Stock Market Needs a Good Dose of the “TRUTH”

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

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

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

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

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

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

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

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

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

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Has Street Considered Possibility of Trump Resignation ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,001
S&P 500: 2,989
Nasdaq Comp.:8,124
Russell 2000:1,525
Thursday,  October 17, 2019
 9:09 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
     This is a high-risk market, a lot can go wrong, all that can go right is already priced into the market (progress on trade talks, Fed cut in rates plus a quasi-QE).
In find it hard to believe the Street is ignoring the implications of impeachment proceedings and the possibility that additional wrongdoings will surface at a time the Democratic Party candidates for election next year are  perceived as unfriendly to stock prices, though the stock market has historically done better under Democrats.  It is perception, not reality, that counts in the short run.
Odds are increasing that President Trump will not run in 2020, and may not survive his presidency.  That is something the Street hasn’t even considered.
Not many in this business were analyzing and writing as far back as Watergate, but it got ugly with each disclosure of impropriety by the Nixon administration.  The S&P declined 50% before the carnage ended.
IMHO, the Street feels immune to a bear market, a unjustified sense of security that bad things can no longer happen that  can be attributed to more than 10-years of Fed-driven bull market.
IMHO, we have been in a recession for many months. Whether it can be minimized by Fed action, is the big question. I don’t think so. Individual, corporate and government debt is too elevated to give a green light to borrow and spend more now..
Presently, the Street seems to believe the stock market can ignore a recession and national political crisis and move on to higher prices.
YES ! the Street can push the market higher, but the BIG money will bail out at some point and we will get a flash crash of 12%-18% in days as all the lemmings will follow.
 

………………………………………..
TECHNICAL
DO NOT OVERLOOK THE FACT WE ARE IN A HIGHLY NEWS-SENSITIVE MARKET.  THIS  NINE-DAY RECOVERY HAS DISCOUNTED ANOTHER FED RATE CUT, FED BOND BUYING TO INJECT MONEY INTO THE SYSTEM, AND HOPEFULLY PROGRESS ON U.S./CHINA TRADE TALKS.     …………………………………………………………
Minor Support: DJIA:26,957; S&P 500:2,987; Nasdaq Comp.:8,114
Minor Resistance: DJIA:27,051; S&P 500:2,994; Nasdaq Comp.:8,167
………………………………………………………….

Wednesday Oct 16,  Market Has Discounted the Good News – None of the Bad

This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
…………………………………………………………………………………….
Tuesday, Oct 15 “Market to March to Another Drumbeat – Q3 Earnings”

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

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

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

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

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
…………………………………………………………………………
Thursday, Oct. 10  “Fed in Panic Mode,” Raise Cash to 90%

Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
     On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.
…………………………………………………………………………
Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
…………………………………………………………………….

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Has Discounted the Good News – None of the Bad

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,024
S&P 500: 2,995
Nasdaq Comp.:8,148
Russell 2000:1,523
Wednesday,  October 16, 2019
 8:41 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
This is the  3rd time up here for the  DJIA and S&P 500  since July with two interim corrections of 7% and 5%.
This push could reach new highs.  Currently, the S&P 500 is 2,995 with a new all-time high at 3,027.  The DJIA is 27,024 with the all-time high at 27,398. Neither have far to run to  hit new highs.  That would get press headlines, but would not be  a good reason to jump in since the market is historically overvalued, and we are is such a news sensitive market.
Failure to reach meaningful  progress in the U.S./China trade talks, or a break off would send stocks back down.
The Street gives credit to expectations of better than expected  Q-3 earnings, but the best reports tend to come out early in the reporting period with the worst held until later.
Since late December, this market recovery from a 20% drubbing has been all about Fed policy, pure and simple. I don’t think lower interest rates following low interest rates to begin with will prevent a recession – delay maybe, prevent – no.
Bottom line:  For anyone holding cash, this kind of market action is somewhere between torturous and wrenching. The overwhelming urge is to go all in. No one wants to be left behind.   That’s why the Buy Low-Sell High bromide for successful investing is so frustrating.
Human nature works against that overly simplified logic. Greed rules at market peaks, as does fear at bottoms.  It is just so tough to go against those strong emotions at key junctures.
………………………………………..
TECHNICAL
Part of this market’s  strength is corporate buybacks, but that has been the case for years.   A smaller part is short covering. Add to that the fear of missing a big move and you have a sharp rally.

     There is a lot of overhead supply (sellers at higher prices) that will limit the upside unless something dramatic like an agreement to eliminate tariffs all together is negotiated.
DO NOT OVERLOOK THE FACT WE ARE IN A HIGHLY NEWS-SENSITIVE MARKET.  THIS  NINE-DAY RECOVERY HAS DISCOUNTED ANOTHER FED RATE CUT, FED BOND BUYING TO INJECT MONEY INTO THE SYSTEM, AND HOPEFULLY PROGRESS ON U.S./CHINA TRADE TALKS.

     THE BIGGEST RISK HERE IS WITH A FAILURE TO PREVENT AN ESCALATION IN THE TRADE WAR OR BREAKDOWN IN TALKS.
…………………………………………………………
Minor Support: DJIA:26,956; S&P 500:2,991; Nasdaq Comp.:8,133
Minor Resistance: DJIA:27,061; S&P 500:2,999; Nasdaq Comp.:8,159
………………………………………………………….

