2021 Stock Trader’s Almanac off the Press. Can It Give Advance On Winner of Election ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,901
S&P 500: 3,357
Nasdaq Comp.:10,910
Russell:1,543
Friday, September 18, 2020   
9:11 a.m.
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brooksie01@aol.com
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November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
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January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
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With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.
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The stock market entered a  correction  on September 3 resulting in declines of  6.0% for the DJIA, 7.7% for the S&P 500 and 11.1% for the Nasdaq Comp..
While the markets opened sharply lower yesterday, the bears were unable to generate enough clout to break the major market averages down.
      Support is now: DJIA: 27,767; S&P 500: 3,341 and Nasdaq Comp.: 10,873.
Savvy from the Stock Trader’s Almanac:   

October may evoke bad memories of anyone who has been investing  over the last 25 years what with massacres in 1978 and 1979, 1989 and a 733-point plunge October 15, 2009
In fact, in the week ending October 10, 2008, the DJIA lost 1,874 points (18.2%), the worst weekly decline going back to 1901.
While October has surrendered its stigma as the worst month for owning stocks to March, it is now known as the “bear killer,” with 12 bear markets since WW II ending  in October.
October may be an exception this time, since this is a presidential election year where October has proven to rank last among the 12 months.
October has advanced in years when the incumbent party is re-elected and declined when ousted. Since 1944, the market advanced 7 times, declined twice and was unchanged once when the incumbents won another  four years.
When ousted, the market declined 6 times and advanced  3 times.

NOTE:  I have owned every Stock Trader’s Almanac since 1968. It is a must for investors, a treasure trove of savvy and excitement, a compilation of all  things you should know.   The 2021 edition is out. Call: 845-875-9582
BOTTOM LINE:
Pre-election jitters have engulfed the market since early September and stand to create a lot of volatility going forward.  While growth stocks have been leaders since the March 23 lows, a rotation to industrials and possibly semiconductor stocks is possible near-term.
It is not only a stock-pickers market, but a market best suited for the nimble trader who can strike quickly, but bail out if a stock fails to follow through.
There is a huge risk of another leg down from here.
Yesterday, I was disturbed by  the fact the market declined in face of enormous hype by Fed Chief Powell who said Wednesday unemployment would drop to 7.6% by year-end and 5.5% next year, that interest rates would remain close to zero and the Fed may be  buying treasuries and agency backed securities going forward.
Powell also said the economy needs further fiscal stimulus.
All this begs the question:  Why does the Fed have to do all these things and why does Congress need another stimulus package unless our economy is in serious trouble. If that is the case, how on earth could unemployment decline sharply if we will be mired in a recession or sink into a depression in coming months ?
Given that, how can buying stocks at levels more overvalued than at any time in history be justified ?
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     RECENT POSTS:
Thursday September 17, 2020 (DJIA: 28,032) “Has a Major Correction Started”

The stock market was supposed to go up, not down, after Fed Chief Powell’s last attempt to hype the market before the November 3 elections.
Futures trading indicate a weak open today.
Is this the beginning of a major correction ?
     Powell, one of the three amigos I warn will hype the stock market before the election (other two: the Administration and the Street), could not have been more bullish,  forecasting a drop  in unemployment to 7.6% by year-end, 5.5% by the end of 2021, 4% by 2023.
      Interest rates will remain near zero through 2023, he said noting the Fed may increase holdings of Treasury and agency mortgage backed securities   to stave off “an even deeper financial crisis.”
Wait a minute.  An even deeper financial crisis ?   How can unemployment drop to 7.6% this year and 5% next year if we are in a deep financial crisis  and at risk of a deeper one, at that ?
The Fed now projects a drop of 3.7% by year-end compared with  projections of a 6.5% drop in June.
What we are getting now is a bounce from severely depressed levels in Q1 and Q2, whether it is a sustained recovery is anyone’s guess at this point, including an attorney turned banker.
COVID-19 is NOT going away, odds are it rebounds again in coming months, especially in face of a lax federal policy.  The key here is what happens after the “bounce” ?
Odds are, Congress will pass another stimulus bill before the elections, which is expected in an election year this important.  We shouldn’t need another stimulus unless our economy is in a huge mess, and that is further proof that Powell’s rosy projections are sheer pre-election hype.
BOTTOM LINE:
Again I say: Phony stock market, phony economy and phony administration – gaslighting 101.
Yesterday’s market should have been up big. Any time the market goes counter to the norm, it is worth stepping back to ask why.
Maybe it’s nothing, maybe this dip vanishes in a day or two.
But, maybe the BIG money used Powell’s basket of bullish goodies to SELL.
       I have been wrong on this one a number of times, however,  like the silly pink rabbit, the market has always snapped back.
       Based on accurate, time-tested measures of value, this market is seriously overvalued. That WILL BE CORRECTED and when it is it will be straight down, initially 12% – 18%, then on to a decline of 45% – 60%, depending on what hits it along the way.  All it takes is for a few big hitters to scrap their “buy with your eyes closed” algos and  WHOOSH !
INITIAL RISK IN A DECLINE:
Price: Close 9/16
                    RISK  
Facebook (FB: 263)                       251
Amazon (AMZN:3,078)              2,907
Apple (AAPL: 112)                         103
Netflix: (NFLX: 483)                       437
Google (GOOG: 1,520)              1,451
Tesla (TSLA: 441)                           377
Microsoft (MSFT: 215)                 191
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Wednesday September 17, 2020 (DJIA:28,032) “Trump Re-election: Depression and Stock Market Crash”
By now readers know where I am coming from.  No sense trying to tiptoe through this minefield, and appeal to all investors.
I think the Trump administration has done more damage to our Nation’s unity, the survival of our democratic “republic”, and our future as a nation of laws, than any foreign adversary has done, or ever dreamed of doing.
Hundreds of thousands of Americans, not one of which was a loser or sucker, gave life and limb to protect our nation from attempts to destroy it from outside or from within.
If Trump is re-elected, and the Republicans maintain control of this do-nothing Senate, we will nose-dive into a depression and chaos, a gun-toting banana republic where no one is safe, whites, people of color, not even Mr. and Mrs. “Made-it.”
       Time for the military style guns to come off the street. OK to own dozens or what it takes to be secure or up the manhood, just  not out in the public where they are dangerous and can be used to intimidate Americans.
For four years, Americans have been lied to, manipulated and disgraced, by a president who cares only for himself and a Republican Senate unwilling to even discuss 395 bills passed and brought up for consideration by the U.S. House.

