Only an Algorithm Can Be This Naive

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,877
S&P 500: 2,864
Nasdaq Comp.:7,785
Russell 2000:1,545
Wednesday, May 22, 2019
   9:08 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
      Before algorithms dominated the Street’s decision process, humans pondered current and foreseeable events to get a feel for whether stocks were over or undervalued.  They tracked a host of indicators, but also  used their instincts based on years of experience to come to conclusions.
Algos track a host of indicators, probably a lot more than the human brain can track, but where the human brain excels is the ability to weigh in on the unknown.
Currently, the market is ignoring a number of critical  factors that could vastly affect the overall perception of what stocks are worth.
The big one is the prospect of the disruption of an impeachment process and uncertainty of the 2020 presidential election. Add to that, a looming recession and bear market, trade wars, war, and an overvalued market and you have enough to keep anyone awake at night.
What is driving stock prices today is not the tangible value, a dividend return, but rather the expectation  stocks will keep rising in value somewhat in line with the growth in earnings and companies buying back their own stock, but mostly because institutions have nowhere else to invest.
This is all well and good as long as we don’t hit a prolonged losing streak where a lot of bad stuff hits the fan relentlessly pounding stocks and investor confidence down.
        It happened in the 1970 and early 1980s where four recessions and five bear markets  in 11 years combined with war, Watergate/impeachment, stagflation, the OPEC oil embargo hammered stocks relentlessly driving the price/earnings ratio for the S&P 500 below 8X (1980).
Stuff happens, and this stock market is ignoring how bad things can get, mostly because computers can’t be programmed for the unthinkable, and also because few analysts/money managers weren’t around in the 1970/1980’s.
Since so many Street  algo decisions are based on the same indicators, they will eventually get a sell at the same time and whoosh – a flash crash of 12%-18% before anyone can say “ouch.” Instead of an immediate rebound we get another leg down as new negatives hit the market.
The best computer in the world is the human brain, not the fastest, not the ability to process zillions of things, but the best to ponder possibilities not yet quantifiable.

Cash will be king some day. It doesn’t have to be 100%, but enough to protect an investor in line with their tolerance for risk.

…………………………………………
TECHNICAL:
Minor Support: DJIA:25,757 ;S&P 500:2,856;Nasdaq Comp.:7,760
Minor Resistance: DJIA:25,927; S&P 500:2,868; Nasdaq Comp.:7,786

…………………………………………..
Tuesday   (May 20)
Look for an attempt to rebound today. There is formidable overhead supply that will limit the upside barring unexpected good news. Nasdaq stocks are under pressure, what are all the bees going to do if the Queen dies ?
The big picture is clouded, but  many on the Street don’t see it, or let’s say they haven’t tweaked their algos to respect what often happens in late stage bull markets – news that progressively gets worse, bit by bit.
        Does anyone who is paying attention think for a moment angst about the future, near and longer term, won’t surge past the  ouch point  to the I can’t stand it anymore level where investors break ranks and bail out.
This will get ugly, very ugly. Project into the future, can the Street simply ignore total chaos at the highest levels of our government ?
The Street wants to party all night.  That’s not how it works, not how it has ever worked, especially when the managers of money think we are in  a new era where recessions don’t happen not with the Fed quick to prevent troubles.
The Fed’s quiver of quick fixes is empty.  Yes, I expect a cut in the Fed funds rate, but they did that prior to the last three recessions.
Right now the Fed is a eunuch. They’ll try, clearly they don’t want a recession in an election year.  But they can’t stop the looming  chaos in confidence that is just around the corner, multiple constitutional crises.
Warning: Beware of a rally failure. Chasing the rally at the open is risky.
………………………………………………………
Monday (May 20)
A three day rally that recouped a bit more than half of May’s
5% loss ran into a wall Friday raising the possibility of a test of  last Monday’s S&P500 low of 2801.
Today’s market will start on the downside which should attract buyers unless they have retreated to the sidelines, fearful of an escalation of war with Iran and uneasy about the inability of the U.S. to strike a trade deal with China.
The DJIA and S&P 500 have traced out triple tops (Nasdaq a double top) going back to January 2018 indicating  an unwillingness of the Street to reach for stocks.
In the interim, we had a three month (Oct./Dec.) 20% correction which was quickly reversed by the Fed’s policy change from raising interest rates to a no action mode.
If humans rather than algorithms  made more buy/sell decisions, this market would sell lower in face of  mounting problems here and abroad.
This decision process has been responsible for the flash crash phenom which features sudden plunges of  12% to 20% in 6 to 18 days.
As long as those losses are recouped quickly, investors are safe, however if the next one leads to a 35% – 50% bear market the Street’s indifference to risk is devastating to portfolios.
Since the Fed’s quiver of tools for stimulating a recovery is limited, a new bull market stands to take a long time to develop.

Friday (May 17)
The market has rebounded each of the last three days, but yesterday’s momentum lagged.  As a result, the market will open on the downside today, the key being  whether this is the beginning of another leg down.
That will depend on the nature of the news flow going into the weekend.
There is increasing concern for the outcome of a budding crisis brewing between the U.S. and Iran as war ships head for the Mid-East.
There are rumblings about a recession on the horizon, though economists do not see one this year (I do, though only the early stages of one).
Recessions are loosely defined as two consecutive declines in GDP. The official declaration is made by the National Bureau of Economic Research (NBER) and that is done well after a recession has started.
Axios reports that the Fed is concerned about rising credit card delinquencies and surging corporate debt. Add to that the fact the U.S. national debt is $1 trillion higher  than a year ago, and they have reason to worry.
This is why I have been saying I think the Fed will cut its fed funds rate. It does not want a recession in an election year !
I have warned of a bear market for months. It will start well ahead of a recession and it will begin with a sharp plunge as the Street suddenly becomes aware the party is over no matter what the Fed does.
A drop in the Fed’s fed funds rate has preceded each of the last three recessions, so a cut here would indicate the Fed is WORRIED.
The Street’s algos will buy at the market and on dips until analysts tweak them to slow down or stop buying and then to start selling.
Everyone will get the signal at the same time and the market will be down 12% – 18% before the individual investor can react, so a cash reserve  is wise now.
………………………………………………………………….