Tuesday, Oct 15 “Market to March to Another Drumbeat – Q3 Earnings”

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

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

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

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

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
…………………………………………………………………………
Thursday, Oct. 10  “Fed in Panic Mode,” Raise Cash to 90%

Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
     On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.
…………………………………………………………………………
Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
…………………………………………………………………….

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

Market to March To Another Drumbeat – Q3 Earnings

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,7887
S&P 500: 2,966
Nasdaq Comp.:8,048
Russell 2000:1,505
Tuesday,  October 15, 2019
 9:08 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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

     There is a lot of overhead supply (sellers at higher prices) that will limit the upside unless something dramatic like an agreement to eliminate tariffs all together is negotiated.
Nevertheless, the market will open higher today.
…………………………………………………………
Minor Support: DJIA:26,751; S&P 500:2,964; Nasdaq Comp.:8,040
Minor Resistance: DJIA:26,879; S&P 500:2,987; Nasdaq Comp.:8,063
………………………………………………………….

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

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

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

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
…………………………………………………………………………
Thursday, Oct. 10  “Fed in Panic Mode,” Raise Cash to 90%

Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
     On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.
…………………………………………………………………………
Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
……………………………………………………………………….
Tuesday, Oct. 8  “Market Has Not Yet Discounted Looming Negatives”

Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
      let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.
…………………………………………………………………….

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

Market News Sensitive – Street Still Wearing Blinders

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,816
S&P 500: 2,976
Nasdaq Comp.:8,057
Russell 2000:1,511
Monday,  October 12, 2019
 9:08 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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

………………………………………..
TECHNICAL
     The market is increasingly news sensitive, and the bad news will outweigh the good news going forward.  Trade is only part of the problem.

     There is a lot of overhead supply (sellers at higher prices) that will limit the upside unless something dramatic like an agreement to eliminate tariffs all together is negotiated.
…………………………………………………………
Minor Support: DJIA:26,751; S&P 500:2,961; Nasdaq Comp.:8,027
Minor Resistance: DJIA:26,947; S&P 500:2,979; Nasdaq Comp.:8,053
………………………………………………………….

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

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

Thursday, Oct. 10  “Fed in Panic Mode, Raise Cash to 90%

Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
     On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.
…………………………………………………………………………
Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
……………………………………………………………………….
Tuesday, Oct. 8  “Market Has Not Yet Discounted Looming Negatives”

Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
      let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.
…………………………………………………………………………..
Monday Oct. 7,  “No, Mr. Powell, the Economy is NOT “In a Good Place”     

After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
………………………………………………………………………….
Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Use Trade Hopes Strength to Raise Cash

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,496
S&P 500: 2,938
Nasdaq Comp.:7,950
Russell 2000:1,485
Friday,  October 11, 2019
 8:56 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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

What really stuns me is what is happening with world trade. The U.S.’ go-it-alone position on trade is opening the door for countries to develop trade relationships excluding the U.S..
A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !
Not good for the long haul.  
Of course everyone will always want to do business with the United States, it is just that we won’t be calling the shots like we once were.
Failure to come out of these trade talks with some smidgen of progress would crush stocks.
………………………………………..
TECHNICAL
    The market will open strongly today as the Street hopes for progress in trade talks.  Expect some progress, which would trigger a rally, but the big picture is murky.
There is a lot of overhead supply (sellers at higher prices) that will limit the upside unless something dramatic like an agreement to eliminate tariffs all together is negotiated.
…………………………………………………………
Minor Support: DJIA:26,610; S&P 500:2,947; Nasdaq Comp.:7,957
Minor Resistance: DJIA:26,737; S&P 500:2,967; Nasdaq Comp.:8,007
………………………………………………………….

Thursday, Oct. 10  “Fed in Panic Mode, Raise Cash to 90%

Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
     On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.
…………………………………………………………………………
Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
……………………………………………………………………….
Tuesday, Oct. 8  “Market Has Not Yet Discounted Looming Negatives”

Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
      let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.
…………………………………………………………………………..
Monday Oct. 7,  “No, Mr. Powell, the Economy is NOT “In a Good Place”     

After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
………………………………………………………………………….
Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fed in Panic Mode – Raise Cash to 90%

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,346
S&P 500: 2,919
Nasdaq Comp.:7,903
Russell 2000:1,479
Thursday,  October 10, 2019
 8:56 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      All Hell can  break loose politically as the nation sinks into recession. The stock market would  lead it off. That could be today, a week from now or as far out as January.
Why take a chance, there so much more downside than upside ?
Why else is the Fed, Administration and Street trying to prop the market every time we get a sharp down day.  They are scared of what will happen if this market breaks down.
Trade talks this week could trigger a sharp rally – fine. That is a chance to lighten up at higher prices. But they could disappoint and trigger a plunge now.
I see that as straight down 12% – 16% in several days once buyers step back, but more so when some big institutions break ranks and sell.
I blame the Fed for not letting the market correct to lower levels in anticipation of the serious negatives looming.
Worst case: DJIA 15,000. It wouldn’t stay there but for a moment when the news gets just so scary no one (except me) will want to buy stocks.
……………………………………………….
Mirroring what I have been saying about the Fed’s manipulation of market sentiment, MarketWatch reported yesterday that, Deutsche Bank chief economist, Torsten Slok, is warning clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.” 
     Also yesterday, Fed Chief Powell told the National Association of Business Economists it would soon start expanding  its balance sheet to add reserves to the financial system through the purchase of short-term  government ddbt  rather than long-term debt in a effort to encourage banks to take on more risk.
Normally, this is bullish, but to pursue such stimulation before a recession/bear market has happened begs the question – WHY, if as Powell asserts, “the economy is in a good place,” are they taking these measures ?
U.S. getting hammered by protectionism
policy
It looks like the world is learning to get along without us. A good example is the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).  The 11 countries in the pact comprise 13.4% of the world’s GDP (US$13.5 trillion) making it the third largest  free-trade group in the world.
It includes most of the TPP, which the U.S. abandoned, but excludes 22 provisions the U.S. favored that other countries opposed.
As a result, the U.S. is on the outside looking in !

