Fed PANIC ! Begs the Question – Why ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,186
S&P 500: 3,046
Nasdaq: 8,303
Russell: 1,572
Thursday,  October  31, 2019
 8:37 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Fed Chief Jerome Powell had this to say at his post-FOMC press conference yesterday. “There’s plenty of risk left, but I have to say the risks seem to have subsided.”
Really ?   Why then, did the Fed decide to cut interest rates for the third time in less than a year ?
Powell has  to stop sugar-coating the situation. If the economy is bad enough to cut rates three times in less than a year, the Fed is doing investors a huge disservice by sucking them in at all-time market highs where the S&P 500 is more overpriced than any time in history except the 1999-2000 dot-com bull market highs which preceded a 50.5% drop in the S&P 500 and 78% drop in the Nasdaq Comp.
      As I see it, the Fed is panicking in the face of a global recession and a presidential election next year.
Some progress is expected on the U.S./China trade front – both countries are feeling the pain of tariffs and the damage it is doing to corporate decision making.
Trump needs a win during impeachment proceedings, so he will do his best to ensure some progress.  Xi Jinping, China’s president, will likewise make concessions unless he decides to play hardball with Trump under pressure from within his own country.
Bottom line: The Fed is doing now what it normally does after a recession is well underway when the stock market is down sharply, not historically overvalued.
If it fails to head off a recession, it will have little firepower to prevent the recession from getting worse and lasting longer.

TECHNICAL
Off and on, I have referred to this as a bubble that will burst when least expected. When that happens, the market will plunge so sharply, investors will have no time to protect their portfolio from nasty losses.
The key here is, how much of  the positives ( rate cut, better than expected Q3 earnings) have been discounted at these lofty levels.
…………………………………………………………
Minor Support:DJIA:27,119; S&P 500:3,043; Nasdaq Comp.:8,287
Minor Resistance: DJIA:27,317; S&P 500:3,057; Nasdaq Comp.:8,338
………………………………………………………….

Thursday Oct. 30 “Street Worried About Fed Rate Cut Today ?”
     The first of three estimates of Q3 GDP came in today at annual rate of  1.9%, better than the Street’s 1.6%, a positive  unless the Fed decides not to announce a  cut in its fed funds rate today.  While the Q3 GDP is better than expected, it is lower than Q2’s  growth rate of 2.1% and  Q1’s 3.1%.  The next key report will be the Employment Situation report  at 8:30 Friday.
While this market is overvalued historically, one more push up is possible in response to better than expected Q3 GDP and Q3 earnings that so far are above expectations though  projected from intentionally low-balled levels.
The stock market bubble continues to deflate then inflate, chasing investors out only to suck them back in – a highly risky situation.
No one want to miss out on an opportunity to make more money. That has to be weighed against one’s tolerance for risk if  the next move is down 35%-45%.
……………………………………………………
Tuesday Oct. 29 “Big Economic News Coming – GDP – Jobs”
The S&P 500 broke out to new highs  yesterday on better than expected Q3 earnings, trade hopes and expectations of a Fed rate cut, but there was not the big follow through that normally accompanies a breakout.
The DJIA and Nasdaq Comp.
That can still happen, since the Street often takes a day or two to decide if overhead supply  has lifted.  This is the third attempt since July to break out of this general area.
BUT, what if all these goodies have been discounted at these levels, which are in fact very pricey, so much so, you have to go back to the 1999 – 2000 dot-com blow off to find the market so overvalued.
As noted yesterday, this is a big week for economic reports, especially Q3 GDP (Wed 8:30) which is estimated to drop to an annual rate of 1.8 percent from 2.0 percent in Q2 and 3.1 percent in Q1, as well as the Employment Situation report (Fri. 8:30) estimated to show 93,000 new hires in October  vs. 135,000 in September.
The week got off to a bad start with the September Chicago Fed  National Activity index  report dropping sharply  to -0.45 from +o.10 and the October Dallas Fed Mfg. Survey index dropping  to 4.5 from13.9.
……………………………………………………
Monday Oct. 28  “Buying Breakout to New Highs – Risky”
     Big week  for economic reports – Q3 GDP comes at 8:30 Wednesday, the Employment Situation on Friday at 8:30.
Both have a bearing on whether the economy is near or in a recession.
The Fed Open Market Committee (FOMC) meets Tuesday and Wednesday with an announcement of the third rate cut in less than a year. expected on Wednesday, though no press conference is scheduled.
No FOMC meeting is scheduled for November, so the next meeting is not until December 10.
Three things are driving stock prices: a cut in the fed funds interest rate; better than expected Q3 earnings; progress in the U.S./China trade  talks.
Conclusion: This market is pricey at these levels, in fact, historically very overpriced, but the Street thinks it can run the table anyway, so expect new highs today and all the press hoopla that goes with it.
Negatives: 1) the Fed does not cut rates this time. 2) trade talks disappoint. 3) GDP signals a recession, as well as other economic indicators announced this week, primarily  Consumer Confidence (Tues. 10 a.m.) Employment Situation (Fri. 9:30).
This is a very dangerous market to chase. It is next to impossible to resist doing so, but all things considered, the downside risk far exceeds the upside potential.  Many on the Street have no idea how ugly a bear market can get, therefore very few are bearish enough to be selling.
That in itself is bearish, but until several big institutions cut and run, the market will hold the line with short-lived corrections along the way.
……………………………………………………………………..

