.3%. For the year, FactSet expects earnings growth to be +3.4%
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections, however he Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..  
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.