On the trade front, it should come as no surprise that Trump was quoted yesterday as saying, “China would like to make a deal very badly.”
This just confirms my conclusion that the Fed, Administration and the Street are in the game of hyping the market a soon as it attempts to go into a healthy correction phase.
        This simply sets up a flash crash when something triggers a massive sell off.

TECHNICAL
    The market will open mixed today as the Street hopes for progressmin trade talks.  Expect some progress, which would trigger a rally, but the big picture is murky.
…………………………………………………………
Minor Support: DJIA:26,289; S&P 500:2,913; Nasdaq Comp.:7,889
Minor Resistance: DJIA:26,467; S&P 500:2,937; Nasdaq Comp.:7,933
………………………………………………………….

Wednesday, Oct 9,  “Not an Elephant in the Room, It’s a Bear !”
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
……………………………………………………………………….
Tuesday, Oct. 8  “Market Has Not Yet Discounted Looming Negatives”

Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
      let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.
…………………………………………………………………………..
Monday Oct. 7,  “No, Mr. Powell, the Economy is NOT “In a Good Place”     

After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
………………………………………………………………………….
Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….
Thursday,  Oct. 3  “Fed Rate Hype, Administration to Hype Trade Progress. Brief Rally ? Nimble Traders Only”

What’s happening with the economy should not have surprised the Street. The early signs of recession have been there for many months and reported here  daily.
This plunge should not surprise the Street.  With the DJIA at 26,820 on Monday, Sept. 30  I headlined, “Ignore Fed and Administration Hype, ..adding  Cash reserve of 80%”
Why would I go to that extreme – 80% cash ?
We all know the Fed will shortly announce more rate cuts, the Administration and/or Street will hype  progress on trade and trigger a rally.
However, at some point, their efforts to prop the market will fail and then it will be straight down.  Why risk it ?

Investors must be prepared for the stock market and political environment to enter a very dark period where a bear market can take the major market averages down 35% – 60%. The severity of the bear market depends on what new negatives hit the market as it is tumbling.
The Street is spoiled by a 10-year bull market. They want to keep partying.
But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
This can get ugly, real ugly. All that is needed is for one or several major institutions to break ranks and sell, others to follow.

The upside is, all this carnage will produce an unprecedented  buying opportunity. Investors must be prepared for it, even if they must leave the party before “last call.”
I issued my bear market bottom “BUY” on March 10, 2009 as the DJIA at 6,800. I would like to do that again when all this unwinds.

IMPORTANT NEWS TODAY
The current plunge in stock prices was triggered by  Tuesday’s report  for Bad reports would confirm a recession and hammer stocks. Also at 10 o’clock we get Factory Orders, which should stink.
………………………………………………………………………
Wednesday. Oct. 2  “Ignore Fed and Administration Hype”
Yesterday’s abrupt reversal and crunch is an example how vulnerable this overpriced market is. I think it was more a matter of buyers walking away when the ISM report hit, than overwhelming selling.  That’ll come at lower levels when doubts and fear mount.
        We had the same freefall in late July/early August. No one wants the bull market to end and will stay as long as possible, but are quick to run for cover when it looks like a bear market or severe correction will strike.
There is sizable support between DJIA: 25,500 and 26,200’ S&P 500:2,850 – 2,920; and Nasdaq Comp.:7,770 – 7,830.
That’s where buyers showed up in August. That band of support will be broken at some point.
Conclusion
:  Expect one or several sharp rallies to be triggered by optimistic comments by the Fed, the Administration, the Street.
The Fed will promise or hint at lower interest rates, the Administration will claim progress in trades talks, and the Street will forecast an earnings rebound in 2020.
We are dealing with something we have not dealt with for 45 years – a dysfunctional government as impeachment proceedings move forward.
This is NOT something the Street’s algorithms were programmed for.  Expect these algos to be tweaked in coming weeks and that stands to be for less buying as well as some selling.
The whole idea here is to prop the market up and delay a recession until after the 2020 election.   Nonsense !  We  are in the early stages of a recession, it will get worse next year.
Confidence drives stock prices.  Confidence will take a huge hit in coming months, and that will eventually take a huge toll on stock prices.
TECHNICAL: There will be the typical knee-jerk buying reaction by institutions  today, but yesterday’s surprise plunge was a jolt to confidence. Playing rallies here is for the nimblest of traders.
……………………………………………………

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not an Elephant in the Room – It’s a Bear