That’s not what makes America great, that’s what erodes all the things we hold dear to us, all the things that pave the way for a safe and prosperous future for those who follow us.
A Biden/Harris government with total control of Congress would have a lot of pieces to pick up. The first being to solidify the security of our democratic republic versus the Trump alternative of a quasi fascist state.
Real Republicans, should go for it, in fact, they are seriously missed today.  At least they understood the rule of law and the value of the “great experiment” gifted to us 244 years ago.
Biden has worked both sides of the aisle, which must be done going forward.
Our need for diversity is not limited to differences of color, religion and preferences, but political positions the blending of which produce results.
 So, what about the stock market ?
Ten out of the last 11 recessions have been with a Republican in the White House. Re-election of Trump would make it 11 out of 12, because the current  economic “bounce” will yield to another recession in face of economic, domestic and international policies that benefit  only a tiny percent of our populace.
There have been bear markets without recessions, but never recessions without a bear market.  The 21-day 35% bear market this year  was over before any pain was dealt out.
The stock market is bubbling out of control, but can bubble further. The Street is spoiled rotten by an 11-year old economic expansion and bull market.
Last call came a long time ago, maybe 12 Bud lights or six Martinis ago.
The next bear market will be the BIG one, down 55% to 60%.
      Why ?
      Because we are living a lie, bigger than Trump’s 20,000 in 4 years. This is a phony economy, phony stock market and phony administration.
Is there any better reason to raise cash and sit close to the exits prior to that “pop” that’s heard around the world ?
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Wednesday September 16, 2020 (DJIA: 28,308)     By now readers know where I am coming from.  No sense trying to tiptoe through this minefield, and appeal to all investors.
I think the Trump administration has done more damage to our Nation’s unity, the survival of our democratic “republic”, and our future as a nation of laws, than any foreign adversary has done, or ever dreamed of doing.
Hundreds of thousands of Americans, not one of which was a loser or sucker, gave life and limb to protect our nation from attempts to destroy it from outside or from within.
If Trump is re-elected, and the Republicans maintain control of this do-nothing Senate, we will nose-dive into a depression and chaos, a gun-toting banana republic where no one is safe, whites, people of color, not even Mr. and Mrs. “Made-it.”
       Time for the military style guns to come off the street. OK to own dozens or what it takes to be secure or up the manhood, just  not out in the public where they are dangerous and can be used to intimidate Americans.
For four years, Americans have been lied to, manipulated and disgraced, by a president who cares only for himself and a Republican Senate unwilling to even discuss 395 bills passed and brought up for consideration by the U.S. House.