Friday Oct. 25  “Big Move Looms as Street Decides on Earnings”

The market needs some volatility and I think we are about to get it.
Q3 earnings are hitting the Street. Some are better than expected, some disappointing, and the Street is about to decide what to do – Buy…or Sell !
      The technical picture (price action) is slightly upbeat, which I think can be credited to hopes for progress on trade and a Fed rate cut plus QE.    It’s really hard to tell now how the Street is factoring earnings into its equation.
New highs would be easy to hit (DJIA: 27,398; S&P 500:3,028). The S&P hit 3,016 yesterday.
New highs by the S&P would trigger news headlines and rush to buy.
However, with the markets as historically overpriced as it is now, a recession looming, and the uncertainty of a presidential impeachment process underway, a sustainable surge from these levels stands to be short lived.

Thursday, Oct. 24  “Watching and Waiting….for a signal”
Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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 Nervous About Fed Rate Cut Today

INVESTOR’S first read.com – Daily edge before the open
DJIA:27,071
S&P 500: 3,036
Nasdaq: 8,276
Russell: 1,576–*
Wednesday,  October  30, 2019
 9:09 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The first of three estimates of Q3 GDP came in today at annual rate of  1.9%, better than the Street’s 1.6%, a positive  unless the Fed decides not to announce a  cut in its fed funds rate today.  While the Q3 GDP is better than expected, it is lower than Q2’s  growth rate of 2.1% and  Q1’s 3.1%.  The next key report will be the Employment Situation report  at 8:30 Friday.
While this market is overvalued historically, one more push up is possible in response to better than expected Q3 GDP and Q3 earnings that so far are above expectations though  projected from intentionally low-balled levels.
The stock market bubble continues to deflate then inflate, chasing investors out only to suck them back in – a highly risky situation.
No one want to miss out on an opportunity to make more money. That has to be weighed against one’s tolerance for risk if  the next move is down 35%-45%.
 TECHNICAL
Off and on, I have referred to this as a bubble that will burst when least expected. When that happens, the market will plunge so sharply, investors will have no time to protect their portfolio from nasty losses.
The key here is, how much of  the positives (possible rate cut, better than expected Q3 earnings) have been discounted at these lofty levels.
…………………………………………………………
Minor Support:DJIA:27,046; S&P 500:3,034; Nasdaq Comp.:8,275
Minor Resistance: DJIA:27,141; S&P 500:3,047; Nasdaq Comp.:8,297
………………………………………………………….

Tuesday Oct. 29 “Big Economic News Coming – GDP – Jobs”
The S&P 500 broke out to new highs  yesterday on better than expected Q3 earnings, trade hopes and expectations of a Fed rate cut, but there was not the big follow through that normally accompanies a breakout.
The DJIA and Nasdaq Comp.
That can still happen, since the Street often takes a day or two to decide if overhead supply  has lifted.  This is the third attempt since July to break out of this general area.
BUT, what if all these goodies have been discounted at these levels, which are in fact very pricey, so much so, you have to go back to the 1999 – 2000 dot-com blow off to find the market so overvalued.
As noted yesterday, this is a big week for economic reports, especially Q3 GDP (Wed 8:30) which is estimated to drop to an annual rate of 1.8 percent from 2.0 percent in Q2 and 3.1 percent in Q1, as well as the Employment Situation report (Fri. 8:30) estimated to show 93,000 new hires in October  vs. 135,000 in September.
The week got off to a bad start with the September Chicago Fed  National Activity index  report dropping sharply  to -0.45 from +o.10 and the October Dallas Fed Mfg. Survey index dropping  to 4.5 from13.9.
……………………………………………………
Monday Oct. 28  “Buying Breakout to New Highs – Risky”
     Big week  for economic reports – Q3 GDP comes at 8:30 Wednesday, the Employment Situation on Friday at 8:30.
Both have a bearing on whether the economy is near or in a recession.
The Fed Open Market Committee (FOMC) meets Tuesday and Wednesday with an announcement of the third rate cut in less than a year. expected on Wednesday, though no press conference is scheduled.
No FOMC meeting is scheduled for November, so the next meeting is not until December 10.
Three things are driving stock prices: a cut in the fed funds interest rate; better than expected Q3 earnings; progress in the U.S./China trade  talks.
Conclusion: This market is pricey at these levels, in fact, historically very overpriced, but the Street thinks it can run the table anyway, so expect new highs today and all the press hoopla that goes with it.
Negatives: 1) the Fed does not cut rates this time. 2) trade talks disappoint. 3) GDP signals a recession, as well as other economic indicators announced this week, primarily  Consumer Confidence (Tues. 10 a.m.) Employment Situation (Fri. 9:30).
This is a very dangerous market to chase. It is next to impossible to resist doing so, but all things considered, the downside risk far exceeds the upside potential.  Many on the Street have no idea how ugly a bear market can get, therefore very few are bearish enough to be selling.
That in itself is bearish, but until several big institutions cut and run, the market will hold the line with short-lived corrections along the way.
……………………………………………………………………..