Thursday (May 16)
The bulls have their work cut out for them with unimpressive news on the housing market, and declines in Industrial Production and Retail Sales on top of high angst  for a military conflict with Iran and the breakdown in trade talks with China.  These negatives are offset by better than expected Q1 corporate earnings.
It’s jump ball between bears and bulls at a time the Street has run stocks up to pricey levels.  That’s OK so long as new negatives don’t surface……or so long as none of the big hitters on the Street breaks ranks and sells in-size.
Even so, the Fed’s policy switch away from raising interest rates should be doing more for the economy.
Contrary to most pundits, I think the Fed will cut its benchmark fed funds rate in December to goose the economy going into the 2020 presidential election year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The S&P 500 was up 66% at this point in the Obama administration compared with a gain of 24% at the same point under Donald Trump.

Wednesday (May 15)
Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
………………………………………………………..

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

Fed a Eunuch ? Quiver Empty When Recession Hits

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,679
S&P 500: 2,840
Nasdaq Comp.:7,702
Russell 2000:1,524
Tuesday, May 21, 2019
   9:03 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
Look for an attempt to rebound today. There is formidable overhead supply that will limit the upside barring unexpected good news. Nasdaq stocks are under pressure, what are all the bees going to do if the Queen dies ?
The big picture is clouded, but  many on the Street don’t see it, or let’s say they haven’t tweaked their algos to respect what often happens in late stage bull markets – news that progressively gets worse, bit by bit.
        Does anyone who is paying attention think for a moment angst about the future, near and longer term, won’t surge past the  ouch point  to the I can’t stand it anymore level where investors break ranks and bail out.
This will get ugly, very ugly. Project into the future, can the Street simply ignore total chaos at the highest levels of our government ?
The Street wants to party all night.  That’s not how it works, not how it has ever worked, especially when the managers of money think we are in  a new era where recessions don’t happen not with the Fed quick to prevent troubles.
The Fed’s quiver of quick fixes is empty.  Yes, I expect a cut in the Fed funds rate, but they did that prior to the last three recessions.
Right now the Fed is a eunuch. They’ll try, clearly they don’t want a recession in an election year.  But they can’t stop the looming  chaos in confidence that is just around the corner, multiple constitutional crises.
Warning: Beware of a rally failure. Chasing the rally at the open is risky.
…………………………………………
TECHNICAL:
Minor Support: DJIA:25,501;S&P 500:2,821;Nasdaq Comp.:7,651
Minor Resistance: DJIA:25,851; S&P 500:2,877; Nasdaq Comp.:7,853

…………………………………………..
Monday (May 20)
A three day rally that recouped a bit more than half of May’s
5% loss ran into a wall Friday raising the possibility of a test of  last Monday’s S&P500 low of 2801.
Today’s market will start on the downside which should attract buyers unless they have retreated to the sidelines, fearful of an escalation of war with Iran and uneasy about the inability of the U.S. to strike a trade deal with China.
The DJIA and S&P 500 have traced out triple tops (Nasdaq a double top) going back to January 2018 indicating  an unwillingness of the Street to reach for stocks.
In the interim, we had a three month (Oct./Dec.) 20% correction which was quickly reversed by the Fed’s policy change from raising interest rates to a no action mode.
If humans rather than algorithms  made more buy/sell decisions, this market would sell lower in face of  mounting problems here and abroad.
This decision process has been responsible for the flash crash phenom which features sudden plunges of  12% to 20% in 6 to 18 days.
As long as those losses are recouped quickly, investors are safe, however if the next one leads to a 35% – 50% bear market the Street’s indifference to risk is devastating to portfolios.
Since the Fed’s quiver of tools for stimulating a recovery is limited, a new bull market stands to take a long time to develop.

Friday (May 17)
The market has rebounded each of the last three days, but yesterday’s momentum lagged.  As a result, the market will open on the downside today, the key being  whether this is the beginning of another leg down.
That will depend on the nature of the news flow going into the weekend.
There is increasing concern for the outcome of a budding crisis brewing between the U.S. and Iran as war ships head for the Mid-East.
There are rumblings about a recession on the horizon, though economists do not see one this year (I do, though only the early stages of one).
Recessions are loosely defined as two consecutive declines in GDP. The official declaration is made by the National Bureau of Economic Research (NBER) and that is done well after a recession has started.
Axios reports that the Fed is concerned about rising credit card delinquencies and surging corporate debt. Add to that the fact the U.S. national debt is $1 trillion higher  than a year ago, and they have reason to worry.
This is why I have been saying I think the Fed will cut its fed funds rate. It does not want a recession in an election year !
I have warned of a bear market for months. It will start well ahead of a recession and it will begin with a sharp plunge as the Street suddenly becomes aware the party is over no matter what the Fed does.
A drop in the Fed’s fed funds rate has preceded each of the last three recessions, so a cut here would indicate the Fed is WORRIED.
The Street’s algos will buy at the market and on dips until analysts tweak them to slow down or stop buying and then to start selling.
Everyone will get the signal at the same time and the market will be down 12% – 18% before the individual investor can react, so a cash reserve  is wise now.
………………………………………………………………….