That’s not what makes America great, that’s what erodes all the things we hold dear to us, all the things that pave the way for a safe and prosperous future for those who follow us.
A Biden/Harris government with total control of Congress would have a lot of pieces to pick up. The first being to solidify the security of our democratic republic versus the Trump alternative of a quasi fascist state.
Real Republicans, should go for it, in fact, they are seriously missed today.  At least they understood the rule of law and the value of the “great experiment” gifted to us 244 years ago.
Biden has worked both sides of the aisle, which must be done going forward.
Our need for diversity is not limited to differences of color, religion and preferences, but political positions the blending of which produce results.
 So, what about the stock market ?
Ten out of the last 11 recessions have been with a Republican in the White House. Re-election of Trump would make it 11 out of 12, because the current  economic “bounce” will yield to another recession in face of economic, domestic and international policies that benefit  only a tiny percent of our populace.
There have been bear markets without recessions, but never recessions without a bear market.  The 21-day 35% bear market this year  was over before any pain was dealt out.
The stock market is bubbling out of control, but can bubble further. The Street is spoiled rotten by an 11-year old economic expansion and bull market.
Last call came a long time ago, maybe 12 Bud lights or six Martinis ago.
The next bear market will be the BIG one, down 55% to 60%.
      Why ?
      Because we are living a lie, bigger than Trump’s 20,000 in 4 years. This is a phony economy, phony stock market and phony administration.
Is there any better reason to raise cash and sit close to the exits prior to that “pop” that’s heard around the world          George Brooks
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Tuesday September 15, 2020 (DJIA: 27,993) “What’s Wrong With This Picture”
It appears that absolutely NOTHING can stop this bull market.
    So what if the DJIA dropped 38.4% in 21 days, the S&P 50035.4% and Nasdaq Comp. 32.6% when COVID-19 struck in February
The market came roaring back, as if a recession starting in February was fake news.
So what if there has never been a recession without a bear market.
So what if 30 million  Americans are out of work or opt not to return for fear of COVID risk.
So what if America has never been divided this much since the Civil War.
So what if we are governed by an Administration that is better known for misinformation than accurate information.
So what if we are being lied to relentlessly about issues of great significance to each and everyone of us.
So what if issues of enormous importance to young people’s future have been politicized and sidelined – environment, healthcare and the nation’s financial security.
So what if we have turned our backs on long-standing international allies.
So what if  our stock markets are more overvalued based on time tested measures of value than at any time in history.
None of this makes a difference, does it ?
Clearly not to investors who look past the warning signs, the cracks in the foundation that warn of  a bubble that won’t stop inflating until all those who “fear  missing out”  (FOMO) are on board the train they worried was leaving the station without them.”

This is the kind of stuff bubbles are made of, this is how investors get blindsided en route to financial ruin.
The Street is betting on COVID-19 simply going away, or weeding out the weaker ones while the stronger (luckier) flourish.
BOTTOM LINE:
What’s wrong with this picture ?
        Too much for comfort !
       Investors should raise cash in line with their tolerance for risk, and sit close to the exit with the rest of one’s portfolio.
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Monday September 14, 2020 (DJIA:27,993) “Post Election Hype in Drivers’ Seat”
We are in the long agonizing countdown to November 3 and it is unwinding pretty much like I have said it will.
The three amigos, the Fed, the Administration, and Street want President Trump to win and will stop at nothing to make it happen.
While  Fed Chief Powell was appointed to the job of his dreams by Trump, it cannot be assumed he owes the president anything, but he will probably not be the Chief for long after a Biden win.
Regardless of who one supports, the Fed’s support for stock prices albeit at very inflated levels will continue at least until November.  Powell has a presser at 2:30 Wednesday.
Administration hype is a given, the biggest message will be an announcement of a  treatment/vaccine  before the election, which will not give fact-checkers a chance to verify.
The Street wants the party to go on forever, which is fine as parties go, but investors are getting sucked into the market at increasingly higher and higher levels of overvaluation. Bloomberg headlines a Goldman, Deutsche opinion that “The U.S. stock selloff may be close to an end.”
BOTTOM LINE:
  The bias for the market is up, though historically September and October can be very dangerous months to own stocks
A Vaccine before election day is today’s hype with speculation that Pfizer (PFE) may be the first to present a vaccine before the election.   Wednesday, the Fed may once again goose the market with additional comments about interest rates remaining close to zero for years.
The major market indexes should be able to launch an attack on September highs (DJIA: 29,199; S&P 500: 3,588; Nasdaq Comp.: 12,074. Again, any rally failures in coming days would be a warning signal that sellers await  higher prices to unload big positions.
September and October can be dangerous months to be long stocks.  A powerful surge in stocks through October would signal a Trump re-election, major weakness would signal a change in the presidency and Senate.
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Friday  September 11, 2020 (DJIA: 27,535) “Have Street’s algos been Adjusted For Risk ?”

The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
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Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”      When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
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BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

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Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
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Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
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George Brooks
Investor’s first read.com
brooksie01@aol.com
A Game-On Analysis, LLC publication
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