Friday Oct. 25  “Big Move Looms as Street Decides on Earnings”

The market needs some volatility and I think we are about to get it.
Q3 earnings are hitting the Street. Some are better than expected, some disappointing, and the Street is about to decide what to do – Buy…or Sell !
      The technical picture (price action) is slightly upbeat, which I think can be credited to hopes for progress on trade and a Fed rate cut plus QE.    It’s really hard to tell now how the Street is factoring earnings into its equation.
New highs would be easy to hit (DJIA: 27,398; S&P 500:3,028). The S&P hit 3,016 yesterday.
New highs by the S&P would trigger news headlines and rush to buy.
However, with the markets as historically overpriced as it is now, a recession looming, and the uncertainty of a presidential impeachment process underway, a sustainable surge from these levels stands to be short lived.

Thursday, Oct. 24  “Watching and Waiting….for a signal”
Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.
………………………………………………………..

Wednesday Oct. 23 “Buying a Breakout to New Highs Would Be Risky”
A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Economic News Coming – GDP and Jobs

INVESTOR’S first read.com – Daily edge before the open
DJIA:27,090
S&P 500: 3,039
Nasdaq: 8,325
Russell: 1,571
Tuesday,  October  29, 2019
 9:09 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The S&P 500 broke out to new highs  yesterday on better than expected Q3 earnings, trade hopes and expectations of a Fed rate cut, but there was not the big follow through that normally accompanies a breakout.
The DJIA and Nasdaq Comp.
That can still happen, since the Street often takes a day or two to decide if overhead supply  has lifted.  This is the third attempt since July to break out of this general area.
BUT, what if all these goodies have been discounted at these levels, which are in fact very pricey, so much so, you have to go back to the 1999 – 2000 dot-com blow off to find the market so overvalued.
As noted yesterday, this is a big week for economic reports, especially Q3 GDP (Wed 8:30) which is estimated to drop to an annual rate of 1.8 percent from 2.0 percent in Q2 and 3.1 percent in Q1, as well as the Employment Situation report (Fri. 8:30) estimated to show 93,000 new hires in October  vs. 135,000 in September.
The week got off to a bad start with the September Chicago Fed  National Activity index  report dropping sharply  to -0.45 from +o.10 and the October Dallas Fed Mfg. Survey index dropping  to 4.5 from13.9.
TECHNICAL
With a breakout to new all-time highs by the S&P 500 yesterday, a follow through  would be normal. The primary  reason it won’t follow through is all the good news has been discounted at current levels.
Off and on, I have referred to this as a bubble that will burst when least expected. When that happens, the market will plunge so sharply, investors will have no time to protect their portfolio from nasty losses.
…………………………………………………………
Minor Support: DJIA:27,061; S&P 500:3,038; Nasdaq Comp.:8,321
Minor Resistance: DJIA:27,168; S&P 500:3,051; Nasdaq Comp.:8,347
………………………………………………………….

Monday Oct. 28  “Buying Breakout to New Highs – Risky”
     Big week  for economic reports – Q3 GDP comes at 8:30 Wednesday, the Employment Situation on Friday at 8:30.
Both have a bearing on whether the economy is near or in a recession.
The Fed Open Market Committee (FOMC) meets Tuesday and Wednesday with an announcement of the third rate cut in less than a year. expected on Wednesday, though no press conference is scheduled.
No FOMC meeting is scheduled for November, so the next meeting is not until December 10.
Three things are driving stock prices: a cut in the fed funds interest rate; better than expected Q3 earnings; progress in the U.S./China trade  talks.
Conclusion: This market is pricey at these levels, in fact, historically very overpriced, but the Street thinks it can run the table anyway, so expect new highs today and all the press hoopla that goes with it.
Negatives: 1) the Fed does not cut rates this time. 2) trade talks disappoint. 3) GDP signals a recession, as well as other economic indicators announced this week, primarily  Consumer Confidence (Tues. 10 a.m.) Employment Situation (Fri. 9:30).
This is a very dangerous market to chase. It is next to impossible to resist doing so, but all things considered, the downside risk far exceeds the upside potential.  Many on the Street have no idea how ugly a bear market can get, therefore very few are bearish enough to be selling.
That in itself is bearish, but until several big institutions cut and run, the market will hold the line with short-lived corrections along the way.
……………………………………………………………………..