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,164
S&P 500: 2,893
Nasdaq Comp.:7,823
Russell 2000:1,472
Wednesday,  October 9, 2019
 8:56 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Like I have been warning, every time the market takes a hit the Fed, Administration and/or Street steps in with a news release to prop the market up.
Yesterday, Fed Chief Jerome Powell hinted at another rate cur (3rd in less than a year), as well as the purchase of T-bills to pump more money into the system.
The market will jump at the open today on news from an unidentified individual with knowledge of  U.S./China trade talks  who said China wants to limit further tariff increases, an indication that it is open to progress on talks beginning today.
So why a “warning?”
Because these timely releases are just postponing the inevitable, a bear market, as the nation joins the world in a recession.
      What’s more, we are faced with a constitutional  crisis unparalleled  since the Civil War.
The Street cannot ignore that, investors cannot ignore that.  It grinds away at the confidence in our democratic republic, the rule of law, and confidence determines the multiple at which stocks sell.
       It’s all about the presidential election next year, delaying a recession/bear market until 2021.  Can’t happen !  We are in for some very rough times.
       Once the Fed, Administration and Street cannot prop the market, it is straight down, which highlights the senselessness and irresponsibility of propping the market and not letting it find a comfort level that discounts known and potential adversity.
TECHNICAL
    The market will open stronger today  goosed by Fed comments about another rate cut and hopes for trade talk progress. It’s not an elephant in the room – it’s a bear ! 
…………………………………………………………
Minor Support: DJIA:25,203; S&P 500:2,909; Nasdaq Comp.:7,857
Minor Resistance: DJIA:26,216; S&P 500:2,933; Nasdaq Comp.:7,889
………………………………………………………….

Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
      let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.
…………………………………………………………………………..
Monday Oct. 7,  “No, Mr. Powell, the Economy is NOT “In a Good Place”     

After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
………………………………………………………………………….
Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….
Thursday,  Oct. 3  “Fed Rate Hype, Administration to Hype Trade Progress. Brief Rally ? Nimble Traders Only”

What’s happening with the economy should not have surprised the Street. The early signs of recession have been there for many months and reported here  daily.
This plunge should not surprise the Street.  With the DJIA at 26,820 on Monday, Sept. 30  I headlined, “Ignore Fed and Administration Hype, ..adding  Cash reserve of 80%”
Why would I go to that extreme – 80% cash ?
We all know the Fed will shortly announce more rate cuts, the Administration and/or Street will hype  progress on trade and trigger a rally.
However, at some point, their efforts to prop the market will fail and then it will be straight down.  Why risk it ?

Investors must be prepared for the stock market and political environment to enter a very dark period where a bear market can take the major market averages down 35% – 60%. The severity of the bear market depends on what new negatives hit the market as it is tumbling.
The Street is spoiled by a 10-year bull market. They want to keep partying.
But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
This can get ugly, real ugly. All that is needed is for one or several major institutions to break ranks and sell, others to follow.

The upside is, all this carnage will produce an unprecedented  buying opportunity. Investors must be prepared for it, even if they must leave the party before “last call.”
I issued my bear market bottom “BUY” on March 10, 2009 as the DJIA at 6,800. I would like to do that again when all this unwinds.

IMPORTANT NEWS TODAY
The current plunge in stock prices was triggered by  Tuesday’s report  for Bad reports would confirm a recession and hammer stocks. Also at 10 o’clock we get Factory Orders, which should stink.
………………………………………………………………………
Wednesday. Oct. 2  “Ignore Fed and Administration Hype”
Yesterday’s abrupt reversal and crunch is an example how vulnerable this overpriced market is. I think it was more a matter of buyers walking away when the ISM report hit, than overwhelming selling.  That’ll come at lower levels when doubts and fear mount.
        We had the same freefall in late July/early August. No one wants the bull market to end and will stay as long as possible, but are quick to run for cover when it looks like a bear market or severe correction will strike.
There is sizable support between DJIA: 25,500 and 26,200’ S&P 500:2,850 – 2,920; and Nasdaq Comp.:7,770 – 7,830.
That’s where buyers showed up in August. That band of support will be broken at some point.
Conclusion
:  Expect one or several sharp rallies to be triggered by optimistic comments by the Fed, the Administration, the Street.
The Fed will promise or hint at lower interest rates, the Administration will claim progress in trades talks, and the Street will forecast an earnings rebound in 2020.
We are dealing with something we have not dealt with for 45 years – a dysfunctional government as impeachment proceedings move forward.
This is NOT something the Street’s algorithms were programmed for.  Expect these algos to be tweaked in coming weeks and that stands to be for less buying as well as some selling.
The whole idea here is to prop the market up and delay a recession until after the 2020 election.   Nonsense !  We  are in the early stages of a recession, it will get worse next year.
Confidence drives stock prices.  Confidence will take a huge hit in coming months, and that will eventually take a huge toll on stock prices.
TECHNICAL: There will be the typical knee-jerk buying reaction by institutions  today, but yesterday’s surprise plunge was a jolt to confidence. Playing rallies here is for the nimblest of traders.
……………………………………………………

Tuesday  Oct. 1  “Bull/Bear Tug of War to be Resolved Soon”    

So far, impeachment proceedings have not dented the veneer of the Street’s bullishness.
Richard Nixon was re-elected a bit more than three months after the first signs of wrongdoings by his administration, the arrest of five men trying to bug  the Democratic National Committee’s Watergate hotel and office complex offices.
A bear market started two months later, one that lopped 50% off of the S&P 500 Index.
Nixon resigned August 8, 1974 before he could be impeached. A recession (Nov. 1973-Mar. 1975), the Yom Kippur War (Oct.1973) and OPEC oil embargo (Oct. 1973-Mar. 1974) contributed to the market’s demise.
What we are face here is similar in that a recession and bear market loom, but far different, far more divisive and far more injurious to investor confidence with impeachment proceedings underway.
Once things start to unravel, there is no stopping the carnage until the plunge has run its course.  Negative news is relentless, putting a lid on rally attempts and driving prices lower.
The big difference today is so much of the decision process is computerized, which means no change in the balance between bulls and bears until the algos are re-programmed.
That will happen as fear and reality mount.
Bottom Line:  The Bulls are desperately trying to hold the line. Even if the market breaks above minor resistance (DJIA: 27,020, S&P 500: 3,000), there is another line of resistance a little above that (DJIA:27,300, S&P 500: 3,008). TECHNICAL
 Sad to say, but IMHO the Fed and Administration have surrendered their credibility with an inconsistent and  flow of information.  Be wary of press releases from  either. They are designed to prop the market, which will plunge without the hype.  The Fed  has lost its clout about rates and why would China cave to trade concessions with Trump’s power sapped by the prospect of impeachment ?
………………………………………………….
Monday  September 30 “Ignore Fed and Administrative Hype,
Cash  80%”

