Don’t Rush to Buy Fed Chief Powell’s Hype

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,252
S&P 500: 2,922
Nasdaq Comp.:7,991
Russell 2000:1,506
Friday  August  23, 2019
  9:17 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The market will open on the downside after China just announced it will strike back on U.S. threat to impose tariffs on $300 billion of Chinese goods with its own tariffs on $75 billion of U.S. goods, levies ranging from 5%-10% (Sept 1 and Dec. 15). A 25% tariff on automobiles and 5% tariff on parts will become effective Dec. 15.
Fed Chief  Jerome Powell speaks before the Central Bankers Forum today at Jackson Hole, Wyoming. While President Trump is pressuring the Fed for one major cut in the fed funds rate, or several smaller cuts, it is uncertain Powell will yield to the pressure.
I expect him to say the Fed will track the nation’s struggling economy and cut rates if it sees fit.
Trump will attend the G-7 meeting in Biarritz, France this weekend. Climate change and trade tensions will be discussed among other issues.
     Thanks to a 14-point rise in Boeing’s stock (BA: see below) the DJIA was up 49 points yesterday instead of down 50 points. At 354, BA is the DJIA’a highest priced stock.  Since the DJIA is a “price-weighted” average, a move in BA impacts the DJIA 10 times  more than a move in Pfizer (PFE: 35).
BOEING (BA)
Boeing (BA: 354)  Stock jumped again yesterday.   
Hundreds of Boeing’s 373 Max aircraft were grounded  by major airlines after two fatal  crashes last year. I didn’t think a 24% drop from its all-time high of 446 adequately discounted downside risk, so I began to track it.  I noted the company has desperately needed just a little good news from a brokerage research firm or airline that could reverse its downward spiral  chase shorts and bring in some buyers. Yesterday, it may have got what  it needed  when Cowen & Co analyst Cai von Rumohr reported the FAA’s certification flight for the 737 could take place in 4 to six weeks. It will take better  news than that, but BA’s downside risk is now limited  and no longer as great a risk as I feared. Coverage here will end  for now.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:
………………………………………………………
Minor Support: DJIA:25,950; S&P 500:2,891;Nasdaq Comp.:7,907
Minor Resistance: DJIA:26,337; S&P500:2,927;Nasdaq Comp.:7,998
………………………………………………………….
Thursday Aug. 22  “Running Scared…Caution to the Winds… Panic…Lies, Deception, Dysfunction…All With a Price”

Panic breeds  bad decisions. Mounting fear of recession is overpowering the Trump Administration and Fed. They are grabbing for straws to head off a devastating recession and worse, a bear market in 2020.
      I have experienced a lot of crises over 57 years in this business, but this one is scary.
Why ?  Too many lies – Too Much Greed…Too much  bullshit at the highest levels.
The inevitable can only be delayed for so long, until  reality sets in.
All this smacks of a bubble – the cartoon where the man walks off a cliff and doesn’t fall until he looks down.
I shudder to think of the leverage that has been amassed over a 10 year bull market.  So much hot money, so much entrusted to algorithms that cannot be programmed to anticipate what we are seeing in the leadership and lack thereof of our country.
So few see it.  Scary !
When they do, it will be too late
Not bedtime reading, but a wakeup call.
What is most troubling to me is we are not yet in hard times, this get-reelected shell game could be prolonged for months. When hard times come there will be little anyone can do to reverse the economic and social pain.
Tax cuts are a short- term fix. But those taxes were employed to pay certain bills.  Our annual deficit will hit $1 trillion this year which the Wall Street Journal says will bump government debt to 95% of GDP in ten years, up from 79% now, the highest since World War II.
CONCLUSION: As characteristic of all stock market bubbles, they just keep expanding.    They either burst because they can’t expand anymore, or they are pricked by an event.
The key for investors is to do something entirely un-human – that is – walk away while others are popping champagne bottles.   ……………….
Wed. August 21 “It’s All About @020 Hype Leading to a Bursting Bubble”
Tax cuts, linking the capital gains tax to inflation, reduce payroll tax – these are measures  employed when a nation is deep in recession
, not when as President Trump says, the “Economy is great….We’re doing tremendously well….Our consumers are rich.”
It’s all about getting re-elected in 2020, and it can backfire big time.
Interest rates barely got off the floor and QE barely cut back when the Fed panicked to cut its benchmark interest rate last month leaving little more than one or two more rate cuts it can do to pull the economy out of recession.
The Tax Cut Jobs Act was a short-term goose for corporations which spent the money more on stock buy-backs than on capex.
Capital gains tax relief may help investors but do little for the core of the economy. More tax cuts may delay the inevitable – a prolonged recession where the government is powerless to help.
Tax cuts deprive the government of funds to pay its bills without borrowing more and inflating the national debt.
BOTTOM LINE: a massive bubble burst…..Dominos tumbling one after another and a huge crunch in the stock market from a historically extremely overvalued level.
Solution: Don’t panic – don’t expend all your anti-recession ammo too early – nurture  the country through the inevitable, a recession – let the stock market find its own comfort level, stop manipulating it and creating the huge bubble that will devastate investors when it bursts.
………………………………………………….
Tuesday  Aug. 20 Administration and Fed Expect Recession
Recession talk is front and center with key officials of the Trump administration (including Trump) denying even a remote possibility of one.
Why then is Trump urging the Fed to cut its benchmark fed funds rate by a full 100 basis points ?
      Why talk about a 10%  tax cut for the middle class which only got a 1%-1.5% tax cut while corporations got a 40% cut in 2017’s Tax Cut Jobs Act ?            Why the talk about a temporary payroll tax cut ?
       For months I have been telling readers we are already in the early stages of a recession, especially housing and manufacturing.
It’s all about 2020’s presidential election, but the prospect of a recession is real, or the administration wouldn’t be panicking.
IF SO, WHAT IS THE STOCK MARKET DOING AT HISTORIC HIGHS in VALUATION ?
There have been bear markets without  recessions, but never a recession without a bear market.
         It is just a matter of time before the BIG money stops buying and institutions begin selling.
Since so many institutions key on the same indicators, the bear market will begin with a 3-day 12% – 16% nosedive.
      That’s why I have been urging readers to  establish a cash reserve in line with their tolerance for risk, at least 30% upwards to 75%.
       The Street doesn’t want the party to end, the administration cannot afford a bear market and recession in an election year. Nine of the last 10 recessions have been with a Republican in the White House and that is a major concern for the BIG money.
……………………………………………..
Monday  August 19   “Ignore Administration Hype About Economy”
     I have been warning readers, the administration and Fed will release whatever information it can muster up to stabilize the market and that that  may work temporarily. 
     White House economic adviser Larry Kudlow was on both Fox News and “Meet the Press” Sunday where he said, “I don’t see a recession at all,” and “There’s no recession coming …the pessimists are wrong”
     Chief White House trade adviser Peter Navarro took the same stance on ABC’s “This Week” and  CBS’ “Face the Nation,” saying he was certain we’re going to have a strong economy through and beyond 2020, adding  Chinese tariffs would have no impact on American consumers.
Leaving New Jersey yesterday on Air Farce One, President Trump denied rumors of an economic downturn, saying, “I don’t think we’re having a recession…We’re doing tremendously well… Our consumers are rich.”
     Small wonder then that the market will kick off trading on a strong note today.
We have yet to hear from the Fed, but  give it a few hours after the open.
OK, while  an administration should be supportive, it should  not be manipulative against strong odds that the economy is either in a recession, or on the threshold of one.
By its verbal hype, investors are being sucked into a market that is historically very overvalued. When the truth outs, they will get slaughtered.
      Just the fact the Fed is in a hurry to cut interest rates, indicates it seriously sees a recession looming. Add to that an inconsistent rebound in housing and a crunch in manufacturing and it spells RECESSION, and there has never been a recession without a bear market.
………………………………………………………..
Friday August 16  “Street Ignores Warning Signs – Will Try to Run Stocks Back Up – Use Strength to Sell”
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.
……………………………………………………………..                                                                           Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.
……………………………………………………………
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