Friday Oct. 25  “Big Move Looms as Street Decides on Earnings”

The market needs some volatility and I think we are about to get it.
Q3 earnings are hitting the Street. Some are better than expected, some disappointing, and the Street is about to decide what to do – Buy…or Sell !
      The technical picture (price action) is slightly upbeat, which I think can be credited to hopes for progress on trade and a Fed rate cut plus QE.    It’s really hard to tell now how the Street is factoring earnings into its equation.
New highs would be easy to hit (DJIA: 27,398; S&P 500:3,028). The S&P hit 3,016 yesterday.
New highs by the S&P would trigger news headlines and rush to buy.
However, with the markets as historically overpriced as it is now, a recession looming, and the uncertainty of a presidential impeachment process underway, a sustainable surge from these levels stands to be short lived.

Thursday, Oct. 24  “Watching and Waiting….for a signal”
Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.
………………………………………………………..

Wednesday Oct. 23 “Buying a Breakout to New Highs Would Be Risky”
A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.
………………………………………………………………………
Tuesday Oct 22  “OCTOBER  – A pivot month”
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
…………………………………………………………………………

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

Buying Breakout to New Highs – RISKY

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,958
S&P 500: 3,022
Nasdaq: 8,243
Russell: 1,558
Monday,  October  28, 2019
 8:59 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Big week  for economic reports – Q3 GDP comes at 8:30 Wednesday, the Employment Situation on Friday at 8:30.
Both have a bearing on whether the economy is near or in a recession.
The Fed Open Market Committee (FOMC) meets Tuesday and Wednesday with an announcement of the third rate cut in less than a year. expected on Wednesday, though no press conference is scheduled.
No FOMC meeting is scheduled for November, so the next meeting is not until December 10.
Three things are driving stock prices: a cut in the fed funds interest rate; better than expected Q3 earnings; progress in the U.S./China trade  talks.
Conclusion: This market is pricey at these levels, in fact, historically very overpriced, but the Street thinks it can run the table anyway, so expect new highs today and all the press hoopla that goes with it.
Negatives: 1) the Fed does not cut rates this time. 2) trade talks disappoint. 3) GDP signals a recession, as well as other economic indicators announced this week, primarily  Consumer Confidence (Tues. 10 a.m.) Employment Situation (Fri. 9:30).
This is a very dangerous market to chase. It is next to impossible to resist doing so, but all things considered, the downside risk far exceeds the upside potential.  Many on the Street have no idea how ugly a bear market can get, therefore very few are bearish enough to be selling.
That in itself is bearish, but until several big institutions cut and run, the market will hold the line with short-lived corrections along the way.

TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs, but odds are improving that will happen, though be temporary..
…………………………………………………………
Minor Support: DJIA:25,941; S&P 500:3,021; Nasdaq Comp.:8,261
Minor Resistance: DJIA:27,041; S&P 500:3,03n7; Nasdaq Comp.:8,276
………………………………………………………….

Friday Oct. 25  “Big Move Looms as Street Decides on Earnings”

The market needs some volatility and I think we are about to get it.
Q3 earnings are hitting the Street. Some are better than expected, some disappointing, and the Street is about to decide what to do – Buy…or Sell !
      The technical picture (price action) is slightly upbeat, which I think can be credited to hopes for progress on trade and a Fed rate cut plus QE.    It’s really hard to tell now how the Street is factoring earnings into its equation.
New highs would be easy to hit (DJIA: 27,398; S&P 500:3,028). The S&P hit 3,016 yesterday.
New highs by the S&P would trigger news headlines and rush to buy.
However, with the markets as historically overpriced as it is now, a recession looming, and the uncertainty of a presidential impeachment process underway, a sustainable surge from these levels stands to be short lived.

Thursday, Oct. 24  “Watching and Waiting….for a signal”
Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.
………………………………………………………..