Thursday (May 16)
The bulls have their work cut out for them with unimpressive news on the housing market, and declines in Industrial Production and Retail Sales on top of high angst  for a military conflict with Iran and the breakdown in trade talks with China.  These negatives are offset by better than expected Q1 corporate earnings.
It’s jump ball between bears and bulls at a time the Street has run stocks up to pricey levels.  That’s OK so long as new negatives don’t surface……or so long as none of the big hitters on the Street breaks ranks and sells in-size.
Even so, the Fed’s policy switch away from raising interest rates should be doing more for the economy.
Contrary to most pundits, I think the Fed will cut its benchmark fed funds rate in December to goose the economy going into the 2020 presidential election year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The S&P 500 was up 66% at this point in the Obama administration compared with a gain of 24% at the same point under Donald Trump.

Wednesday (May 15)
Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
………………………………………………………..

Tuesday  (May 14)
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
……………………………………………………
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

Bombs Away ???

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,765
S&P 500: 2,859
Nasdaq Comp.:7,816
Russell 2000:1,538
Monday, May 20, 2019
   8:52 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
A three day rally that recouped a bit more than half of May’s
5% loss ran into a wall Friday raising the possibility of a test of  last Monday’s S&P500 low of 2801.
Today’s market will start on the downside which should attract buyers unless they have retreated to the sidelines, fearful of an escalation of war with Iran and uneasy about the inability of the U.S. to strike a trade deal with China.
The DJIA and S&P 500 have traced out triple tops (Nasdaq a double top) going back to January 2018 indicating  an unwillingness of the Street to reach for stocks.
In the interim, we had a three month (Oct./Dec.) 20% correction which was quickly reversed by the Fed’s policy change from raising interest rates to a no action mode.
If humans rather than algorithms  made more buy/sell decisions, this market would sell lower in face of  mounting problems here and abroad.
This decision process has been responsible for the flash crash phenom which features sudden plunges of  12% to 20% in 6 to 18 days.
As long as those losses are recouped quickly, investors are safe, however if the next one leads to a 35% – 50% bear market the Street’s indifference to risk is devastating to portfolios.
Since the Fed’s quiver of tools for stimulating a recovery is limited, a new bull market stands to take a long time to develop.
            …………………………………………

TECHNICAL
:
Minor Support: DJIA:25517;S&P 500:2,837;Nasdaq Comp.:7,721
Minor Resistance: DJIA:25,800; S&P 500:2,861; Nasdaq Comp.:7,837

…………………………………………..
Friday (May 17)
The market has rebounded each of the last three days, but yesterday’s momentum lagged.  As a result, the market will open on the downside today, the key being  whether this is the beginning of another leg down.
That will depend on the nature of the news flow going into the weekend.
There is increasing concern for the outcome of a budding crisis brewing between the U.S. and Iran as war ships head for the Mid-East.
There are rumblings about a recession on the horizon, though economists do not see one this year (I do, though only the early stages of one).
Recessions are loosely defined as two consecutive declines in GDP. The official declaration is made by the National Bureau of Economic Research (NBER) and that is done well after a recession has started.
Axios reports that the Fed is concerned about rising credit card delinquencies and surging corporate debt. Add to that the fact the U.S. national debt is $1 trillion higher  than a year ago, and they have reason to worry.
This is why I have been saying I think the Fed will cut its fed funds rate. It does not want a recession in an election year !
I have warned of a bear market for months. It will start well ahead of a recession and it will begin with a sharp plunge as the Street suddenly becomes aware the party is over no matter what the Fed does.
A drop in the Fed’s fed funds rate has preceded each of the last three recessions, so a cut here would indicate the Fed is WORRIED.
The Street’s algos will buy at the market and on dips until analysts tweak them to slow down or stop buying and then to start selling.
Everyone will get the signal at the same time and the market will be down 12% – 18% before the individual investor can react, so a cash reserve  is wise now.
………………………………………………………………….

Thursday (May 16)
The bulls have their work cut out for them with unimpressive news on the housing market, and declines in Industrial Production and Retail Sales on top of high angst  for a military conflict with Iran and the breakdown in trade talks with China.  These negatives are offset by better than expected Q1 corporate earnings.
It’s jump ball between bears and bulls at a time the Street has run stocks up to pricey levels.  That’s OK so long as new negatives don’t surface……or so long as none of the big hitters on the Street breaks ranks and sells in-size.
Even so, the Fed’s policy switch away from raising interest rates should be doing more for the economy.
Contrary to most pundits, I think the Fed will cut its benchmark fed funds rate in December to goose the economy going into the 2020 presidential election year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The S&P 500 was up 66% at this point in the Obama administration compared with a gain of 24% at the same point under Donald Trump.

Wednesday (May 15)
Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
………………………………………………………..

Tuesday  (May 14)
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
……………………………………………………
Monday (May 13)

The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.
………………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

A Cash Reserve a MUST

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,802
S&P 500: 2,876
Nasdaq Comp.:7,898
Russell 2000:1,557
Friday, May 17, 2019
   8:52 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
The market has rebounded each of the last three days, but yesterday’s momentum lagged.  As a result, the market will open on the downside today, the key being  whether this is the beginning of another leg down.
That will depend on the nature of the news flow going into the weekend.
There is increasing concern for the outcome of a budding crisis brewing between the U.S. and Iran as war ships head for the Mid-East.
There are rumblings about a recession on the horizon, though economists do not see one this year (I do, though only the early stages of one).
Recessions are loosely defined as two consecutive declines in GDP. The official declaration is made by the National Bureau of Economic Research (NBER) and that is done well after a recession has started.
Axios reports that the Fed is concerned about rising credit card delinquencies and surging corporate debt. Add to that the fact the U.S. national debt is $1 trillion higher  than a year ago, and they have reason to worry.
This is why I have been saying I think the Fed will cut its fed funds rate. It does not want a recession in an election year !
I have warned of a bear market for months. It will start well ahead of a recession and it will begin with a sharp plunge as the Street suddenly becomes aware the party is over no matter what the Fed does.
A drop in the Fed’s fed funds rate has preceded each of the last three recessions, so a cut here would indicate the Fed is WORRIED.
The Street’s algos will buy at the market and on dips until analysts tweak them to slow down or stop buying and then to start selling.
Everyone will get the signal at the same time and the market will be down 12% – 18% before the individual investor can react, so a cash reserve  is wise now.