The Street tends to shrug off a lot of things that could end up hammering stock prices: war, recession, a bear market resulting from overvalued stocks facing an earnings recession that can be worsened by a recession, and now the potential for the impeachment of the nation’s president.
That’s what a 10-year long bull market can do to the people who benefitted the most – corporate management and Wall Street.
       At some point, the BIG money will hit the silk and it will be straight down  12% to 16% before investors can say ouch.  That’s just the first leg down.
That’s because the Fed, Street and Administration have propped this market up with hype about the economy and the magic of interest rate cuts !
Investors are being conned !  There are no new eras ! Bear markets happen !
All it takes is for several major institutions to break ranks and sell and others will follow.
The impact will be instantaneous as computer algos, mostly programmed to track the same bullish metrics, will get the sell at the same time.
The hype will continue in an attempt to prop the market hopefully through 2020 election year.
Impeachment a real  possibility, and that will lead to more divisiveness and  stifle consumer and investor confidence.
This one has the potential to get real ugly.
Stock markets recover from bear markets, so why not wait it out ?
For one, over the last 46 years we have had three bear markets with the S&P 500 dropping 50%.  Many investors got shaken out near the bottom not to return until long after the  market lows. Those who held on didn’t see portfolios regain losses for years.
Depending on one’s tolerance for risk, a cash reserve of 80% is justified.
……………………………………………………………

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Has NOT Yet Discounted Looming Negatives

Market Has Not YET Discounted Looming Negatives
INVESTOR’S
first read.com – Daily edge before the open
DJIA: 26,478
S&P 500: 2,938
Nasdaq Comp.:7.958
Russell 2000:1,497
Tuesday,  October 8, 2019
 8:56 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Call it tunnel vison, confirmation bias or just plain denial, the Street simply does not want to face reality – the stock market is overvalued by historical benchmarks, the country is slipping into recession and our nation is faced with a number of wrenching  constitutional crises.
If the market were selling at a 30% discount, I would be urging readers to be preparing for a buying opportunity when the market is getting pummeled and no one anywhere wants to buy stocks.
       We have serious negatives, BUT the stock market hovers near all-time highs.
A freely trading stock market will find  a level that discounts known and potential positives and negatives.  We do not have a freely trading stock market, since the Fed and Administration step in with a news release about a rate cut or improved prospects for a trade deal every time the market sells off.
       Nothing wrong about preventing an unjustified sell off, but manipulation only delays the inevitable, worse yet it misleads investors into thinking it is safe to buy and at extreme levels at that !
If we get a sharp sell off from here, expect the Fed to talk of another rate cut, and the Administration to hype trade talk progress.
     

 

let a bull market go.  But manipulation of news by the Fed, Administration and the Street has never been so persistent.

TECHNICAL:
      There has never been a recession without a bear market. The Fed, Administration and Street will deny reality and hype the market and economy in coming days. The market was down yesterday, expect  a White House release about trade talk progress.  And/or, expect a Fed release about another rate cut.
This manipulation has worked  in the past, but is doomed to failure when a bear market strikes.
Sharp rallies can occur as a result of positive developments on the trade front, but China has reportedly just indicated it is seeking to limit the scope of trade talks in negotiations set to begin this week.
Rallies are an opportunity to raise cash not to increase holdings of stocks.

…………………………………………………………
Minor Support: DJIA:26,307; S&P 500:2,923; Nasdaq Comp.:7,857
Minor Resistance: DJIA:26,547; S&P 500:2,949; Nasdaq Comp.:7,973
………………………………………………………….

After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
………………………………………………………………………….
Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….
Thursday,  Oct. 3  “Fed Rate Hype, Administration to Hype Trade Progress. Brief Rally ? Nimble Traders Only”

What’s happening with the economy should not have surprised the Street. The early signs of recession have been there for many months and reported here  daily.
This plunge should not surprise the Street.  With the DJIA at 26,820 on Monday, Sept. 30  I headlined, “Ignore Fed and Administration Hype, ..adding  Cash reserve of 80%”
Why would I go to that extreme – 80% cash ?
We all know the Fed will shortly announce more rate cuts, the Administration and/or Street will hype  progress on trade and trigger a rally.
However, at some point, their efforts to prop the market will fail and then it will be straight down.  Why risk it ?

Investors must be prepared for the stock market and political environment to enter a very dark period where a bear market can take the major market averages down 35% – 60%. The severity of the bear market depends on what new negatives hit the market as it is tumbling.
The Street is spoiled by a 10-year bull market. They want to keep partying.
But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
This can get ugly, real ugly. All that is needed is for one or several major institutions to break ranks and sell, others to follow.