Running Scared, Caution to the Winds, Panic, Lies, Deception, Dysfunction…All With a Price

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,202
S&P 500: 2,924
Nasdaq Comp.:8,020
Russell 2000:1,509
Thursday  August  22, 2019
  8:44 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
     Panic breeds  bad decisions. Mounting fear of recession is overpowering the Trump Administration and Fed. They are grabbing for straws to head off a devastating recession and worse, a bear market in 2020.
      I have experienced a lot of crises over 57 years in this business, but this one is scary.
Why ?  Too many lies – Too Much Greed…Too much  bullshit at the highest levels.
The inevitable can only be delayed for so long, until  reality sets in.
All this smacks of a bubble – the cartoon where the man walks off a cliff and doesn’t fall until he looks down.
I shudder to think of the leverage that has been amassed over a 10 year bull market.  So much hot money, so much entrusted to algorithms that cannot be programmed to anticipate what we are seeing in the leadership and lack thereof of our country.
So few see it.  Scary !
When they do, it will be too late
Not bedtime reading, but a wakeup call.
What is most troubling to me is we are not yet in hard times, this get-reelected shell game could be prolonged for months. When hard times come there will be little anyone can do to reverse the economic and social pain.
Tax cuts are a short- term fix. But those taxes were employed to pay certain bills.  Our annual deficit will hit $1 trillion this year which the Wall Street Journal says will bump government debt to 95% of GDP in ten years, up from 79% now, the highest since World War II.
CONCLUSION: As characteristic of all stock market bubbles, they just keep expanding.    They either burst because they can’t expand anymore, or they are pricked by an event.
The key for investors is to do something entirely un-human – that is – walk away while others are popping champagne bottles.   ……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 340)  Stock jumped sharply yesterday.   With hundreds of Boeing’s 373 Max aircraft grounded, the company has desperately needed just a little good news from a brokerage research could chase shorts and take it up 10 points, or a major order from an airline could take it higher. 
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:
There is still room to move up. The S&P 500 is still 3.5% below August’s high. Hype of tax cuts for all voters is rampant, so that will expand the bubble further.  A turn down can start at any time, so a healthy cash reserve is wise.
………………………………………………………
Minor Support: DJIA:26,157; S&P 500:2,917;Nasdaq Comp.:7,996
Minor Resistance: DJIA:26,251; S&P500:2,927;Nasdaq Comp.:8,026
………………………………………………………….
Wed. August 21 “It’s All About @020 Hype Leading to a Bursting Bubble”
Tax cuts, linking the capital gains tax to inflation, reduce payroll tax – these are measures  employed when a nation is deep in recession
, not when as President Trump says, the “Economy is great….We’re doing tremendously well….Our consumers are rich.”
It’s all about getting re-elected in 2020, and it can backfire big time.
Interest rates barely got off the floor and QE barely cut back when the Fed panicked to cut its benchmark interest rate last month leaving little more than one or two more rate cuts it can do to pull the economy out of recession.
The Tax Cut Jobs Act was a short-term goose for corporations which spent the money more on stock buy-backs than on capex.
Capital gains tax relief may help investors but do little for the core of the economy. More tax cuts may delay the inevitable – a prolonged recession where the government is powerless to help.
Tax cuts deprive the government of funds to pay its bills without borrowing more and inflating the national debt.
BOTTOM LINE: a massive bubble burst…..Dominos tumbling one after another and a huge crunch in the stock market from a historically extremely overvalued level.
Solution: Don’t panic – don’t expend all your anti-recession ammo too early – nurture  the country through the inevitable, a recession – let the stock market find its own comfort level, stop manipulating it and creating the huge bubble that will devastate investors when it bursts.
………………………………………………….
Tuesday  Aug. 20 Administration and Fed Expect Recession
Recession talk is front and center with key officials of the Trump administration (including Trump) denying even a remote possibility of one.
Why then is Trump urging the Fed to cut its benchmark fed funds rate by a full 100 basis points ?
      Why talk about a 10%  tax cut for the middle class which only got a 1%-1.5% tax cut while corporations got a 40% cut in 2017’s Tax Cut Jobs Act ?            Why the talk about a temporary payroll tax cut ?
       For months I have been telling readers we are already in the early stages of a recession, especially housing and manufacturing.
It’s all about 2020’s presidential election, but the prospect of a recession is real, or the administration wouldn’t be panicking.
IF SO, WHAT IS THE STOCK MARKET DOING AT HISTORIC HIGHS in VALUATION ?
There have been bear markets without  recessions, but never a recession without a bear market.
         It is just a matter of time before the BIG money stops buying and institutions begin selling.
Since so many institutions key on the same indicators, the bear market will begin with a 3-day 12% – 16% nosedive.
      That’s why I have been urging readers to  establish a cash reserve in line with their tolerance for risk, at least 30% upwards to 75%.
       The Street doesn’t want the party to end, the administration cannot afford a bear market and recession in an election year. Nine of the last 10 recessions have been with a Republican in the White House and that is a major concern for the BIG money.
……………………………………………..
Monday  August 19   “Ignore Administration Hype About Economy”
     I have been warning readers, the administration and Fed will release whatever information it can muster up to stabilize the market and that that  may work temporarily. 
     White House economic adviser Larry Kudlow was on both Fox News and “Meet the Press” Sunday where he said, “I don’t see a recession at all,” and “There’s no recession coming …the pessimists are wrong”
     Chief White House trade adviser Peter Navarro took the same stance on ABC’s “This Week” and  CBS’ “Face the Nation,” saying he was certain we’re going to have a strong economy through and beyond 2020, adding  Chinese tariffs would have no impact on American consumers.
Leaving New Jersey yesterday on Air Farce One, President Trump denied rumors of an economic downturn, saying, “I don’t think we’re having a recession…We’re doing tremendously well… Our consumers are rich.”
     Small wonder then that the market will kick off trading on a strong note today.
We have yet to hear from the Fed, but  give it a few hours after the open.
OK, while  an administration should be supportive, it should  not be manipulative against strong odds that the economy is either in a recession, or on the threshold of one.
By its verbal hype, investors are being sucked into a market that is historically very overvalued. When the truth outs, they will get slaughtered.
      Just the fact the Fed is in a hurry to cut interest rates, indicates it seriously sees a recession looming. Add to that an inconsistent rebound in housing and a crunch in manufacturing and it spells RECESSION, and there has never been a recession without a bear market.
………………………………………………………..
Friday August 16  “Street Ignores Warning Signs – Will Try to Run Stocks Back Up – Use Strength to Sell”
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.
……………………………………………………………..                                                                           Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.
……………………………………………………………
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