Has a Major Correction Started ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,032
S&P 500: 3,385
Nasdaq Comp.:11,050
Russell:1,552
Thursday, September 17, 2020   
8:26 a.m.
……………………………………..
brooksie01@aol.com
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November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.
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The stock market was supposed to go up, not down, after Fed Chief Powell’s last attempt to hype the market before the November 3 elections.
Futures trading indicate a weak open today.
Is this the beginning of a major correction ?
     Powell, one of the three amigos I warn will hype the stock market before the election (other two: the Administration and the Street), could not have been more bullish,  forecasting a drop  in unemployment to 7.6% by year-end, 5.5% by the end of 2021, 4% by 2023.
      Interest rates will remain near zero through 2023, he said noting the Fed may increase holdings of Treasury and agency mortgage backed securities   to stave off “an even deeper financial crisis.”
Wait a minute.  An even deeper financial crisis ?   How can unemployment drop to 7.6% this year and 5% next year if we are in a deep financial crisis  and at risk of a deeper one, at that ?
The Fed now projects a drop of 3.7% by year-end compared with  projections of a 6.5% drop in June.
What we are getting now is a bounce from severely depressed levels in Q1 and Q2, whether it is a sustained recovery is anyone’s guess at this point, including an attorney turned banker.
COVID-19 is NOT going away, odds are it rebounds again in coming months, especially in face of a lax federal policy.  The key here is what happens after the “bounce” ?
Odds are, Congress will pass another stimulus bill before the elections, which is expected in an election year this important.  We shouldn’t need another stimulus unless our economy is in a huge mess, and that is further proof that Powell’s rosy projections are sheer pre-election hype.
BOTTOM LINE:
Again I say: Phony stock market, phony economy and phony administration – gaslighting 101.
Yesterday’s market should have been up big. Any time the market goes counter to the norm, it is worth stepping back to ask why.
Maybe it’s nothing, maybe this dip vanishes in a day or two.
But, maybe the BIG money used Powell’s basket of bullish goodies to SELL.
       I have been wrong on this one a number of times, however,  like the silly pink rabbit, the market has always snapped back.
       Based on accurate, time-tested measures of value, this market is seriously overvalued. That WILL BE CORRECTED and when it is it will be straight down, initially 12% – 18%, then on to a decline of 45% – 60%, depending on what hits it along the way.  All it takes is for a few big hitters to scrap their “buy with your eyes closed” algos and  WHOOSH !
INITIAL RISK IN A DECLINE:
                                                          RISK
Facebook (FB: 263)                       251
Amazon (AMZN:3,078)              2,907
Apple (AAPL: 112)                         103
Netflix: (NFLX: 483)                       437
Google (GOOG: 1,520)              1,451
Tesla (TSLA: 441)                           377
Microsoft (MSFT: 215)                 191                                                                                            >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Wednesday September 17, 2020 (DJIA:28,032) “Trump Re-election: Depression and Stock Market Crash”
By now readers know where I am coming from.  No sense trying to tiptoe through this minefield, and appeal to all investors.
I think the Trump administration has done more damage to our Nation’s unity, the survival of our democratic “republic”, and our future as a nation of laws, than any foreign adversary has done, or ever dreamed of doing.
Hundreds of thousands of Americans, not one of which was a loser or sucker, gave life and limb to protect our nation from attempts to destroy it from outside or from within.
If Trump is re-elected, and the Republicans maintain control of this do-nothing Senate, we will nose-dive into a depression and chaos, a gun-toting banana republic where no one is safe, whites, people of color, not even Mr. and Mrs. “Made-it.”
       Time for the military style guns to come off the street. OK to own dozens or what it takes to be secure or up the manhood, just  not out in the public where they are dangerous and can be used to intimidate Americans.
For four years, Americans have been lied to, manipulated and disgraced, by a president who cares only for himself and a Republican Senate unwilling to even discuss 395 bills passed and brought up for consideration by the U.S. House.

That’s not what makes America great, that’s what erodes all the things we hold dear to us, all the things that pave the way for a safe and prosperous future for those who follow us.
A Biden/Harris government with total control of Congress would have a lot of pieces to pick up. The first being to solidify the security of our democratic republic versus the Trump alternative of a quasi fascist state.
Real Republicans, should go for it, in fact, they are seriously missed today.  At least they understood the rule of law and the value of the “great experiment” gifted to us 244 years ago.
Biden has worked both sides of the aisle, which must be done going forward.
Our need for diversity is not limited to differences of color, religion and preferences, but political positions the blending of which produce results.
 So, what about the stock market ?
Ten out of the last 11 recessions have been with a Republican in the White House. Re-election of Trump would make it 11 out of 12, because the current  economic “bounce” will yield to another recession in face of economic, domestic and international policies that benefit  only a tiny percent of our populace.
There have been bear markets without recessions, but never recessions without a bear market.  The 21-day 35% bear market this year  was over before any pain was dealt out.
The stock market is bubbling out of control, but can bubble further. The Street is spoiled rotten by an 11-year old economic expansion and bull market.
Last call came a long time ago, maybe 12 Bud lights or six Martinis ago.
The next bear market will be the BIG one, down 55% to 60%.
      Why ?
      Because we are living a lie, bigger than Trump’s 20,000 in 4 years. This is a phony economy, phony stock market and phony administration.
Is there any better reason to raise cash and sit close to the exits prior to that “pop” that’s heard around the world ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Wednesday September 16, 2020 (DJIA: 28,308)     By now readers know where I am coming from.  No sense trying to tiptoe through this minefield, and appeal to all investors.
I think the Trump administration has done more damage to our Nation’s unity, the survival of our democratic “republic”, and our future as a nation of laws, than any foreign adversary has done, or ever dreamed of doing.
Hundreds of thousands of Americans, not one of which was a loser or sucker, gave life and limb to protect our nation from attempts to destroy it from outside or from within.
If Trump is re-elected, and the Republicans maintain control of this do-nothing Senate, we will nose-dive into a depression and chaos, a gun-toting banana republic where no one is safe, whites, people of color, not even Mr. and Mrs. “Made-it.”
       Time for the military style guns to come off the street. OK to own dozens or what it takes to be secure or up the manhood, just  not out in the public where they are dangerous and can be used to intimidate Americans.
For four years, Americans have been lied to, manipulated and disgraced, by a president who cares only for himself and a Republican Senate unwilling to even discuss 395 bills passed and brought up for consideration by the U.S. House.