The upside is, all this carnage will produce an unprecedented  buying opportunity. Investors must be prepared for it, even if they must leave the party before “last call.”
I issued my bear market bottom “BUY” on March 10, 2009 as the DJIA at 6,800. I would like to do that again when all this unwinds.

IMPORTANT NEWS TODAY
The current plunge in stock prices was triggered by  Tuesday’s report  for Bad reports would confirm a recession and hammer stocks. Also at 10 o’clock we get Factory Orders, which should stink.
………………………………………………………………………
Wednesday. Oct. 2  “Ignore Fed and Administration Hype”
Yesterday’s abrupt reversal and crunch is an example how vulnerable this overpriced market is. I think it was more a matter of buyers walking away when the ISM report hit, than overwhelming selling.  That’ll come at lower levels when doubts and fear mount.
        We had the same freefall in late July/early August. No one wants the bull market to end and will stay as long as possible, but are quick to run for cover when it looks like a bear market or severe correction will strike.
There is sizable support between DJIA: 25,500 and 26,200’ S&P 500:2,850 – 2,920; and Nasdaq Comp.:7,770 – 7,830.
That’s where buyers showed up in August. That band of support will be broken at some point.
Conclusion
:  Expect one or several sharp rallies to be triggered by optimistic comments by the Fed, the Administration, the Street.
The Fed will promise or hint at lower interest rates, the Administration will claim progress in trades talks, and the Street will forecast an earnings rebound in 2020.
We are dealing with something we have not dealt with for 45 years – a dysfunctional government as impeachment proceedings move forward.
This is NOT something the Street’s algorithms were programmed for.  Expect these algos to be tweaked in coming weeks and that stands to be for less buying as well as some selling.
The whole idea here is to prop the market up and delay a recession until after the 2020 election.   Nonsense !  We  are in the early stages of a recession, it will get worse next year.
Confidence drives stock prices.  Confidence will take a huge hit in coming months, and that will eventually take a huge toll on stock prices.
TECHNICAL: There will be the typical knee-jerk buying reaction by institutions  today, but yesterday’s surprise plunge was a jolt to confidence. Playing rallies here is for the nimblest of traders.
……………………………………………………

Tuesday  Oct. 1  “Bull/Bear Tug of War to be Resolved Soon”    

So far, impeachment proceedings have not dented the veneer of the Street’s bullishness.
Richard Nixon was re-elected a bit more than three months after the first signs of wrongdoings by his administration, the arrest of five men trying to bug  the Democratic National Committee’s Watergate hotel and office complex offices.
A bear market started two months later, one that lopped 50% off of the S&P 500 Index.
Nixon resigned August 8, 1974 before he could be impeached. A recession (Nov. 1973-Mar. 1975), the Yom Kippur War (Oct.1973) and OPEC oil embargo (Oct. 1973-Mar. 1974) contributed to the market’s demise.
What we are face here is similar in that a recession and bear market loom, but far different, far more divisive and far more injurious to investor confidence with impeachment proceedings underway.
Once things start to unravel, there is no stopping the carnage until the plunge has run its course.  Negative news is relentless, putting a lid on rally attempts and driving prices lower.
The big difference today is so much of the decision process is computerized, which means no change in the balance between bulls and bears until the algos are re-programmed.
That will happen as fear and reality mount.
Bottom Line:  The Bulls are desperately trying to hold the line. Even if the market breaks above minor resistance (DJIA: 27,020, S&P 500: 3,000), there is another line of resistance a little above that (DJIA:27,300, S&P 500: 3,008). TECHNICAL
 Sad to say, but IMHO the Fed and Administration have surrendered their credibility with an inconsistent and  flow of information.  Be wary of press releases from  either. They are designed to prop the market, which will plunge without the hype.  The Fed  has lost its clout about rates and why would China cave to trade concessions with Trump’s power sapped by the prospect of impeachment ?
………………………………………………….
Monday  September 30 “Ignore Fed and Administrative Hype,
Cash  80%”

The Street tends to shrug off a lot of things that could end up hammering stock prices: war, recession, a bear market resulting from overvalued stocks facing an earnings recession that can be worsened by a recession, and now the potential for the impeachment of the nation’s president.
That’s what a 10-year long bull market can do to the people who benefitted the most – corporate management and Wall Street.
       At some point, the BIG money will hit the silk and it will be straight down  12% to 16% before investors can say ouch.  That’s just the first leg down.
That’s because the Fed, Street and Administration have propped this market up with hype about the economy and the magic of interest rate cuts !
Investors are being conned !  There are no new eras ! Bear markets happen !
All it takes is for several major institutions to break ranks and sell and others will follow.
The impact will be instantaneous as computer algos, mostly programmed to track the same bullish metrics, will get the sell at the same time.
The hype will continue in an attempt to prop the market hopefully through 2020 election year.
Impeachment a real  possibility, and that will lead to more divisiveness and  stifle consumer and investor confidence.
This one has the potential to get real ugly.
Stock markets recover from bear markets, so why not wait it out ?
For one, over the last 46 years we have had three bear markets with the S&P 500 dropping 50%.  Many investors got shaken out near the bottom not to return until long after the  market lows. Those who held on didn’t see portfolios regain losses for years.
Depending on one’s tolerance for risk, a cash reserve of 80% is justified.
……………………………………………………………

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NO, Mr. Powell, The Economy Is NOT in a Good Place !