…………………………………………
TECHNICAL:
Minor Support: DJIA:25,685;S&P 500:2,856;Nasdaq Comp.:7,817
Minor Resistance: DJIA:25,600; S&P 500:2,876; Nasdaq Comp.:7,891

…………………………………………..
Thursday (May 16)
The bulls have their work cut out for them with unimpressive news on the housing market, and declines in Industrial Production and Retail Sales on top of high angst  for a military conflict with Iran and the breakdown in trade talks with China.  These negatives are offset by better than expected Q1 corporate earnings.
It’s jump ball between bears and bulls at a time the Street has run stocks up to pricey levels.  That’s OK so long as new negatives don’t surface……or so long as none of the big hitters on the Street breaks ranks and sells in-size.
Even so, the Fed’s policy switch away from raising interest rates should be doing more for the economy.
Contrary to most pundits, I think the Fed will cut its benchmark fed funds rate in December to goose the economy going into the 2020 presidential election year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The S&P 500 was up 66% at this point in the Obama administration compared with a gain of 24% at the same point under Donald Trump.

Wednesday (May 15)
Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
………………………………………………………..

Tuesday  (May 14)
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
……………………………………………………
Monday (May 13)

The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.
…………………………………………………………..
Friday (May 19)
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.
……………………………………………………..
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

Market To Encounter Overhead Supply

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,648
S&P 500: 2,850
Nasdaq Comp.:7,822
Russell 2000:1,548
Thursday, May 16, 2019
   8:52 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
The bulls have their work cut out for them with unimpressive news on the housing market, and declines in Industrial Production and Retail Sales on top of high angst  for a military conflict with Iran and the breakdown in trade talks with China.  These negatives are offset by better than expected Q1 corporate earnings.
It’s jump ball between bears and bulls at a time the Street has run stocks up to pricey levels.  That’s OK so long as new negatives don’t surface……or so long as none of the big hitters on the Street breaks ranks and sells in-size.
Even so, the Fed’s policy switch away from raising interest rates should be doing more for the economy.
Contrary to most pundits, I think the Fed will cut its benchmark fed funds rate in December to goose the economy going into the 2020 presidential election year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The S&P 500 was up 66% at this point in the Obama administration compared with a gain of 24% at the same point under Donald Trump.
…………………………………………
TECHNICAL:
Minor Support: DJIA:25,703;S&P 500:2,855;Nasdaq Comp.:7,816
Minor Resistance: DJIA:25,817; S&P 500:2,873; Nasdaq Comp.:7,927

…………………………………………..
Wednesday (May 15)
Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
………………………………………………………..

Tuesday  (May 14)
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
……………………………………………………
Monday (May 13)

The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.
…………………………………………………………..
Friday (May 19)
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.
……………………………………………………..
Thursday (May 9)
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

A Bear Market Will Come Without Warning…Yes, They Do Happen

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,532
S&P 500: 2,834
Nasdaq Comp.:7,734
Russell 2000:1,543
Monday, May 15, 2019
   8:52 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
      Ask yourself two questions.
Is a bear market possible beginning in the next 6 months ?
Is a recession starting within the next 9 months possible ?
If your answer is no to both, think again, or risk getting blindsided.
No one  is bearish and that is bearish. The Street is blinded by the euphoria of a 10-year old bull market, propped up by an administration-friendly Fed, which may just cut its benchmark interest rate to head off a recession in time for the 2020 elections.
Bear markets begin ahead of recessions, the lead time varies from several months to a year. I don’t see the next bear market beginning slowly, since most analysts/money managers track the same indicators plug them into an algo and wait for an answer.  Aside from free-thinkers who will anticipate problems in advance, most on the Street will get a defer purchase/sell signal at the same time and whoosh down the market goes giving anyone with no cash reserve a chance to react.
       My message here is, establish a cash reserve of 30% and ignore the temptation to go all-in, because no one knows when the plug will be pulled. Worst case, an opportunity to make a little more is lost, but a flash crash leading to a bear market does not lead to two years of more getting back  one’s losses.
We have had ugly corrections in recent years, all but one were flash crashes.
Apr./May 2011 the S&P plunged 12.6% in 8 days
Aug. 2011:  –  15.8% in 6 days
Jly./Aug. 2015:   – 11.5% in 18 days
Dec. 2015/Jan.:  –  12.9% in 13 days
Jan/Feb. 2018:  -11.8% in 10 days
Oct./Dec. 2018: – 20.2% over 3 months
All were followed by recoveries. The difference with a bear market will be, new negatives will hit the market after a sharp plunge and at the point when it is ready to rebound. That’s when a second leg begins leading to lower lows and ultimately a decline of 35% – 48%, or so.
In most cases, the bear will be accompanied by a recession and a rush by the Fed to trigger a recovery with lower interest rates and pumping money into the economy.   But rates are still low and the ability of the Fed to pump money into the economy limited this time, so a recovery stands to take longer.
…………………………………………
TECHNICAL:
Minor Support: DJIA:25,413;S&P 500:2,823;Nasdaq Comp.:7,701
Minor Resistance: DJIA:25,613; S&P 500:2,846; Nasdaq Comp.:7,761

…………………………………………..
Tuesday  (May 14)
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
……………………………………………………
Monday (May 13)

The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.