Wednesday Oct. 23 “Buying a Breakout to New Highs Would Be Risky”
A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.
………………………………………………………………………
Tuesday Oct 22  “OCTOBER  – A pivot month”
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
………………………………………..
Monday  Oct. 21  “Market Locked in Limbo  By News Whipsaw”
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Move Looms as Street Decides on Earnings

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,805
S&P 500: 3,010
Nasdaq: 8,185
Russell: 1,550
Friday,  October  25, 2019
 9:03 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The market needs some volatility and I think we are about to get it.
Q3 earnings are hitting the Street. Some are better than expected, some disappointing, and the Street is about to decide what to do – Buy…or Sell !
      The technical picture (price action) is slightly upbeat, which I think can be credited to hopes for progress on trade and a Fed rate cut plus QE.    It’s really hard to tell now how the Street is factoring earnings into its equation.
New highs would be easy to hit (DJIA: 27,398; S&P 500:3,028). The S&P hit 3,016 yesterday.
New highs by the S&P would trigger news headlines and rush to buy.
However, with the markets as historically overpriced as it is now, a recession looming, and the uncertainty of a presidential impeachment process underway, a sustainable surge from these levels stands to be short lived.

TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs, but odds are improving that will happen, though be temporary..
…………………………………………………………
Minor Support: DJIA:26,761; S&P 500:3,001; Nasdaq Comp.:8,169
Minor Resistance: DJIA:26,861; S&P 500:3,029; Nasdaq Comp.:8,221
………………………………………………………….

Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.
………………………………………………………..

Wednesday Oct. 23 “Buying a Breakout to New Highs Would Be Risky”
A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.
………………………………………………………………………
Tuesday Oct 22  “OCTOBER  – A pivot month”
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
………………………………………..
Monday  Oct. 21  “Market Locked in Limbo  By News Whipsaw”
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
………………………………………………………………………………….
Friday Oct., 18   What the Stock Market Needs is a Good Dose of the TRUTH”
 If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….

Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

Watching and Waiting….for a Signal

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,833
S&P 500: 3,004
Nasdaq: 8,119
Russell: 1,552
Thursday,  October  24, 2019
 9:03 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Street is watching and waiting for a signal on trade and earnings, not just Q3 but guidance and projections for 2020, which has so far been projected to be better than this year.
If the Fed cannot head off a recession, the Street will be slashing 2020 earnings projections which would  adversely impact an overvalued market.
Odds are good we already are in a recession, so the Fed has its work cut out for it.  The Fed is cutting rates and employing a variation of QE, so I don’t know what it can do if we get into a severe recession.
These are strange times.
But a Fed rate cut is built into current pricing and much of expected progress on trade.
Failure to cut rates and/or failure to make progress on trade would hammer prices.
I think the market has a shot at new highs, which would be accompanied by a lot of press, Administration and Street hoopla, driving the market up temporarily and maybe into early January before a major correction develops.
Playing that move by buying the breakout would be a challenge for all but the nimble and quick.    

TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs, but odds are improving that will happen, though be temporary..
…………………………………………………………
Minor Support: DJIA:26,776; S&P 500:3,001; Nasdaq Comp.:8,111
Minor Resistance: DJIA:26,887; S&P 500:3,011; Nasdaq Comp.:8,147
………………………………………………………….

Wednesday Oct. 23 “Buying a Breakout to New Highs Would Be Riusky”
A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.
………………………………………………………………………
Tuesday Oct 22  “OCTOBER  – A pivot month”
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
………………………………………..
Monday  Oct. 21  “Market Locked in Limbo  By News Whipsaw”
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
………………………………………………………………………………….
Friday Oct., 18   What the Stock Market Needs is a Good Dose of the TRUTH”
 If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….

Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

Buying a Breakout to New Highs Would Be Risky

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,788
S&P 500: 2,995
Nasdaq: 8,104
Russell: 1,550
Wednesday,  October  23, 2019
 9:03 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      A ho-hummer yesterday, today stands to follow suit, unless we get hit with negative surprises on earnings.
Over the last four days, the major market averages have tried to break out to new highs for the fourth time since August.
It still can happen if progress on trade is announced, and actually happened.
The question is, how much is progress on trade and Fed rate cuts built into current prices ?
I think – a lot with the S&P 500 significantly overvalued.
Q3 earnings
are hitting the Street. While better than expected, expectations had been lowered significantly before the report period.
Even so, Disappointing results from Caterpillar (CAT) and Texas Instruments (TXN) yesterday reminded the Street not all is well.
Progress on trade seems to be announced only after a couple bad days in the market, the Fed is expected to cut its fed funds ratye on the 30th.
Retail sales remain soft, but existing homes sales are firm on a year/year basis.

TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs, but odds are improving that will happen, though be temporary..
…………………………………………………………
Minor Support: DJIA:26,751; S&P 500:2,990; Nasdaq Comp.:8,045
Minor Resistance: DJIA:26,847; S&P 500:3,003; Nasdaq Comp.:8,111
………………………………………………………….