That’s not what makes America great, that’s what erodes all the things we hold dear to us, all the things that pave the way for a safe and prosperous future for those who follow us.
A Biden/Harris government with total control of Congress would have a lot of pieces to pick up. The first being to solidify the security of our democratic republic versus the Trump alternative of a quasi fascist state.
Real Republicans, should go for it, in fact, they are seriously missed today.  At least they understood the rule of law and the value of the “great experiment” gifted to us 244 years ago.
Biden has worked both sides of the aisle, which must be done going forward.
Our need for diversity is not limited to differences of color, religion and preferences, but political positions the blending of which produce results.
 So, what about the stock market ?
Ten out of the last 11 recessions have been with a Republican in the White House. Re-election of Trump would make it 11 out of 12, because the current  economic “bounce” will yield to another recession in face of economic, domestic and international policies that benefit  only a tiny percent of our populace.
There have been bear markets without recessions, but never recessions without a bear market.  The 21-day 35% bear market this year  was over before any pain was dealt out.
The stock market is bubbling out of control, but can bubble further. The Street is spoiled rotten by an 11-year old economic expansion and bull market.
Last call came a long time ago, maybe 12 Bud lights or six Martinis ago.
The next bear market will be the BIG one, down 55% to 60%.
      Why ?
      Because we are living a lie, bigger than Trump’s 20,000 in 4 years. This is a phony economy, phony stock market and phony administration.
Is there any better reason to raise cash and sit close to the exits prior to that “pop” that’s heard around the world          George Brooks
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Tuesday September 15, 2020 (DJIA: 27,993) “What’s Wrong With This Picture”
It appears that absolutely NOTHING can stop this bull market.
    So what if the DJIA dropped 38.4% in 21 days, the S&P 50035.4% and Nasdaq Comp. 32.6% when COVID-19 struck in February
The market came roaring back, as if a recession starting in February was fake news.
So what if there has never been a recession without a bear market.
So what if 30 million  Americans are out of work or opt not to return for fear of COVID risk.
So what if America has never been divided this much since the Civil War.
So what if we are governed by an Administration that is better known for misinformation than accurate information.
So what if we are being lied to relentlessly about issues of great significance to each and everyone of us.
So what if issues of enormous importance to young people’s future have been politicized and sidelined – environment, healthcare and the nation’s financial security.
So what if we have turned our backs on long-standing international allies.
So what if  our stock markets are more overvalued based on time tested measures of value than at any time in history.
None of this makes a difference, does it ?
Clearly not to investors who look past the warning signs, the cracks in the foundation that warn of  a bubble that won’t stop inflating until all those who “fear  missing out”  (FOMO) are on board the train they worried was leaving the station without them.”

This is the kind of stuff bubbles are made of, this is how investors get blindsided en route to financial ruin.
The Street is betting on COVID-19 simply going away, or weeding out the weaker ones while the stronger (luckier) flourish.
BOTTOM LINE:
What’s wrong with this picture ?
        Too much for comfort !
       Investors should raise cash in line with their tolerance for risk, and sit close to the exit with the rest of one’s portfolio.
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Monday September 14, 2020 (DJIA:27,993) “Post Election Hype in Drivers’ Seat”
We are in the long agonizing countdown to November 3 and it is unwinding pretty much like I have said it will.
The three amigos, the Fed, the Administration, and Street want President Trump to win and will stop at nothing to make it happen.
While  Fed Chief Powell was appointed to the job of his dreams by Trump, it cannot be assumed he owes the president anything, but he will probably not be the Chief for long after a Biden win.
Regardless of who one supports, the Fed’s support for stock prices albeit at very inflated levels will continue at least until November.  Powell has a presser at 2:30 Wednesday.
Administration hype is a given, the biggest message will be an announcement of a  treatment/vaccine  before the election, which will not give fact-checkers a chance to verify.
The Street wants the party to go on forever, which is fine as parties go, but investors are getting sucked into the market at increasingly higher and higher levels of overvaluation. Bloomberg headlines a Goldman, Deutsche opinion that “The U.S. stock selloff may be close to an end.”
BOTTOM LINE:
  The bias for the market is up, though historically September and October can be very dangerous months to own stocks
A Vaccine before election day is today’s hype with speculation that Pfizer (PFE) may be the first to present a vaccine before the election.   Wednesday, the Fed may once again goose the market with additional comments about interest rates remaining close to zero for years.
The major market indexes should be able to launch an attack on September highs (DJIA: 29,199; S&P 500: 3,588; Nasdaq Comp.: 12,074. Again, any rally failures in coming days would be a warning signal that sellers await  higher prices to unload big positions.
September and October can be dangerous months to be long stocks.  A powerful surge in stocks through October would signal a Trump re-election, major weakness would signal a change in the presidency and Senate.
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Friday  September 11, 2020 (DJIA: 27,535) “Have Street’s algos been Adjusted For Risk ?”