Friday (May 19)
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.
……………………………………………………..
Thursday (May 9)
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………………….
Wednesday (May 8)
The Street is nervous about a U.S./China trade deal, but not nervous enough to bail out big-time.  So far, the market has rebounded from all the sharp sell offs of 10% to 20% over the past ten years, so the Street simply uses sell offs to “buy.”
       This is what I have referred to as a cruise control mentality, and looking back, it has worked.
At some point, bad news will hit the market when it is ready to rebound from a sharp sell off, resulting in another leg or two down, a bear market with the DJIA and S&P 500 down 35% – 45%, the Nasdaq more.
       Odds are increasing for an ugly  free-fall in Nasdaq Comp., up 529% since the bull started March 9, 2009.  By comparison, the DJIA is up 303% and the S&P 500 up 233% for the period.
The Nasdaq Comp. declined 78% in the 2000-2002 bear market, though speculation this time does not compare with that we saw in the dot-com bubble burst.
At this late stage in the bull market, investors should have a sizable cash reserve  just in case the next major correction will lead to a bear  market.  That’s hard to do in frothy bull markets. There is always the feeling that an investor can stay for just one more score.
…………………………………………………..
Tuesday (May 7)
A flash crash is just that. It comes out of nowhere, without warning as stock prices gap down so sharply investors have little time to react.
I can only warn that this is one of those times a flash crash could happen.
      The Street is only a little worried about a continuing trade war, in fact there is little that worries the Street, and that could be a problem. This is the kind of “see no evil, hear no evil,……” mentality that leads to a flash crash, i.e., everyone stops buying at the same time causing a vacuum which allows a free fall in prices. This leads to increased selling and the market is down 12% before anyone can say “ouch.”
This is the new normal, and it is mostly a result of the computerization of the decision process on the Street, aka algorithms.
The market has taken some nasty hits over the years, but it always bounces  back. So why worry about a correction and have a cash reserve ?
       One answer may be to have cash to invest at the lower prices a correction offers,  Another answer may be to protect your portfolio from taking a huge hit.
Yet another answer may be an extended  bear market  may keep portfolio values down for an extended period of time, if cash is needed, stocks would have to be sold at depressed prices.
………………………………………………………………
Referring to President Trump’s statement yesterday that tariffs on Chinese goods will be increased to  25%  from 10%, Axios reported that tariffs are paid by U.S. importers not by Chinese companies or its government.
An  importing company paying tariffs can do the following:
1)Pay the full cost
2)Cut costs to offset cost of tariff
3)Ask the China supplier for discount to offset tariff cost.
4)Source supplies from outside China.
5)Pass cost off tariff on to customer
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
…………………………………………………………….

Tuesday (April 30)
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
……………………………………………….
Monday (April 29)

MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

Rally Failure Risks HIGH

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,324
S&P 500: 2,811
Nasdaq Comp.:7,647
Russell 2000:1,523
Tuesday, May 14, 2019
   8:37 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
One year ago, The Guardian reported 1,140 economists (14 Nobel prize winners) warned President Trump his economic protectionism policies threaten  to repeat the mistakes the US made in the 1930s that resulted in the Great Depression.
Obviously, the warning was ignored as the trade war between the US and China heats up.  The NAFTA’s remake, the U.S.-Mexico-Canada Agreement (USMCA), is stalled in Congress.
When will this nonsense end ?  The long and the short answer are the same – no one knows and that is NOT GOOD.
So far, the Street isn’t all that worried with futures  trading indicating a rally at the open.
This would be  a dangerous rally to buy, since the risks of a rally failure at this point are high.
The current U.S./China trade impasse was not expected, and must be discounted as the market seeks a level that reflects that.
   …………………………………………
TECHNICAL:
Minor Support: DJIA:25,137;S&P 500:2,788;Nasdaq Comp.:7,586
Minor Resistance: DJIA:25,517; S&P 500:2,837; Nasdaq Comp.:7,721

…………………………………………..
Monday (May 13)

The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.

Friday (May 19)
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.
……………………………………………………..
Thursday (May 9)
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………………….
Wednesday (May 8)
The Street is nervous about a U.S./China trade deal, but not nervous enough to bail out big-time.  So far, the market has rebounded from all the sharp sell offs of 10% to 20% over the past ten years, so the Street simply uses sell offs to “buy.”
       This is what I have referred to as a cruise control mentality, and looking back, it has worked.
At some point, bad news will hit the market when it is ready to rebound from a sharp sell off, resulting in another leg or two down, a bear market with the DJIA and S&P 500 down 35% – 45%, the Nasdaq more.
       Odds are increasing for an ugly  free-fall in Nasdaq Comp., up 529% since the bull started March 9, 2009.  By comparison, the DJIA is up 303% and the S&P 500 up 233% for the period.
The Nasdaq Comp. declined 78% in the 2000-2002 bear market, though speculation this time does not compare with that we saw in the dot-com bubble burst.
At this late stage in the bull market, investors should have a sizable cash reserve  just in case the next major correction will lead to a bear  market.  That’s hard to do in frothy bull markets. There is always the feeling that an investor can stay for just one more score.
…………………………………………………..
Tuesday (May 7)
A flash crash is just that. It comes out of nowhere, without warning as stock prices gap down so sharply investors have little time to react.
I can only warn that this is one of those times a flash crash could happen.
      The Street is only a little worried about a continuing trade war, in fact there is little that worries the Street, and that could be a problem. This is the kind of “see no evil, hear no evil,……” mentality that leads to a flash crash, i.e., everyone stops buying at the same time causing a vacuum which allows a free fall in prices. This leads to increased selling and the market is down 12% before anyone can say “ouch.”
This is the new normal, and it is mostly a result of the computerization of the decision process on the Street, aka algorithms.
The market has taken some nasty hits over the years, but it always bounces  back. So why worry about a correction and have a cash reserve ?
       One answer may be to have cash to invest at the lower prices a correction offers,  Another answer may be to protect your portfolio from taking a huge hit.
Yet another answer may be an extended  bear market  may keep portfolio values down for an extended period of time, if cash is needed, stocks would have to be sold at depressed prices.
………………………………………………………………
Referring to President Trump’s statement yesterday that tariffs on Chinese goods will be increased to  25%  from 10%, Axios reported that tariffs are paid by U.S. importers not by Chinese companies or its government.
An  importing company paying tariffs can do the following:
1)Pay the full cost
2)Cut costs to offset cost of tariff
3)Ask the China supplier for discount to offset tariff cost.
4)Source supplies from outside China.
5)Pass cost off tariff on to customer
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
…………………………………………………………….