Tuesday Oct 22  “OCTOBER  – A pivot month”
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
………………………………………..
Monday  Oct. 21  “Market Locked in Limbo  By News Whipsaw”
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
………………………………………………………………………………….
Friday Oct., 18   What the Stock Market Needs is a Good Dose of the TRUTH”
 If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….

Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

OCTOBER – A Pivot Month

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,827
S&P 500: 3,006
Nasdaq: 8,162
Russell: 1,550
Tuesday,  October  22, 2019
 8: 48 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”[2]
      October hosted bear market bottoms in1957. 1960, 1966, 1987. 1990,, 1nd 2002, but AFTER bear market declines, which we have not had yet.

October market one bull market top – 2007, the beginning of the Great Recession/Bull Market.
President Trumps saying trade talks with China are coming along very well. More importantly, China’s chief trade negotiator, Vice Premier Liu He, indicates trade negotiations are progressing well for phase one with a potential for signing in mid-November.
We have been down this road before, and the stock market appears to agree, though talks can hit a snag at any time.
The question is, how much of an agreement in phase one as well as a Fed rate cut, are already priced in the market at these levels ?
We are so close to new all-time highs, I think we can hit them with or without an agreement, but only temporarily.

The all-time high for the DJIA is 27,398 (now 26,827); the all-time high for the S&P 500  is 3028 (now 3,006).
Anticipation of progress in the trade talks and or a Fed rate cut on the 30th could push the market averages to new highs.
Buying the news would be HIGHLY RISKY in light of looming negatives and a very pricey market.
………………………………………..
TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs, but odds are improving that will happen, though be temporary..
…………………………………………………………
Minor Support: DJIA:26,817; S&P 500:3,001; Nasdaq Comp.:8,8,166
Minor Resistance: DJIA:26,867; S&P 500:3,019; Nasdaq Comp.:8,167
………………………………………………………….

Monday  Oct. 21  “Market Locked in Limbo  By News Whipsaw”
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
………………………………………………………………………………….
Friday Oct., 18   What the Stock Market Needs is a Good Dose of the TRUTH”
 If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….
Tuesday, Oct 15 “Market to March to Another Drumbeat – Q3 Earnings”

The Fed is doing everything it can to head off a recession, including buying bonds, though its purchases since mid-September intending to pump money into the financial system where a shortage caused interest rates on these securities to jump sharply well beyond  the Fed’s fed funds rate. This need for Fed action has not happened for 10 years.
As a result the inverted yield curve is no longer inverted, i.e., long-term rates are now higher than short-term rates.  This is an aberration and does not alter the signal the inversion was giving that a recession was imminent.
The Fed can be expected to cut rates again on October 20, its third cut in less than a year, but the cut  is pretty much built into the market.
The Street thinks it can ride out current and looming  negatives. That’s a big order. There is little the Fed can do but reduce the adversity of a recession which  appears to be digging in its cleats on a global scale.
Impeachment proceedings are picking up a full head of steam and can only depress consumer confidence.
Q3 earnings will hit the Street in coming weeks, but are not expected to make good reading. However, if earnings however soft come in better than currently projected, the Street will see it as a positive.
…………………………………………………………..
Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Locked in Limbo By News Whipsaw

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,770
S&P 500: 2,986
Nasdaq: 8,089
Russell: 1,535
Monday,  October  21, 2019
 9:09a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The market is in a consolidation phase as investors wait for more info on trade, the economy, the Fed on interest rates and impeachment proceedings.
Trade is obviously the big one, but we only get bits & pieces to the puzzle as two huge egos joust for an edge.
The economy is slipping with little to suggest we aren’t in the early stages of recession; the Fed is expected to cut  its fed funds rate again on the 30th, but that is already priced in the market.
As for impeachment proceedings, daily disclosures of news negative to the Trump administration chip away at investor confidence.
Bottom line: a market locked in limbo, with swings in both directions but unable to trend meaningfully in one direction or the other.
Odds favor a rally attempt today.
The Street wants to be bullish, and will seize on any news that reinforce its optimism.
Bears see a high risk of a big move down.
This spells news whipsaw with unplayable swings in both directions.
………………………………………..
TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
Expect another attempt to rally.  It would need big news  on trade to attack new all-time highs.
…………………………………………………………
Minor Support: DJIA:26,701; S&P 500:2,977; Nasdaq Comp.:8,011
Minor Resistance: DJIA:26,847; S&P 500:2,991; Nasdaq Comp.:8,119
………………………………………………………….