It’s All About 2020 Leading to a Bursting Bubble

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,962
S&P 500: 2,900
Nasdaq Comp.:1,948
Russell 2000:1,498
Wednesday  August  21, 2019
  9:06 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Tax cuts, linking the capital gains tax to inflation, reduce payroll tax – these are measures  employed when a nation is deep in recession
, not when as President Trump says, the “Economy is great….We’re doing tremendously well….Our consumers are rich.”
It’s all about getting re-elected in 2020, and it can backfire big time.
Interest rates barely got off the floor and QE barely cut back when the Fed panicked to cut its benchmark interest rate last month leaving little more than one or two more rate cuts it can do to pull the economy out of recession.
The Tax Cut Jobs Act was a short-term goose for corporations which spent the money more on stock buy-backs than on capex.
Capital gains tax relief may help investors but do little for the core of the economy. More tax cuts may delay the inevitable – a prolonged recession where the government is powerless to help.
Tax cuts deprive the government of funds to pay its bills without borrowing more and inflating the national debt.
BOTTOM LINE: a massive bubble burst…..Dominos tumbling one after another and a huge crunch in the stock market from a historically extremely overvalued level.
Solution: Don’t panic – don’t expend all your anti-recession ammo too early – nurture  the country through the inevitable, a recession – let the stock market find its own comfort level, stop manipulating it and creating the huge bubble that will devastate investors when it bursts.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 331)  A break below 321 would indicate another leg down. Company desperately needs a vote of confidence from somewhere, preferably the airlines which have hundreds of Boeing’s 373 Max aircraft grounded. Just a little good news from a brokerage research could chase shorts and take it up 10 points, or a major order from an airline could take it higher, but the whole reason it is getting is hammered is the Street and airline industry are afraid to buy.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:

………………………………………………………
Minor Support: DJIA:25,851; S&P 500:2,895;Nasdaq Comp.:7,921
Minor Resistance: DJIA:25,997; S&P500:2,917;Nasdaq Comp.:79,964
………………………………………………………….
Recession
talk is front and center with key officials of the Trump administration (including Trump) denying even a remote possibility of one.
Why then is Trump urging the Fed to cut its benchmark fed funds rate by a full 100 basis points ?
      Why talk about a 10%  tax cut for the middle class which only got a 1%-1.5% tax cut while corporations got a 40% cut in 2017’s Tax Cut Jobs Act ?            Why the talk about a temporary payroll tax cut ?
       For months I have been telling readers we are already in the early stages of a recession, especially housing and manufacturing.
It’s all about 2020’s presidential election, but the prospect of a recession is real, or the administration wouldn’t be panicking.
IF SO, WHAT IS THE STOCK MARKET DOING AT HISTORIC HIGHS in VALUATION ?
There have been bear markets without  recessions, but never a recession without a bear market.
         It is just a matter of time before the BIG money stops buying and institutions begin selling.
Since so many institutions key on the same indicators, the bear market will begin with a 3-day 12% – 16% nosedive.
      That’s why I have been urging readers to  establish a cash reserve in line with their tolerance for risk, at least 30% upwards to 75%.
       The Street doesn’t want the party to end, the administration cannot afford a bear market and recession in an election year. Nine of the last 10 recessions have been with a Republican in the White House and that is a major concern for the BIG money.
……………………………………………..
Monday  August 19   “Ignore Administration Hype About Economy”
     I have been warning readers, the administration and Fed will release whatever information it can muster up to stabilize the market and that that  may work temporarily. 
     White House economic adviser Larry Kudlow was on both Fox News and “Meet the Press” Sunday where he said, “I don’t see a recession at all,” and “There’s no recession coming …the pessimists are wrong”
     Chief White House trade adviser Peter Navarro took the same stance on ABC’s “This Week” and  CBS’ “Face the Nation,” saying he was certain we’re going to have a strong economy through and beyond 2020, adding  Chinese tariffs would have no impact on American consumers.
Leaving New Jersey yesterday on Air Farce One, President Trump denied rumors of an economic downturn, saying, “I don’t think we’re having a recession…We’re doing tremendously well… Our consumers are rich.”
     Small wonder then that the market will kick off trading on a strong note today.
We have yet to hear from the Fed, but  give it a few hours after the open.
OK, while  an administration should be supportive, it should  not be manipulative against strong odds that the economy is either in a recession, or on the threshold of one.
By its verbal hype, investors are being sucked into a market that is historically very overvalued. When the truth outs, they will get slaughtered.
      Just the fact the Fed is in a hurry to cut interest rates, indicates it seriously sees a recession looming. Add to that an inconsistent rebound in housing and a crunch in manufacturing and it spells RECESSION, and there has never been a recession without a bear market.
………………………………………………………..
Friday August 16  “Street Ignores Warning Signs – Will Try to Run Stocks Back Up – Use Strength to Sell”
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.
……………………………………………………………..                                                                           Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.
……………………………………………………………
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

Administration and Fed Expect Recession

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,135
S&P 500: 2,923
Nasdaq Comp.:8,002
Russell 2000:1,508
Tuesday  August  20, 2019
  9:06 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Recession
talk is front and center with key officials of the Trump administration (including Trump) denying even a remote possibility of one.
Why then is Trump urging the Fed to cut its benchmark fed funds rate by a full 100 basis points ?
      Why talk about a 10%  tax cut for the middle class which only got a 1%-1.5% tax cut while corporations got a 40% cut in 2017’s Tax Cut Jobs Act ?            Why the talk about a temporary payroll tax cut ?
       For months I have been telling readers we are already in the early stages of a recession, especially housing and manufacturing.
It’s all about 2020’s presidential election, but the prospect of a recession is real, or the administration wouldn’t be panicking.
IF SO, WHAT IS THE STOCK MARKET DOING AT HISTORIC HIGHS in VALUATION ?
There have been bear markets without  recessions, but never a recession without a bear market.
         It is just a matter of time before the BIG money stops buying and institutions begin selling.
Since so many institutions key on the same indicators, the bear market will begin with a 3-day 12% – 16% nosedive.
      That’s why I have been urging readers to  establish a cash reserve in line with their tolerance for risk, at least 30% upwards to 75%.
       The Street doesn’t want the party to end, the administration cannot afford a bear market and recession in an election year. Nine of the last 10 recessions have been with a Republican in the White House and that is a major concern for the BIG money.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 333)  BA could run  a bit higher (333 – 335, but abreak below 321 would indicate another leg down. Company desperately needs a vote of confidence from somewhere, preferably the airlines which have hundreds of Boeing’s 373 Max aircraft grounded. Just a little good news from a brokerage research could chase shorts and take it up 10 points, or a major order from an airline could take it higher, but the whole reason it is getting is hammered is the Street and airline industry are afraid to buy.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:
Markets continued to rebound from last week’s sell off on news of the yield curve inversion.  The Fed could push prices higher with more hype of  lower interest rates.
………………………………………………………
Minor Support: DJIA:26,076; S&P 500:2,919;Nasdaq Comp.:7,986
Support is based on a  pullback from early buying
Minor Resistance: DJIA:26,199; S&P500:2,929;Nasdaq Comp.:8,017
………………………………………………………….
Monday  August 19   “Ignore Administration Hype About Economy”
     I have been warning readers, the administration and Fed will release whatever information it can muster up to stabilize the market and that that  may work temporarily. 
     White House economic adviser Larry Kudlow was on both Fox News and “Meet the Press” Sunday where he said, “I don’t see a recession at all,” and “There’s no recession coming …the pessimists are wrong”
     Chief White House trade adviser Peter Naxarro took the same stance on ABC’s “This Week” and  CBS’ “Face the Nation,” saying he was certain we’re going to have a strong economy through and beyond 2020, adding  Chinese tariffs would have no impact on American consumers.
Leaving New Jersey yesterday on Air Farce One, President Trump denied rumors of an economic downturn, saying, “I don’t think we’re having a recession…We’re doing tremendously well… Our consumers are rich.”
     Small wonder then that the market will kick off trading on a strong note today.
We have yet to hear from the Fed, but  give it a few hours after the open.
OK, while  an administration should be supportive, it should  not be manipulative against strong odds that the economy is either in a recession, or on the threshold of one.
By its verbal hype, investors are being sucked into a market that is historically very overvalued. When the truth outs, they will get slaughtered.
      Just the fact the Fed is in a hurry to cut interest rates, indicates it seriously sees a recession looming. Add to that an inconsistent rebound in housing and a crunch in manufacturing and it spells RECESSION, and there has never been a recession without a bear market.
………………………………………………………..
Friday August 16  “Street Ignores Warning Signs – Will Try to Run Stocks Back Up – Use Strength to Sell”
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.
……………………………………………………………..                                                                           Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.
……………………………………………………………
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