Tuesday (April 30)
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
……………………………………………….
Monday (April 29)

MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

Time For the Street’s Algos to Be Re-Programmed

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,942
S&P 500: 2,881
Nasdaq Comp.:7,916
Russell 2000:1,572
Monday, May 13, 2019
   8:37 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
      The Street was unfazed Friday by the inability of the U.S. and China to reach an accord on tariffs, but today it is more concerned today that this may be the new normal.
Shortly, we will know what China’s response will be, and the Street can chew on that.
This indifference to negatives is classic late-stage bull market behavior by an industry that simply won’t accept the possibility the party is ready for last call.
Historically, stock markets top out ahead of the beginning of recessions. The lead time has varies between two months (2007) and 12 months (2000), which is of little help here.
It’s going to be a tough read this time around, since the Street isn’t ready for a bear market, the Fed is  determined to head off a recession in an election year, and  so much of the decision process is computerized by algos, which can’t possibly be programmed to account for the current political improbabilities that will influence our economy going forward.
What I see developing now is uncertainty about everything. How can corporate managements plan for a future that is so uncertain ?
Will a “pricey”  stock market have to find a level that discounts this uncertainty ? What if new negatives surface once that level is reached ?

If the Street’s algos are not programmed to address this uncertainty, will analysts have to re-program them to do so and will that all happen at the same time, resulting in an extreme plunge in prices.
I think the biggest risk here is the Street has lost respect for the savagery  of a bear market, a relentless assault by new negatives that pound stocks unmercifully.

 


…………………………………………
TECHNICAL:
Minor Support: DJIA:25,587;S&P 500:2,834;Nasdaq Comp.:7,586
Minor Resistance: DJIA:25,7887; S&P 500:2,865; Nasdaq Comp.:7,877

…………………………………………..
Friday (May 19)
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.
……………………………………………………..
Thursday (May 9)
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………………….
Wednesday (May 8)
The Street is nervous about a U.S./China trade deal, but not nervous enough to bail out big-time.  So far, the market has rebounded from all the sharp sell offs of 10% to 20% over the past ten years, so the Street simply uses sell offs to “buy.”
       This is what I have referred to as a cruise control mentality, and looking back, it has worked.
At some point, bad news will hit the market when it is ready to rebound from a sharp sell off, resulting in another leg or two down, a bear market with the DJIA and S&P 500 down 35% – 45%, the Nasdaq more.
       Odds are increasing for an ugly  free-fall in Nasdaq Comp., up 529% since the bull started March 9, 2009.  By comparison, the DJIA is up 303% and the S&P 500 up 233% for the period.
The Nasdaq Comp. declined 78% in the 2000-2002 bear market, though speculation this time does not compare with that we saw in the dot-com bubble burst.
At this late stage in the bull market, investors should have a sizable cash reserve  just in case the next major correction will lead to a bear  market.  That’s hard to do in frothy bull markets. There is always the feeling that an investor can stay for just one more score.
…………………………………………………..
Tuesday (May 7)
A flash crash is just that. It comes out of nowhere, without warning as stock prices gap down so sharply investors have little time to react.
I can only warn that this is one of those times a flash crash could happen.
      The Street is only a little worried about a continuing trade war, in fact there is little that worries the Street, and that could be a problem. This is the kind of “see no evil, hear no evil,……” mentality that leads to a flash crash, i.e., everyone stops buying at the same time causing a vacuum which allows a free fall in prices. This leads to increased selling and the market is down 12% before anyone can say “ouch.”
This is the new normal, and it is mostly a result of the computerization of the decision process on the Street, aka algorithms.
The market has taken some nasty hits over the years, but it always bounces  back. So why worry about a correction and have a cash reserve ?
       One answer may be to have cash to invest at the lower prices a correction offers,  Another answer may be to protect your portfolio from taking a huge hit.
Yet another answer may be an extended  bear market  may keep portfolio values down for an extended period of time, if cash is needed, stocks would have to be sold at depressed prices.
………………………………………………………………
Referring to President Trump’s statement yesterday that tariffs on Chinese goods will be increased to  25%  from 10%, Axios reported that tariffs are paid by U.S. importers not by Chinese companies or its government.
An  importing company paying tariffs can do the following:
1)Pay the full cost
2)Cut costs to offset cost of tariff
3)Ask the China supplier for discount to offset tariff cost.
4)Source supplies from outside China.
5)Pass cost off tariff on to customer
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Monday (May 6)
In response to China reportedly backing off provisions of  certain provisions in a trade deal the U.S. thought it had nailed down, President Trump is threatening raise tariffs on $200 billion  to 25% from 10% Friday.
Axios reported today that China is in a more advantageous position this time around, since it has been able to stabilize its economy as a result of its stimulus program, and a sudden increase in tariffs would hurt U.S. companies more than Chinese companies.
This could simply be  bluster designed to strengthen the U.S. negotiating position before a deal is struck, or news that will trigger enormous uncertainty and a stock market correction.
At this point, the DJIA is expected to open 500 points lower.
Last week I warned that “A Flash Crash Can Come, At Any Time,” and this is the kind of trigger that can do it. As I have warned repeatedly, the Market is overvalued and vulnerable.
…………………………………………………………….