Friday Oct., 18   What the Stock Market Needs is a Good Dose of the TRUTH”
If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….
Tuesday, Oct 15 “Market to March to Another Drumbeat – Q3 Earnings”

The Fed is doing everything it can to head off a recession, including buying bonds, though its purchases since mid-September intending to pump money into the financial system where a shortage caused interest rates on these securities to jump sharply well beyond  the Fed’s fed funds rate. This need for Fed action has not happened for 10 years.
As a result the inverted yield curve is no longer inverted, i.e., long-term rates are now higher than short-term rates.  This is an aberration and does not alter the signal the inversion was giving that a recession was imminent.
The Fed can be expected to cut rates again on October 20, its third cut in less than a year, but the cut  is pretty much built into the market.
The Street thinks it can ride out current and looming  negatives. That’s a big order. There is little the Fed can do but reduce the adversity of a recession which  appears to be digging in its cleats on a global scale.
Impeachment proceedings are picking up a full head of steam and can only depress consumer confidence.
Q3 earnings will hit the Street in coming weeks, but are not expected to make good reading. However, if earnings however soft come in better than currently projected, the Street will see it as a positive.
…………………………………………………………..
Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly.
…………………………………………………………..

Monday Oct 14  “Market News Sensitive – Street Still Wearing Blinders”

The market is increasingly news sensitive, and this is just the beginning. We have the mid-east powder keg, recession which looks more and more like a reality, Q3 earnings which stand to be a bummer, impeachment proceedings which will get ugly and violent, and an increasingly out-of-control government.
If the market were down 30% from here, I would say look for buying opportunities.  But it isn’t. It is still historically  overvalued, by some yardsticks, a lot.
No one wants a bear market, but sensible investing is not about preference, it is about realistically assessing the current and possible prospects and taking action.  Unmistakable storm clouds are looming.
I always thought it was wise to be wrong with your money in your pocket, not stocks. That gives an investor a chance to invest when the odds are more favorable without having to recoup a lot of losses before being profitable.
YES, we are in a news whipsaw.  It is unplayable.
……………………………………………………………………………………….

Friday, Oct 11  “Use Trade Hopes Strength to Raise Cash”
Yesterday, I urged a 90% cash position saying, “Trade talks this week could trigger a sharp rally – fine. That is a chance to lighten up at higher prices. But they could disappoint and trigger a plunge.”
Obviously, few investors would be that cautious, and of course there are investments that will do well while others will get hit.
My stated reason was that, “All Hell can  break loose politically
as the nation sinks into recession. The stock market would  lead it off. That could be today, a week from now or as far out as January.
Why take a chance, there so much more downside than upside ?”
There are times to simply walk away from the market, though they are more easily seen in hindsight.
Odds are good that President Trump will be impeached by the House, though not convicted by a Republican Senate.
During such a process, confidence in the future takes a hit. Add to that the a presidential election at  the same time  these proceedings are underway and  uncertainty takes center stage.
Then there is the fact signs of an early stage recession are causing the Fed to scramble for damage control and prop the market up with reference to another rate cut  or another QE every time it starts to sell off, thus preventing a healthy correction.
Corporate earnings growth has slowed to a crawl at a time the market is overvalued by historical precedent.
Add them up and you get a good reason to have a healthy cash reserve.

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Market Needs a Good Dose of the “TRUTH”

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,025
S&P 500: 2,997
Nasdaq Comp.:
Russell 2000:
Friday,  October 18, 2019
 7:47 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
If investors are confused, frustrated and uneasy, they are simply normal human beings.
       The Fed keeps saying the market is in a good place, yet it is scurrying to cut interest rates and pump money into the economy.
This is not what the Fed does when the stock market is overvalued probing all-time highs.
What this market needs is the TRUTH.  It would trade lower, but won’t be teetering on the verge of a wrenching flash crash that takes the major averages down 12% -18% in the matter of days.
While flash crashes (the new normal) have  happened frequently since mid-2011, the market has always snapped back quickly.
With a lot of major negatives looming, recession, a dysfunctional government in Washington constantly under fire with one self-imposed crisis after another, an immediate rebound  is unlikely to  happen this time.
That means another leg down, ergo a bear market.
How deep ?
Depends on what new negatives hit it when it is trying to rebound.
That is what determines the depth of bear markets whether it is  a 55% bear (2007-2009), 51% bear (2000-2002), 50% bear (1973-1974), or smaller ones in the low to mid 20s.  It is all about new negatives that pound prices down to unreasonable levels.