INVESTOR’S first read.com – Daily edge before the open
DJIA: 26,573
S&P 500: 2,952
Nasdaq Comp.:7,982
Russell 2000:1,500
Monday,  October 7, 2019
 9:08 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
After 10 years,  the economy is tiring, having risen from the depths of Hell 10 years ago, with U.S. and global economies coming within a hair of total meltdown  between 2007 and 2009 (the Great Recession)  and investors suffering the worse losses since the 1930s, S&P 500 down 57%.
There are just too many indications that we are in the early stages of a recession to mislead investors the economy is in “a good place.”
Puff piece statements like Fed Chair Jerome Powell’s press conference last week just suck investors into an overpriced stock market.
If the chair of the Federal Reserve says the economy is in a good place, investors think it is safe to buy.  These comments come at a time the S&P 500 is selling some 70% above historic benchmarks.
       Last Monday with the market at higher levels, I warned, “Ignore Fed and Administration  Hype –  raise  cash to 80%.”
I have seen price/earnings (P/Es) ratios at single digits, I have felt the wrath of 14 bear markets and  8 recessions – they happen, the Fed should acknowledge  it.
Septembers’ ISM manufacturers’ index  plunged the most since the Great Recession  (2007-2009).
The PMI “Services”  report and the ISM Non-Manufacturing “Services” report, are both on recession thresholds.
……………………………………………………………………..
TOP ECONOMIST STATES CASE FOR A RECESSION
Gary Shilling’s  “INSIGHT” lists many of the reasons why this economy is in a BAD place.

I have tracked A. Gary Shilling for decades and believe him to be one of the nation’s leading economists based on an incredible record for forecasting accuracy.
    Shilling’s October  INSIGHT listed reasons why RECESSION is underway now. To mention a few:

-OECD has slashed economic forecasts.
-N.Y. and Cleveland Fed model outputs have reached recession levels.
-Capital spending is falling
Transportation stocks  continue to drop. Transports tend to lead industrials in signaling trouble since materials need to be shipped before they are turned into  finished products.
Trade wars are causing business caution.
-Treasury yield curve is inverted.
-Corporate profits are sliding.
-The Fed is losing its battle against disinflation.
Consumer spending alone is holding back a full-blown recession.
-Growth of nonfarm payrolls and weekly earnings continue to slide, as well as consumer confidence.
Purchasing Managers’ index (PMI) for manufacturing has dropped below 50 signaling contraction.
-A low manufacturing capacity utilization is discouraging capital expansion.
-Eurozone and U.K. on edge of recession, China’s growth slowing.
-Shiller’s cyclically adjusted P/E  (28.9) is 71% above long-term average (16.9).
TECHNICAL:
      There has never been a recession without a bear market. The Fed, Administration and Street will deny reality and hype the market and economy in coming days.
This manipulation has worked  in the past, but is doomed to failure when a bear market strikes.
Sharp rallies can occur as a result of positive developments on the trade front, but China has reportedly just indicated it is seeking to limit the scope of trade talks in negotiations set to begin this week.
Rallies are an opportunity to raise cash not to increase holdings of stocks.

…………………………………………………………
Minor Support: DJIA:26,427; S&P 500:2,933; Nasdaq Comp.:7,921
Minor Resistance: DJIA:26,617; S&P 500:2,967; Nasdaq Comp.:7,987
………………………………………………………….

Friday, Oct. 4 “Storm Clouds Limit Upside – Patience – Ignore Hype”
A lot of storm clouds on the horizon (recession, political uncertainty, bear market, international tensions). The Fed will try to counter that with another rate cut, and there will be promises of progress on trade.
These will trigger rallies, some dramatic.
I believe we are in a bear market and  the early stages of a recession. How intense both will get depends on  events down the road.  New negatives can delay recoveries. What happens between now and 2021 is key. It doesn’t look pretty.

Algorithm Investing

I rant about buy-oriented institutional algorithms  making most of the investment decision today, how a sudden change in their programming could cause a flash crash.
The Economist  reports algos account for 35% of the stock market, 60% of institutional equity assets and 60% of trading activity. Artificial intelligence (AI) is being used more and more to write programs. Careful guys/girls, the best computer is the human brain.
Myths
    I am repeating the following, since a 10-year bull market can block out memories that things can get far worse than anyone on the Street can imagine.
In 1969, who would have thought there would be four recessions and 5 bear markets in the next 12 years.  Stuff happens.

But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
…………………………………………………………………….
Thursday,  Oct. 3  “Fed Rate Hype, Administration to Hype Trade Progress. Brief Rally ? Nimble Traders Only”

What’s happening with the economy should not have surprised the Street. The early signs of recession have been there for many months and reported here  daily.
This plunge should not surprise the Street.  With the DJIA at 26,820 on Monday, Sept. 30  I headlined, “Ignore Fed and Administration Hype, ..adding  Cash reserve of 80%”
Why would I go to that extreme – 80% cash ?
We all know the Fed will shortly announce more rate cuts, the Administration and/or Street will hype  progress on trade and trigger a rally.
However, at some point, their efforts to prop the market will fail and then it will be straight down.  Why risk it ?

Investors must be prepared for the stock market and political environment to enter a very dark period where a bear market can take the major market averages down 35% – 60%. The severity of the bear market depends on what new negatives hit the market as it is tumbling.
The Street is spoiled by a 10-year bull market. They want to keep partying.
But, the Street is mesmerized by a giant “myth.”
The Myth
-that economies grow forever.
-that lessons from the Great Recessions were learned – can’t happen again.
-that stock markets always recover quickly from bear markets
-that the current excessive stock market valuations will last forever
-that the Fed will come to the rescue when the stock market takes a big hit.
-that single digit P/Es will never return.
-that untethered chaos, civil and political unrest, and violence are not possible in the U.S..
This can get ugly, real ugly. All that is needed is for one or several major institutions to break ranks and sell, others to follow.