The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
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Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”      When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

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Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
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Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
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Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
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Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.                                                     
George Brooks
Investor’s first read.com
brooksie01@aol.com
A Game-On Analysis, LLC publication
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

Trump Re-election: Depression ans Stock Market Crash

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,995
S&P 500: 3,401
Nasdaq Comp.:11,190
Russell:1,538
Wednesday, September 16, 2020   
7:45 a.m.
……………………………………..
brooksie01@aol.com
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November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
By now readers know where I am coming from.  No sense trying to tiptoe through this minefield, and appeal to all investors.
I think the Trump administration has done more damage to our Nation’s unity, the survival of our democratic “republic”, and our future as a nation of laws, than any foreign adversary has done, or ever dreamed of doing.
Hundreds of thousands of Americans, not one of which was a loser or sucker, gave life and limb to protect our nation from attempts to destroy it from outside or from within.
If Trump is re-elected, and the Republicans maintain control of this do-nothing Senate, we will nose-dive into a depression and chaos, a gun-toting banana republic where no one is safe, whites, people of color, not even Mr. and Mrs. “Made-it.”
       Time for the military style guns to come off the street. OK to own dozens or what it takes to be secure or up the manhood, just  not out in the public where they are dangerous and can be used to intimidate Americans.
For four years, Americans have been lied to, manipulated and disgraced, by a president who cares only for himself and a Republican Senate unwilling to even discuss 395 bills passed and brought up for consideration by the U.S. House.

That’s not what makes America great, that’s what erodes all the things we hold dear to us, all the things that pave the way for a safe and prosperous future for those who follow us.
A Biden/Harris government with total control of Congress would have a lot of pieces to pick up. The first being to solidify the security of our democratic republic versus the Trump alternative of a quasi fascist state.
Real Republicans, should go for it, in fact, they are seriously missed today.  At least they understood the rule of law and the value of the “great experiment” gifted to us 244 years ago.
Biden has worked both sides of the aisle, which must be done going forward.
Our need for diversity is not limited to differences of color, religion and preferences, but political positions the blending of which produce results.
 So, what about the stock market ?
Ten out of the last 11 recessions have been with a Republican in the White House. Re-election of Trump would make it 11 out of 12, because the current  economic “bounce” will yield to another recession in face of economic, domestic and international policies that benefit  only a tiny percent of our populace.
There have been bear markets without recessions, but never recessions without a bear market.  The 21-day 35% bear market this year  was over before any pain was dealt out.
The stock market is bubbling out of control, but can bubble further. The Street is spoiled rotten by an 11-year old economic expansion and bull market.
Last call came a long time ago, maybe 12 Bud lights or six Martinis ago.
The next bear market will be the BIG one, down 55% to 60%.
      Why ?
      Because we are living a lie, bigger than Trump’s 20,000 in 4 years. This is a phony economy, phony stock market and phony administration.
Is there any better reason to raise cash and sit close to the exits prior to that “pop” that’s heard around the world ?

George Brooks

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RECENT POSTS:
Tuesday September 15, 2020 (DJIA: 27,993) “What’s Wrong With This Picture”
It appears that absolutely NOTHING can stop this bull market.
    So what if the DJIA dropped 38.4% in 21 days, the S&P 50035.4% and Nasdaq Comp. 32.6% when COVID-19 struck in February
The market came roaring back, as if a recession starting in February was fake news.
So what if there has never been a recession without a bear market.
So what if 30 million  Americans are out of work or opt not to return for fear of COVID risk.
So what if America has never been divided this much since the Civil War.
So what if we are governed by an Administration that is better known for misinformation than accurate information.
So what if we are being lied to relentlessly about issues of great significance to each and everyone of us.
So what if issues of enormous importance to young people’s future have been politicized and sidelined – environment, healthcare and the nation’s financial security.
So what if we have turned our backs on long-standing international allies.
So what if  our stock markets are more overvalued based on time tested measures of value than at any time in history.
None of this makes a difference, does it ?
Clearly not to investors who look past the warning signs, the cracks in the foundation that warn of  a bubble that won’t stop inflating until all those who “fear  missing out”  (FOMO) are on board the train they worried was leaving the station without them.”