………………………………………..
TECHNICAL
So far corporate earnings don’t look as bad as forecast but let’s wait to see more reports. Often, the bad ones are held off until later.
New highs would not be a stretch from here (DJIA: 27,398, S&P 500:3,027). While a punch to new highs would attract a big stir in the financial press, and  excited buyers, the increased volume may attract institutional sellers ho use the increased volume to unload big positions.
DO NOT OVERLOOK THE FACT WE ARE IN A HIGHLY NEWS-SENSITIVE MARKET.  THIS  NINE-DAY RECOVERY HAS DISCOUNTED ANOTHER FED RATE CUT, FED BOND BUYING TO INJECT MONEY INTO THE SYSTEM, AND HOPEFULLY PROGRESS ON U.S./CHINA TRADE TALKS.     …………………………………………………………
Minor Support: DJIA:26,976; S&P 500:2,993; Nasdaq Comp.:8,141
Minor Resistance: DJIA:27,061; S&P 500:2,002; Nasdaq Comp.:8,159
………………………………………………………….

Thursday Oct. 17  “Has the Street Considered  the Possibility of a Trump Resignation”
This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
………………………………………………………………………………..
Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….
Tuesday, Oct 15 “Market to March to Another Drumbeat – Q3 Earnings”

The Fed is doing everything it can to head off a recession, including buying bonds, though its purchases since mid-September intending to pump money into the financial system where a shortage caused interest rates on these securities to jump sharply well beyond  the Fed’s fed funds rate. This need for Fed action has not happened for 10 years.
As a result the inverted yield curve is no longer inverted, i.e., long-term rates are now higher than short-term rates.  This is an aberration and does not alter the signal the inversion was giving that a recession was imminent.
The Fed can be expected to cut rates again on October 20, its third cut in less than a year, but the cut  is pretty much built into the market.
The Street thinks it can ride out current and looming  negatives. That’s a big order. There is little the Fed can do but reduce the adversity of a recession which  appears to be digging in its cleats on a global scale.
Impeachment proceedings are picking up a full head of steam and can only depress consumer confidence.
Q3 earnings will hit the Street in coming weeks, but are not expected to make good reading. However, if earnings however soft come in better than currently projected, the Street will see it as a positive.
…………………………………………………………..
Here’s where I have a problem.  The current and prospective negatives are not to be taken lightly, yet the S&P 500 is historically very overvalued.
The Street is betting this recession won’t be accompanied by a bear market. That has never happened. We have had bear markets without  a recession, but never recession without a bear market.
We are back where we were a number of times this year where the Fed has used cuts in interest rates to head off a recession, but recession indicators keep worsening, though at a slow pace.
       As I have written so often. Investors must ascertain their tolerance for risk and adjust cash reserves accordingly.
…………………………………………………………..

Monday Oct 14  “Market News Sensitive – Street Still Wearing Blinders”

The market is increasingly news sensitive, and this is just the beginning. We have the mid-east powder keg, recession which looks more and more like a reality, Q3 earnings which stand to be a bummer, impeachment proceedings which will get ugly and violent, and an increasingly out-of-control government.
If the market were down 30% from here, I would say look for buying opportunities.  But it isn’t. It is still historically  overvalued, by some yardsticks, a lot.
No one wants a bear market, but sensible investing is not about preference, it is about realistically assessing the current and possible prospects and taking action.  Unmistakable storm clouds are looming.
I always thought it was wise to be wrong with your money in your pocket, not stocks. That gives an investor a chance to invest when the odds are more favorable without having to recoup a lot of losses before being profitable.
YES, we are in a news whipsaw.  It is unplayable.
……………………………………………………………………………………….

Friday, Oct 11  “Use Trade Hopes Strength to Raise Cash”
Yesterday, I urged a 90% cash position saying, “Trade talks this week could trigger a sharp rally – fine. That is a chance to lighten up at higher prices. But they could disappoint and trigger a plunge.”
Obviously, few investors would be that cautious, and of course there are investments that will do well while others will get hit.
My stated reason was that, “All Hell can  break loose politically
as the nation sinks into recession. The stock market would  lead it off. That could be today, a week from now or as far out as January.
Why take a chance, there so much more downside than upside ?”
There are times to simply walk away from the market, though they are more easily seen in hindsight.
Odds are good that President Trump will be impeached by the House, though not convicted by a Republican Senate.
During such a process, confidence in the future takes a hit. Add to that the a presidential election at  the same time  these proceedings are underway and  uncertainty takes center stage.
Then there is the fact signs of an early stage recession are causing the Fed to scramble for damage control and prop the market up with reference to another rate cut  or another QE every time it starts to sell off, thus preventing a healthy correction.
Corporate earnings growth has slowed to a crawl at a time the market is overvalued by historical precedent.
Add them up and you get a good reason to have a healthy cash reserve.

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
…………………………………………………………………………

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 122 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 3.5% which was hit in September.  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 126 months is 4.2 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.