Ignore Administration Hype about Economy

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,886
S&P 500: 2,888
Nasdaq Comp.:7,895
Russell 2000:1,493
Monday  August  19, 2019
  8:48 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
     I have been warning readers, the administration and Fed will release whatever information it can muster up to stabilize the market and that that  may work temporarily. 
     White House economic adviser Larry Kudlow was on both Fox News and “Meet the Press” Sunday where he said, “I don’t see a recession at all,” and “There’s no recession coming …the pessimists are wrong”
     Chief White House trade adviser Peter Naxarro took the same stance on ABC’s “This Week” and  CBS’ “Face the Nation,” saying he was certain we’re going to have a strong economy through and beyond 2020, adding  Chinese tariffs would have no impact on American consumers.
Leaving New Jersey yesterday on Air Farce One, President Trump denied rumors of an economic downturn, saying, “I don’t think we’re having a recession…We’re doing tremendously well… Our consumers are rich.”
     Small wonder then that the market will kick off trading on a strong note today.
We have yet to hear from the Fed, but  give it a few hours after the open.
OK, while  an administration should be supportive, it should  not be manipulative against strong odds that the economy is either in a recession, or on the threshold of one.
By its verbal hype, investors are being sucked into a market that is historically very overvalued. When the truth outs, they will get slaughtered.
      Just the fact the Fed is in a hurry to cut interest rates, indicates it seriously sees a recession looming. Add to that an inconsistent rebound in housing and a crunch in manufacturing and it spells RECESSION, and there has never been a recession without a bear market
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 330)  BA could run  a bit higher (333 – 335, but break below 321 would indicate another leg down. Company desperately needs a vote of confidence from somewhere, preferably the airlines which have hundreds of Boeing’s 373 Max aircraft grounded. Just a little good news from a brokerage research could chase shorts and take it up 10 points, or a major order from an airline could take it higher, but the whole reason it is getting is hammered is the Street and airline industry are afraid to buy.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:
Markets are bouncing from last week’s sell off on news of the yield curve inversion.  The Fed could push prices higher with more hype of  lower interest rates.  The market must hold its gain today, or it spells weakness.
………………………………………………………
Minor Support: DJIA:25,851; S&P 500:2,886;Nasdaq Comp.:7,881
Support is based on a  pullback from early buying.
Minor Resistance: DJIA:26,117; S&P500:2,913;Nasdaq Comp.:7,965
………………………………………………………….
Friday August 16  “Street Ignores Warning Signs – Will Try to Run Stocks Back Up – Use Strength to Sell”
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.
……………………………………………………………..

 

 

Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.
……………………………………………………………
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
……………………………………………….
Monday  August 12  “There Are No New Eras for Stocks”
      If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

Street Ignores Warning Signs – Use Strength to Sell

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,579
S&P 500: 2,847
Nasdaq Comp.:7,761
Russell 2000:1,461
Friday August  16, 2019
  8:48 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Global recession fears
have driven interest rates into negative territory, i.e., depositors must pay banks to hold their money !
The US Fed is driving interest rates lower to head off  a recession here. Only 8 months ago, it was raising rates – go figure.
Unprecedented policies will be needed to respond to the next economic downturn,” reports BlackRock Investment Institute, adding “Monetary policy is almost exhausted as global interest rates plunge toward zero or below.
BlackRock’s solution is “helicopter money,” giving money directly to the public. Hey guys, I live at 7925………..
CONCLUSION:
I would rather be wrong on this one, but I have been warning of a recession/bear market  since late last year with good reason, and finally, the financial press is picking up on the risk.
But the Street still  doesn’t get it.   That’s the kind of arrogance and naivete that leads to investors getting slaughtered.
This I what happens after a Fed-micromanaged 10-year long bull market.
      The bull will continue, and buyers will continue to buy, at the market and on dips until suddenly the BIG money, the SMART money, is a no-show, or a piece of news so horrific that it can’t be ignored  chases buyers away and triggers a selling panic.
       I have experienced 13 of these market tops, and they all have at least one thing in common – practically no one thinks a bear market can happen – conditions are simply too good.                                                                              
  ……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 328)  Stock bounced yesterday. Resistance is now 329-330; support 325. A break below 321 would indicate another leg down. Company desperately needs a vote of confidence from somewhere, preferably the airlines which have hundreds of Boeing’s 373 Max aircraft grounded.

…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:
………………………………………………………
Minor Support: DJIA:25,667; S&P 500:2,868;Nasdaq Comp.:7,781
Support is based on a a pullback from early buying.
Minor Resistance: DJIA:25,846; S&P500:2,873;Nasdaq Comp.:7,827
………………………………………………………….
Thursday  August 15  “Expect Fed and Administration to Talk Market Back Up”
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.

 

Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
……………………………………………….
Monday  August 12  “There Are No New Eras for Stocks”
      If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
…………………………………………………..
Friday  August 9   “Easy Does It !”
       Was the recent four-day, 6.7% loss in the market the beginning of a major correction (12% – 18% downer), or a bear market, down 35% – 45%, or just another blip in a 10-year old bull market ?
       On the positive: The bulls have weathered a lot of  bad news (trade news, threat of recession talk,  Iran, impeachment) and are still hanging tough.
Negative: The bulls may be at the breaking point where just one more negative could trigger a breaking in ranks on the Street where a few big funds sell, prompting others to do likewise, and whoosh !
The DJIA Has recouped two-thirds of its August loss, the S&P 500 and Nasdaq Comp. a bit more.
There is overhead supply above yesterday’s close fueled mostly by in ramp up in the  trade war between the US and China.
While today will start off on the downside, the real test will come later in the morning.  If the bulls step in aggressively, they can run the market back up to the old highs.
Failure to do so would lead to a test of the August lows of DJIA 25,440, S&P 500: 2,822, Nasdaq Comp.:7,662.
…………………………………………………..
Thursday   August 8, 2019
“Absolutely NO ROOM For a Rally Failure Today”
       Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