The upside is, all this carnage will produce an unprecedented  buying opportunity. Investors must be prepared for it, even if they must leave the party before “last call.”
I issued my bear market bottom “BUY” on March 10, 2009 as the DJIA at 6,800. I would like to do that again when all this unwinds.

IMPORTANT NEWS TODAY
The current plunge in stock prices was triggered by  Tuesday’s report  for Bad reports would confirm a recession and hammer stocks. Also at 10 o’clock we get Factory Orders, which should stink.
………………………………………………………………………
Wednesday. Oct. 2  “Ignore Fed and Administration Hype”
Yesterday’s abrupt reversal and crunch is an example how vulnerable this overpriced market is. I think it was more a matter of buyers walking away when the ISM report hit, than overwhelming selling.  That’ll come at lower levels when doubts and fear mount.
        We had the same freefall in late July/early August. No one wants the bull market to end and will stay as long as possible, but are quick to run for cover when it looks like a bear market or severe correction will strike.
There is sizable support between DJIA: 25,500 and 26,200’ S&P 500:2,850 – 2,920; and Nasdaq Comp.:7,770 – 7,830.
That’s where buyers showed up in August. That band of support will be broken at some point.
Conclusion
:  Expect one or several sharp rallies to be triggered by optimistic comments by the Fed, the Administration, the Street.
The Fed will promise or hint at lower interest rates, the Administration will claim progress in trades talks, and the Street will forecast an earnings rebound in 2020.
We are dealing with something we have not dealt with for 45 years – a dysfunctional government as impeachment proceedings move forward.
This is NOT something the Street’s algorithms were programmed for.  Expect these algos to be tweaked in coming weeks and that stands to be for less buying as well as some selling.
The whole idea here is to prop the market up and delay a recession until after the 2020 election.   Nonsense !  We  are in the early stages of a recession, it will get worse next year.
Confidence drives stock prices.  Confidence will take a huge hit in coming months, and that will eventually take a huge toll on stock prices.
TECHNICAL: There will be the typical knee-jerk buying reaction by institutions  today, but yesterday’s surprise plunge was a jolt to confidence. Playing rallies here is for the nimblest of traders.
……………………………………………………

Tuesday  Oct. 1  “Bull/Bear Tug of War to be Resolved Soon”    

So far, impeachment proceedings have not dented the veneer of the Street’s bullishness.
Richard Nixon was re-elected a bit more than three months after the first signs of wrongdoings by his administration, the arrest of five men trying to bug  the Democratic National Committee’s Watergate hotel and office complex offices.
A bear market started two months later, one that lopped 50% off of the S&P 500 Index.
Nixon resigned August 8, 1974 before he could be impeached. A recession (Nov. 1973-Mar. 1975), the Yom Kippur War (Oct.1973) and OPEC oil embargo (Oct. 1973-Mar. 1974) contributed to the market’s demise.
What we are face here is similar in that a recession and bear market loom, but far different, far more divisive and far more injurious to investor confidence with impeachment proceedings underway.
Once things start to unravel, there is no stopping the carnage until the plunge has run its course.  Negative news is relentless, putting a lid on rally attempts and driving prices lower.
The big difference today is so much of the decision process is computerized, which means no change in the balance between bulls and bears until the algos are re-programmed.
That will happen as fear and reality mount.
Bottom Line:  The Bulls are desperately trying to hold the line. Even if the market breaks above minor resistance (DJIA: 27,020, S&P 500: 3,000), there is another line of resistance a little above that (DJIA:27,300, S&P 500: 3,008). TECHNICAL
 Sad to say, but IMHO the Fed and Administration have surrendered their credibility with an inconsistent and  flow of information.  Be wary of press releases from  either. They are designed to prop the market, which will plunge without the hype.  The Fed  has lost its clout about rates and why would China cave to trade concessions with Trump’s power sapped by the prospect of impeachment ?
………………………………………………….
Monday  September 30 “Ignore Fed and Administrative Hype,
Cash  80%”

The Street tends to shrug off a lot of things that could end up hammering stock prices: war, recession, a bear market resulting from overvalued stocks facing an earnings recession that can be worsened by a recession, and now the potential for the impeachment of the nation’s president.
That’s what a 10-year long bull market can do to the people who benefitted the most – corporate management and Wall Street.
       At some point, the BIG money will hit the silk and it will be straight down  12% to 16% before investors can say ouch.  That’s just the first leg down.
That’s because the Fed, Street and Administration have propped this market up with hype about the economy and the magic of interest rate cuts !
Investors are being conned !  There are no new eras ! Bear markets happen !
All it takes is for several major institutions to break ranks and sell and others will follow.
The impact will be instantaneous as computer algos, mostly programmed to track the same bullish metrics, will get the sell at the same time.
The hype will continue in an attempt to prop the market hopefully through 2020 election year.
Impeachment a real  possibility, and that will lead to more divisiveness and  stifle consumer and investor confidence.
This one has the potential to get real ugly.
Stock markets recover from bear markets, so why not wait it out ?
For one, over the last 46 years we have had three bear markets with the S&P 500 dropping 50%.  Many investors got shaken out near the bottom not to return until long after the  market lows. Those who held on didn’t see portfolios regain losses for years.
Depending on one’s tolerance for risk, a cash reserve of 80% is justified.
……………………………………………………………

What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.