Tuesday (April 30)
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
……………………………………………….
Monday (April 29)

MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

Bulls Need Trade Deal Over Weekend… or else

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,828
S&P 500: 2,870
Nasdaq Comp.:7,910
Russell 2000:1,571
Friday, May 10, 2019
   8:47 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
Unable to strike an agreement on trade with China, Trump has upped the ante by slapping tariffs of 25% on $250 billion of Chinese goods entering the United States. Previously the tariff was 10%.
This could be posturing leading to a surprise announcement over the weekend.  The bottom line is, corporate planners have no idea what to expect.
This uncertainty confounds planning and disrupts complex supply chains around the world. It is bad business and bad politics.
With 45 minutes before the market opens, the futures indicate only a mild negative reaction. That could change into a full blown free-fall, if the Street suspects a deal is not imminent.
Even if a deal is announced the market at these levels pretty much discounts a “deal,” so a rally would be limited.

 


…………………………………………
TECHNICAL:
Minor Support: DJIA:25,300;S&P 500:2,820; Nasdaq Comp.:7,745
Minor Resistance: DJIA:25,750; S&P 500:2,860; Nasdaq Comp.:7,854
………………………………………………….
Did not publish May 1- May 3
…………………………………………..
Thursday (May 9)
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………………….
Wednesday (May 8)
The Street is nervous about a U.S./China trade deal, but not nervous enough to bail out big-time.  So far, the market has rebounded from all the sharp sell offs of 10% to 20% over the past ten years, so the Street simply uses sell offs to “buy.”
       This is what I have referred to as a cruise control mentality, and looking back, it has worked.
At some point, bad news will hit the market when it is ready to rebound from a sharp sell off, resulting in another leg or two down, a bear market with the DJIA and S&P 500 down 35% – 45%, the Nasdaq more.
       Odds are increasing for an ugly  free-fall in Nasdaq Comp., up 529% since the bull started March 9, 2009.  By comparison, the DJIA is up 303% and the S&P 500 up 233% for the period.
The Nasdaq Comp. declined 78% in the 2000-2002 bear market, though speculation this time does not compare with that we saw in the dot-com bubble burst.
At this late stage in the bull market, investors should have a sizable cash reserve  just in case the next major correction will lead to a bear  market.  That’s hard to do in frothy bull markets. There is always the feeling that an investor can stay for just one more score.
…………………………………………………..
Tuesday (May 7)
A flash crash is just that. It comes out of nowhere, without warning as stock prices gap down so sharply investors have little time to react.
I can only warn that this is one of those times a flash crash could happen.
      The Street is only a little worried about a continuing trade war, in fact there is little that worries the Street, and that could be a problem. This is the kind of “see no evil, hear no evil,……” mentality that leads to a flash crash, i.e., everyone stops buying at the same time causing a vacuum which allows a free fall in prices. This leads to increased selling and the market is down 12% before anyone can say “ouch.”
This is the new normal, and it is mostly a result of the computerization of the decision process on the Street, aka algorithms.
The market has taken some nasty hits over the years, but it always bounces  back. So why worry about a correction and have a cash reserve ?
       One answer may be to have cash to invest at the lower prices a correction offers,  Another answer may be to protect your portfolio from taking a huge hit.
Yet another answer may be an extended  bear market  may keep portfolio values down for an extended period of time, if cash is needed, stocks would have to be sold at depressed prices.
………………………………………………………………
Referring to President Trump’s statement yesterday that tariffs on Chinese goods will be increased to  25%  from 10%, Axios reported that tariffs are paid by U.S. importers not by Chinese companies or its government.
An  importing company paying tariffs can do the following:
1)Pay the full cost
2)Cut costs to offset cost of tariff
3)Ask the China supplier for discount to offset tariff cost.
4)Source supplies from outside China.
5)Pass cost off tariff on to customer
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Monday (May 6)
In response to China reportedly backing off provisions of  certain provisions in a trade deal the U.S. thought it had nailed down, President Trump is threatening raise tariffs on $200 billion  to 25% from 10% Friday.
Axios reported today that China is in a more advantageous position this time around, since it has been able to stabilize its economy as a result of its stimulus program, and a sudden increase in tariffs would hurt U.S. companies more than Chinese companies.
This could simply be  bluster designed to strengthen the U.S. negotiating position before a deal is struck, or news that will trigger enormous uncertainty and a stock market correction.
At this point, the DJIA is expected to open 500 points lower.
Last week I warned that “A Flash Crash Can Come, At Any Time,” and this is the kind of trigger that can do it. As I have warned repeatedly, the Market is overvalued and vulnerable.
…………………………………………………………….

Tuesday (April 30)
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
……………………………………………….
Monday (April 29)

MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

Bulls Need a “Hail Mary” to Avert a Big Sell Off.

INVESTOR’S first read.com – Daily edge before the open
DJIA: 25,967
S&P 500: 2,879
Nasdaq Comp.:7,943
Russell 2000:1,574
Thursday, May 9, 2019
   8:47 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
TODAY:
The market is extremely vulnerable to a flash crash of 6%-9%.
It needs  a break on trade talks, or another rescue attempt by the Fed.
The mood on the Street is that the sky is all clear for more upside, the Fed has its back and Q1 earnings are better than projected.
Nonsense ! When things can’t get better, they don’t. I think the BIG money is selling into the blue-sky-forever scenario, and the market is on a precipice.
The Administration’s hype of the Mueller report was premature, now it will be one constitutional crisis after another and that spells uncertainty.
We have been here before, on the edge with the risk of a flash crash, only to have the Street step in to take advantage of slightly lower prices. It’s what I refer to as cruise control investing, driven by algorithms that are programmed to buy at the market and especially on dips until reprogrammed to respond differently.
Algos sport a resilience to developing news that enables them to ignore risk, but lack a human’s ability to think on their feet, to follow one’s instincts and go against the crowd.
Nasdaq stocks are due for a shellacking – big-time.
…………………………………………
TECHNICAL:
Minor Support: DJIA:26,616;S&P 500:2,827; Nasdaq Comp.:7,701
Minor Resistance: DJIA:26,047; S&P 500:2,887; Nasdaq Comp.:7,967
………………………………………………….
Did not publish May 1- May 3
…………………………………………..
Wednesday (May 8)