Expect Fed and Administration to Talk Market Back Up

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,479
S&P 500: 2,840
Nasdaq Comp.:7,773
Russell 2000:1,467
Thursday August  15, 2019
  9:28 a.m.  Internet down2
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
     It took an inversion of the 2 yr/10yr yield curve to wake the Street up to what has been obvious for 6 months – that we are in the early stages of a recession.
Yes, this is what I have been warning readers  of for at least that long.
Another warning is appropriate now, that is that the Fed and administration are  going to step in with whatever BS they can muster to turn the market back up……and of course, suck investors in for yet another  drubbing.
As I have said several times  this week, both the Fed and administration are master market manipulators of the stock market.
     Yesterday I noted, “At some point…. the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives. Yesterday’s “whoosh” down was just the first of many when the BIG money, the “smart” money, decides to bail out looking ahead to an opportunity to buy back ion 35% – 45% lower, more for Nasdaq.
CONCLUSION:  Expect hype about tariffs, meetings with China’s Xi Jinping, and lies about the strength of the economy
.
These comments will trigger sharp rallies. Investors will jump back in… only to get their clock cleaned all over again.
There have been bear markets without recessions, but never a recession without a bear market.
I have experienced 13 bear markets and 7 recessions and have never seen such ineptness and spewing of untruths in any of them.

  ……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 320) Technical breakdown continues, with likelihood of a break to 299 which should be followed by a rally to 317, then a drop below 300 to the 270 level.  Company desperately needs a vote of confidence from somewhere, preferably the airlines which have hundreds of Boeing’s 373 Max aircraft grounded.

…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:  The big hit at the open is caused by news about the inverted yield curve, a bearish indicator but one with inconsistent timing.
………………………………………………………
Minor Support: DJIA:25,317; S&P 500:2,801;Nasdaq Comp.:7,649
Minor Resistance: DJIA:25,617; S&P500:2,855;Nasdaq Comp.:7,852
Resistance based on a rebound from selling early in the day.
………………………………………………………….
Wednesday  August 14  “Bulls “Must” Hold the Line….or else”
Why worry about buying,
I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
…………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
……………………………………………….
Monday  August 12  “There Are No New Eras for Stocks”
      If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
…………………………………………………..
Friday  August 9   “Easy Does It !”
       Was the recent four-day, 6.7% loss in the market the beginning of a major correction (12% – 18% downer), or a bear market, down 35% – 45%, or just another blip in a 10-year old bull market ?
       On the positive: The bulls have weathered a lot of  bad news (trade news, threat of recession talk,  Iran, impeachment) and are still hanging tough.
Negative: The bulls may be at the breaking point where just one more negative could trigger a breaking in ranks on the Street where a few big funds sell, prompting others to do likewise, and whoosh !
The DJIA Has recouped two-thirds of its August loss, the S&P 500 and Nasdaq Comp. a bit more.
There is overhead supply above yesterday’s close fueled mostly by in ramp up in the  trade war between the US and China.
While today will start off on the downside, the real test will come later in the morning.  If the bulls step in aggressively, they can run the market back up to the old highs.
Failure to do so would lead to a test of the August lows of DJIA 25,440, S&P 500: 2,822, Nasdaq Comp.:7,662.
…………………………………………………..
Thursday   August 8, 2019
“Absolutely NO ROOM For a Rally Failure Today”
       Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

Bulls “Must” Hold the Line….or else

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,279
S&P 500: 2,926
Nasdaq Comp.:8,016
Russell 2000:1,516
Tuesday August  14, 2019
  8:15 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
  Why worry about buying, I wrote yesterday, “The Fed is there with another cut in rates, or verbal hype, and it has been a long time since this administration floated an untruth about optimism on trade talks.”
Within 90 minutes of my post, the administration announced
it would postpone the 10% tariff on $300 billion of Chinese goods scheduled for Sept. 1 until Dec. 15. The DJIA shot up372 points erasing Monday’s 391 point loss.
It is clear to me the announcement was timed to prevent another leg down in the market, something this administration and Fed do not want so close to a presidential election year.
As noted Monday, the Fed and administration manipulate the market all the time.
      I have argued for letting the market find a level that discounts current and potential negatives. Eventually, the market will do that anyhow, but not until a lot of investors get sucked into stocks by the hype.
At some point, I noted, the Street won’t take the bait then whoosh down the market goes to a level that does  discount the negatives.
      THAT JUNCTURE MAY HAVE COME TODAY . PRE-OPEN TRADING INDICATE A BIG DROP AT THE OPEN IN FACE OF THE INVERSION OF THE 2-YEAR AND 10-YEAR YIELD CURVE, THE FIRST INVERSION SINCE 2007.
       Expect the Fed or administration to counter with  a commentary that rebuts the seriousness of  the yield curve inversion.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 333) failed to hold its early day rally and closed on the downside  – not good. A break below 331 sets the stage for further weakness to 325 where it should find some buyers. BA desperately needs  news to reverse an engineering credibility gap after the grounding of 371of its 373 Max aircraft. Risk here is a drop below 300 to 270 where some bargain hunters can be expected but not enough to prevent a drop to the 342 area.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:  The big hit at the open is caused by news about the inverted yield curve, a bearish indicator but one with inconsistent timing.
………………………………………………………
Minor Support: DJIA:25,687; S&P 500:2,866;Nasdaq Comp.:7,801
Minor Resistance: DJIA:2,617; S&P500:2,903;Nasdaq Comp.:7,947
Resistance based on a rebound from selling early in the day.
………………………………………………………….
Tuesday   August 13, 2019  “Street’s Algos Unflappable Until Overridden By Selling”
    Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
……………………………………………….
Monday August 12  “There Are No New Eras for Stocks”
      If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
…………………………………………………..
Friday  August 9   “Easy Does It !”
       Was the recent four-day, 6.7% loss in the market the beginning of a major correction (12% – 18% downer), or a bear market, down 35% – 45%, or just another blip in a 10-year old bull market ?
       On the positive: The bulls have weathered a lot of  bad news (trade news, threat of recession talk,  Iran, impeachment) and are still hanging tough.
Negative: The bulls may be at the breaking point where just one more negative could trigger a breaking in ranks on the Street where a few big funds sell, prompting others to do likewise, and whoosh !
The DJIA Has recouped two-thirds of its August loss, the S&P 500 and Nasdaq Comp. a bit more.
There is overhead supply above yesterday’s close fueled mostly by in ramp up in the  trade war between the US and China.
While today will start off on the downside, the real test will come later in the morning.  If the bulls step in aggressively, they can run the market back up to the old highs.
Failure to do so would lead to a test of the August lows of DJIA 25,440, S&P 500: 2,822, Nasdaq Comp.:7,662.
…………………………………………………..
Thursday   August 8, 2019
“Absolutely NO ROOM For a Rally Failure Today”
       Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
…………………………………………….
Wednesday  August 7  “White House/Fed Hype May Not Be Enough”
     Yesterday I warned that after this week’s crunch in the market,  the administration and Fed would release whatever info they could muster up to stabilize the market.  Sure enough, St. Louis Fed president James Bullard  played the rate card, saying, “Further rate action may be desirable.” which helped bump a sagging market up to an upbeat close.
Trump’s economic adviser, Larry Kudlow, told CNBC yesterday that the United States  will remain committed to resuming negotiations with China in early September after stating Monday that the economy is in a strong position with money pouring in  from abroad seeking safety and higher interest rates.
If that is the case Larry, why is the Fed in a hurry to cut interest rates ?
There is a trade off here, the Street can celebrate rate cuts, but has to cope with a recession and there has never been a recession that has not been accompanied by a bear market.
So far, government hype has worked. When it fails to move markets,  it is time to head for cover.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 332) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.