This is the kind of stuff bubbles are made of, this is how investors get blindsided en route to financial ruin.
The Street is betting on COVID-19 simply going away, or weeding out the weaker ones while the stronger (luckier) flourish.
BOTTOM LINE:
What’s wrong with this picture ?
        Too much for comfort !
       Investors should raise cash in line with their tolerance for risk, and sit close to the exit with the rest of one’s portfolio.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Monday September 14, 2020 (DJIA:27,993) “Post Election Hype in Drivers’ Seat”
We are in the long agonizing countdown to November 3 and it is unwinding pretty much like I have said it will.
The three amigos, the Fed, the Administration, and Street want President Trump to win and will stop at nothing to make it happen.
While  Fed Chief Powell was appointed to the job of his dreams by Trump, it cannot be assumed he owes the president anything, but he will probably not be the Chief for long after a Biden win.
Regardless of who one supports, the Fed’s support for stock prices albeit at very inflated levels will continue at least until November.  Powell has a presser at 2:30 Wednesday.
Administration hype is a given, the biggest message will be an announcement of a  treatment/vaccine  before the election, which will not give fact-checkers a chance to verify.
The Street wants the party to go on forever, which is fine as parties go, but investors are getting sucked into the market at increasingly higher and higher levels of overvaluation. Bloomberg headlines a Goldman, Deutsche opinion that “The U.S. stock selloff may be close to an end.”
BOTTOM LINE:
  The bias for the market is up, though historically September and October can be very dangerous months to own stocks
A Vaccine before election day is today’s hype with speculation that Pfizer (PFE) may be the first to present a vaccine before the election.   Wednesday, the Fed may once again goose the market with additional comments about interest rates remaining close to zero for years.
The major market indexes should be able to launch an attack on September highs (DJIA: 29,199; S&P 500: 3,588; Nasdaq Comp.: 12,074. Again, any rally failures in coming days would be a warning signal that sellers await  higher prices to unload big positions.
September and October can be dangerous months to be long stocks.  A powerful surge in stocks through October would signal a Trump re-election, major weakness would signal a change in the presidency and Senate.
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Friday  September 11, 2020 (DJIA: 27,535) “Have Street’s algos been Adjusted For Risk ?”

The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
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Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”      When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.                                                     
George Brooks
Investor’s first read.com
brooksie01@aol.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.

 

 

 

 

 

 

 

 

 

 

What’s Wrong With This Picture ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,993
S&P 500: 3,383
Nasdaq Comp.:11,056
Russell:1,536
Tuesday, September 15, 2020   
9:19 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
It appears that absolutely NOTHING can stop this bull market.
    So what if the DJIA dropped 38.4% in 21 days, the S&P 50035.4% and Nasdaq Comp. 32.6% when COVID-19 struck in February
The market came roaring back, as if a recession starting in February was fake news.
So what if there has never been a recession without a bear market.
So what if 30 million  Americans are out of work or opt not to return for fear of COVID risk.
So what if America has never been divided this much since the Civil War.
So what if we are governed by an Administration that is better known for misinformation than accurate information.
So what if we are being lied to relentlessly about issues of great significance to each and everyone of us.
So what if issues of enormous importance to young people’s future have been politicized and sidelined – environment, healthcare and the nation’s financial security.
So what if we have turned our backs on long-standing international allies.
So what if  our stock markets are more overvalued based on time tested measures of value than at any time in history.
None of this makes a difference, does it ?
Clearly not to investors who look past the warning signs, the cracks in the foundation that warn of  a bubble that won’t stop inflating until all those who “fear  missing out”  (FOMO) are on board the train they worried was leaving the station without them.”

This is the kind of stuff bubbles are made of, this is how investors get blindsided en route to financial ruin.
The Street is betting on COVID-19 simply going away, or weeding out the weaker ones while the stronger (luckier) flourish.
BOTTOM LINE:
What’s wrong with this picture ?
        Too much for comfort !
       Investors should raise cash in line with their tolerance for risk, and sit close to the exit with the rest of one’s portfolio.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Monday September 14, 2020 (DJIA:27,993) “Post Election Hype in Drivers’ Seat”
We are in the long agonizing countdown to November 3 and it is unwinding pretty much like I have said it will.
The three amigos, the Fed, the Administration, and Street want President Trump to win and will stop at nothing to make it happen.
While  Fed Chief Powell was appointed to the job of his dreams by Trump, it cannot be assumed he owes the president anything, but he will probably not be the Chief for long after a Biden win.
Regardless of who one supports, the Fed’s support for stock prices albeit at very inflated levels will continue at least until November.  Powell has a presser at 2:30 Wednesday.
Administration hype is a given, the biggest message will be an announcement of a  treatment/vaccine  before the election, which will not give fact-checkers a chance to verify.
The Street wants the party to go on forever, which is fine as parties go, but investors are getting sucked into the market at increasingly higher and higher levels of overvaluation. Bloomberg headlines a Goldman, Deutsche opinion that “The U.S. stock selloff may be close to an end.”
BOTTOM LINE:
  The bias for the market is up, though historically September and October can be very dangerous months to own stocks
A Vaccine before election day is today’s hype with speculation that Pfizer (PFE) may be the first to present a vaccine before the election.   Wednesday, the Fed may once again goose the market with additional comments about interest rates remaining close to zero for years.
The major market indexes should be able to launch an attack on September highs (DJIA: 29,199; S&P 500: 3,588; Nasdaq Comp.: 12,074. Again, any rally failures in coming days would be a warning signal that sellers await  higher prices to unload big positions.
September and October can be dangerous months to be long stocks.  A powerful surge in stocks through October would signal a Trump re-election, major weakness would signal a change in the presidency and Senate.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday  September 11, 2020 (DJIA: 27,535) “Have Street’s algos been Adjusted For Risk ?”