The Street is nervous about a U.S./China trade deal, but not nervous enough to bail out big-time.  So far, the market has rebounded from all the sharp sell offs of 10% to 20% over the past ten years, so the Street simply uses sell offs to “buy.”
       This is what I have referred to as a cruise control mentality, and looking back, it has worked.
At some point, bad news will hit the market when it is ready to rebound from a sharp sell off, resulting in another leg or two down, a bear market with the DJIA and S&P 500 down 35% – 45%, the Nasdaq more.
       Odds are increasing for an ugly  free-fall in Nasdaq Comp., up 529% since the bull started March 9, 2009.  By comparison, the DJIA is up 303% and the S&P 500 up 233% for the period.
The Nasdaq Comp. declined 78% in the 2000-2002 bear market, though speculation this time does not compare with that we saw in the dot-com bubble burst.
At this late stage in the bull market, investors should have a sizable cash reserve  just in case the next major correction will lead to a bear  market.  That’s hard to do in frothy bull markets. There is always the feeling that an investor can stay for just one more score.
…………………………………………………..
Tuesday (May 7)
A flash crash is just that. It comes out of nowhere, without warning as stock prices gap down so sharply investors have little time to react.
I can only warn that this is one of those times a flash crash could happen.
      The Street is only a little worried about a continuing trade war, in fact there is little that worries the Street, and that could be a problem. This is the kind of “see no evil, hear no evil,……” mentality that leads to a flash crash, i.e., everyone stops buying at the same time causing a vacuum which allows a free fall in prices. This leads to increased selling and the market is down 12% before anyone can say “ouch.”
This is the new normal, and it is mostly a result of the computerization of the decision process on the Street, aka algorithms.
The market has taken some nasty hits over the years, but it always bounces  back. So why worry about a correction and have a cash reserve ?
       One answer may be to have cash to invest at the lower prices a correction offers,  Another answer may be to protect your portfolio from taking a huge hit.
Yet another answer may be an extended  bear market  may keep portfolio values down for an extended period of time, if cash is needed, stocks would have to be sold at depressed prices.
………………………………………………………………
Referring to President Trump’s statement yesterday that tariffs on Chinese goods will be increased to  25%  from 10%, Axios reported that tariffs are paid by U.S. importers not by Chinese companies or its government.
An  importing company paying tariffs can do the following:
1)Pay the full cost
2)Cut costs to offset cost of tariff
3)Ask the China supplier for discount to offset tariff cost.
4)Source supplies from outside China.
5)Pass cost off tariff on to customer
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Monday (May 6)
In response to China reportedly backing off provisions of  certain provisions in a trade deal the U.S. thought it had nailed down, President Trump is threatening raise tariffs on $200 billion  to 25% from 10% Friday.
Axios reported today that China is in a more advantageous position this time around, since it has been able to stabilize its economy as a result of its stimulus program, and a sudden increase in tariffs would hurt U.S. companies more than Chinese companies.
This could simply be  bluster designed to strengthen the U.S. negotiating position before a deal is struck, or news that will trigger enormous uncertainty and a stock market correction.
At this point, the DJIA is expected to open 500 points lower.
Last week I warned that “A Flash Crash Can Come, At Any Time,” and this is the kind of trigger that can do it. As I have warned repeatedly, the Market is overvalued and vulnerable.
…………………………………………………………….

Tuesday (April 30)
Yesterday was a ho-hummer, as the Street awaits Fed Chief Powell’s press conference Wednesday at 2:30 a.m..
The economy is holding its own, helped by the Fed which has abandoned its policy  of  raising rates to one of hold and wait for more information.
Last week’s GDP report showing a 3.2% jump was skewed by a rise in inventories and exports, a bump that is unlikely to repeat.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on today, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.
    A flash crash can occur at any time, all it takes is for the BIG money to walk away. They don’t even have to sell in size. They probably have already.
No one is bearish – that’s scary.
The Street would like to first run the table taking this market up another 5%- 8%. It’s called greed. A 342% bull market isn’t enough for them, besides an ensuing bear market may last 18 months.
The Fed has few tools to counter a recession. Interest rates are still too low to be cut further and stimulate the economy. We already got an outsized tax cut. Borrowing at the personal, business, corporate and government level is too high.
      It doesn’t look like it, but this is a very dangerous market, very similar to the market I warned about prior to Q4’s 20% plunge.
……………………………………………….
Monday (April 29)

MarketWatch’s Rex Nutting was quick to warn readers today that the 3.2% GDP number reported last week was misleading, that growth in the private-sector was the weakest in six years, more like at a plus 1.3% annual rate.             Consumer Spending rose only 1.2% in Q1 after a +2.5% rate in Q4,  Durable Goods dropped5.3%, the worst since 2009, he notes. Business investment slowed to 2.7% from 5.4%, investments in factories, offices, stores and oil wells fell for the third straight quarter, investments in computers, airplanes and machinery barely grew, rising 0.2%, Nutting explains.
This will be a big week for economic reports, highlighted by Consumer Confidence and Pending Home Sales on Tuesday, the ADP Employment report, PMI Manufacturing, ISM Manufacturing, and Construction Spending on Wednesday, Jobless Claims and Factory Orders Thursday, and the Employment Situation, PMI Services and ISM Non-Manufacturing reports on Friday.

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.