………………………………………………….
Tuesday  Aug. 6, 2019 “The Party Is Over – Use Rally to Raise Crash Reserve”
 This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
     Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
…………………………………………………
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

 

Street’s Algos Unflappable Until Overridden by Selling

INVESTOR’S first read.com – Daily edge before the open
DJIA:25,896
S&P 500: 2,882
Nasdaq Comp.:7,863
Russell 2000:1,494
Monday August  13, 2019
  8:15 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      Buyers will rule UNTIL someone breaks ranks and sells, triggering a stampede to sell.   This is a “I won’t sell if they don’t sell” mentality. The Street’s algos are unflappable  until overridden by common sense.
     So far buyers are there on pullbacks even though they are paying up for stocks. Why worry, the Fed is there with another cut in rates, or the verbal hype, and it has been a long time since the administration floated an untruth about optimism  on trade talks.
Both the Fed and administration manipulate the market all the time, as well as huge pools of leveraged money.
But, comes a time, all that doesn’t work, buyers are  chased away by fundamental, domestic and international developments, and big investors scramble to lock in profits.
This negative rant must get old after a while, but all I am saying is, there are soooo many signs of trouble that aren’t discounted in valuations, and that situation won’t last forever.
When this aging and overpriced bull market heads down to a level that reasonably values stocks, it will happen suddenly, 12% – 18% in a matter of days and that will more than sting.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 333) Pattern worsened yesterday. BA needs good news to reverse the “question marks” about its engineering credibility. Without that, BA is headed for 270 after which should bounce to 307 before plunge to 249. That’s a technical read which can vary between technicians.  Resistance is 339 to 342.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
TODAY:  Look for a mixed open and an a rebound to resistance (below). There is no room for a rally failure here.
………………………………………………………
Minor Support: DJIA:25,837; S&P 500:2,876;Nasdaq Comp.:7,839
Minor Resistance: DJIA:26,097; S&P500:2,905;Nasdaq Comp.:7,923
………………………………………………………….
Monday August 12  “There Are No New Eras for Stocks”

      If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
…………………………………………………..
Friday  August 9   “Easy Does It !”
       Was the recent four-day, 6.7% loss in the market the beginning of a major correction (12% – 18% downer), or a bear market, down 35% – 45%, or just another blip in a 10-year old bull market ?
       On the positive: The bulls have weathered a lot of  bad news (trade news, threat of recession talk,  Iran, impeachment) and are still hanging tough.
Negative: The bulls may be at the breaking point where just one more negative could trigger a breaking in ranks on the Street where a few big funds sell, prompting others to do likewise, and whoosh !
The DJIA Has recouped two-thirds of its August loss, the S&P 500 and Nasdaq Comp. a bit more.
There is overhead supply above yesterday’s close fueled mostly by in ramp up in the  trade war between the US and China.
While today will start off on the downside, the real test will come later in the morning.  If the bulls step in aggressively, they can run the market back up to the old highs.
Failure to do so would lead to a test of the August lows of DJIA 25,440, S&P 500: 2,822, Nasdaq Comp.:7,662.
…………………………………………………..
Thursday   August 8, 2019
“Absolutely NO ROOM For a Rally Failure Today”
       Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
…………………………………………….
Wednesday  August 7  “White House/Fed Hype May Not Be Enough”
     Yesterday I warned that after this week’s crunch in the market,  the administration and Fed would release whatever info they could muster up to stabilize the market.  Sure enough, St. Louis Fed president James Bullard  played the rate card, saying, “Further rate action may be desirable.” which helped bump a sagging market up to an upbeat close.
Trump’s economic adviser, Larry Kudlow, told CNBC yesterday that the United States  will remain committed to resuming negotiations with China in early September after stating Monday that the economy is in a strong position with money pouring in  from abroad seeking safety and higher interest rates.
If that is the case Larry, why is the Fed in a hurry to cut interest rates ?
There is a trade off here, the Street can celebrate rate cuts, but has to cope with a recession and there has never been a recession that has not been accompanied by a bear market.
So far, government hype has worked. When it fails to move markets,  it is time to head for cover.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 332) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.

………………………………………………….
Tuesday  Aug. 6, 2019 “The Party Is Over – Use Rally to Raise Crash Reserve”
 This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
     Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
…………………………………………………

Friday, August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………..
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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

There are No “New Eras” for Stocks

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,2897
S&P 500: 2,918
Nasdaq Comp.:7,959
Russell 2000:1,518
Friday August  12, 2019
  9:12 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
If this market were trading 25% lower in face of hurtful tariffs, struggling global economies on the threshold of recession,  stagnant corporate earnings, excessive individual, corporate and government debt that limits future growth,  international tensions and  a government under fire, I would feel more comfortable about buying, simply because these negative would be largely discounted.
By historical yardsticks, this market is overvalued, possibly by more that 25%.  The Shiller price/earnings ratio is 29.5 versus a mean of 16.6, that’s higher than before the 2007 – 2009 bear market, and as high as the market before the ’29 crash. While the market is not as overvalued as the 44.2  P/E in December 1999 when the dot-com bubble burst causing a 50% plunge in the S&P 500 (78% plunge in Nasdaq), there is enough good reason to have a healthy cash reserve.
A NEW ERA FOR STOCKS ?   That’s what the Street generally thinks at market tops.  With algorithms doing so much of the Street’s thinking, this market  can hang tough….until something unexpected outside of the algo programming metrics and you have a stampede for the exits….and no buyers.
The only thing new about this era is the degree to which the market has been casinoized.  Bull and bear markets happen. We are overdue for the latter. All it takes is for a couple of major institutions to ditch their algos, break ranks and sell – the others will follow. That justifies taking steps to  protect one’s portfolio with a cash reserve of 30% +. Depending on one’s tolerance for risk, that could be greater.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 337) Resistance starts at 339 but could get up to low 340s before running into selling. It hit 339 Friday but fell back. BA tends to trace out an irregular pattern, looking good just before looking bad. …………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
………………………………………………………
Minor Support: DJIA:26,153; S&P 500:2,913;Nasdaq Comp.:7,927
Minor Resistance: DJIA:26,347; S&P500:2,924;Nasdaq Comp.:7,976
………………………………………………………….

Friday  August 9   “Easy Does It !”
       Was the recent four-day, 6.7% loss in the market the beginning of a major correction (12% – 18% downer), or a bear market, down 35% – 45%, or just another blip in a 10-year old bull market ?
       On the positive: The bulls have weathered a lot of  bad news (trade news, threat of recession talk,  Iran, impeachment) and are still hanging tough.
Negative: The bulls may be at the breaking point where just one more negative could trigger a breaking in ranks on the Street where a few big funds sell, prompting others to do likewise, and whoosh !
The DJIA Has recouped two-thirds of its August loss, the S&P 500 and Nasdaq Comp. a bit more.
There is overhead supply above yesterday’s close fueled mostly by in ramp up in the  trade war between the US and China.
While today will start off on the downside, the real test will come later in the morning.  If the bulls step in aggressively, they can run the market back up to the old highs.
Failure to do so would lead to a test of the August lows of DJIA 25,440, S&P 500: 2,822, Nasdaq Comp.:7,662.

Thursday   August 8, 2019
“Absolutely NO ROOM For a Rally Failure Today”
       Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
…………………………………………….
Wednesday  August 7  “White House/Fed Hype May Not Be Enough”
     Yesterday I warned that after this week’s crunch in the market,  the administration and Fed would release whatever info they could muster up to stabilize the market.  Sure enough, St. Louis Fed president James Bullard  played the rate card, saying, “Further rate action may be desirable.” which helped bump a sagging market up to an upbeat close.
Trump’s economic adviser, Larry Kudlow, told CNBC yesterday that the United States  will remain committed to resuming negotiations with China in early September after stating Monday that the economy is in a strong position with money pouring in  from abroad seeking safety and higher interest rates.
If that is the case Larry, why is the Fed in a hurry to cut interest rates ?
There is a trade off here, the Street can celebrate rate cuts, but has to cope with a recession and there has never been a recession that has not been accompanied by a bear market.
So far, government hype has worked. When it fails to move markets,  it is time to head for cover.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 332) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.

………………………………………………….
Tuesday  Aug. 6, 2019 “The Party Is Over – Use Rally to Raise Crash Reserve”
 This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
     Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
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Monday, August 5, “Technical Rally Possible at Any Time – Highly Risky”
I have been on record for warning that we are in the early stages of a recession and data over the weekend  in InvesTech Research’s interim bulletin indicates just that with graphs highlighting the ISM Manufacturing Index (Purchase Managers ), the ISM  New Orders Manufacturing Index and Chicago Business Barometer all on the threshold of crossing into no growth territory.
While Consumer Confidence (present and future) indices are at all-time highs, this extreme exuberance  normal at business expansion peaks.
However, JP Morgan is bullish, urging clients to us the current weakness to add stocks to their portfolios.
Granted, the sharp sell-off at the open stands to attract traders, the risks are high – just too many visible  and sub-surface negatives for a sustained rally in a market that is historically over valued.
If enough institutions agree, we will get a rally from these levels, but they are in the money management business and can’t afford to be bearish..
At much higher levels last Wednesday morningand before the Fed announcement of a rate cut, I headline “Traders – Sell the Rate Cut,” feeling the action was already priced in the market and the market was over due for a correction.
With the help of Trump’s Thursday warning to China of another 10% tariff on Chinese exports on September 1, the market tumbled and looks like it will follow through today before an attempt to rally today.
Nimble traders can exploit these wide swings in the market, but investors need a crash reserve.
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Friday, August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
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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 120 months, the longest  in history, 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 is 3.6% which was hit in May.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 123 months is 4 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.
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George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
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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.