The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”      When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.                                                     
George Brooks
Investor’s first read.com
brooksie01@aol.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.

 

 

 

 

 

 

 

 

 

Pre-Election Hype In the Driver’s Seat

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,665
S&P 500: 3,340
Nasdaq Comp.:10,853
Russell:1,497
Monday, September 14, 2020   
8:46 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
We are in the long agonizing countdown to November 3 and it is unwinding pretty much like I have said it will.
The three amigos, the Fed, the Administration, and Street want President Trump to win and will stop at nothing to make it happen.
While  Fed Chief Powell was appointed to the job of his dreams by Trump, it cannot be assumed he owes the president anything, but he will probably not be the Chief for long after a Biden win.
Regardless of who one supports, the Fed’s support for stock prices albeit at very inflated levels will continue at least until November.  Powell has a presser at 2:30 Wednesday.
Administration hype is a given, the biggest message will be an announcement of a  treatment/vaccine  before the election, which will not give fact-checkers a chance to verify.
The Street wants the party to go on forever, which is fine as parties go, but investors are getting sucked into the market at increasingly higher and higher levels of overvaluation. Bloomberg headlines a Goldman, Deutsche opinion that “The U.S. stock selloff may be close to an end.”
BOTTOM LINE:
  The bias for the market is up, though historically September and October can be very dangerous months to own stocks
A Vaccine before election day is today’s hype with speculation that Pfizer (PFE) may be the first to present a vaccine before the election.   Wednesday, the Fed may once again goose the market with additional comments about interest rates remaining close to zero for years.
The major market indexes should be able to launch an attack on September highs (DJIA: 29,199; S&P 500: 3,588; Nasdaq Comp.: 12,074. Again, any rally failures in coming days would be a warning signal that sellers await  higher prices to unload big positions.
September and October can be dangerous months to be long stocks.  A powerful surge in stocks through October would signal a Trump re-election, major weakness would signal a change in the presidency and Senate.
 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Friday  September 11, 2020 (DJIA: 27,535) “Have Street’s algos been Adjusted For Risk ?”

The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”      When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Ernie Tedeschi of Evercore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
                                                    
George Brooks
Investor’s first read.com
brooksie01@aol.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.

 

 

 

 

 

 

 

 

Have Street’s “BUY” Algos Been Adjusted For Risk ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,534
S&P 500: 3,339
Nasdaq Comp.:10,719
Russell:1,507
Friday, September 11, 2020   
9:09 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
     The bulls charged out of the gate in early trading yesterday looking like they were  ready to run the table, but hit a wall, and it was all downhill from there, taking all three major market indexes  back to test the lows hit three days ago ( DJIA: 27,464;  S&P 500: 3,329;  Nasdaq Comp.: 10,877).
In this tug of war, rally failures are key to who is really in charge.  After a rally failure yesterday where the market indexes closed at the lows for the day, the market is now probing for a level that discounts  known and perceived negatives and positives, the major one being gross overvaluation of equities.
Only six days ago the market indexes were hitting new highs.  How quickly things change.
      MY blog six days ago was headlined , A “W” not a “V” ?, warning  readers of a stall in the rebounding economic indicators from depressed levels and another plunge based on unprecedented job losses, business failures and reduced spending.
I quoted Evercore ISI’s Ernie Tedeshi as pointing out that three times as many jobs have been lost and four times as many people on government unemployment insurance than during the Great Recession of 2007 -2009.
That bear market was accompanied by a drop of 57% in the S&P 500.
Bad stuff can happen
, it has been a long time since the Great Recession.
The 35% plunge in the S&P 500 in February/March this year was over so quickly investors were not aware of its magnitude.
Put another way, the Street doesn’t respect what can happen when a real bear market roils stocks relentlessly to the point investors begin to worry if the market will ever recover, many selling out at the bottom.
BOTTOM LINE:
      The market will open once again on a positive note as some of the Street’s algorithms go into their automatic pilot mode, buying blindly without regard to looming negatives and uncertainties.
Has anything changed ?  Have analysts begun to adjust their algos for risk, resulting in a change to less buying, even selling  due to new concerns that a “V”- shaped economic recovery will be more like an “L” or a “W” ?
If suddenly reliable buying  vanishes, we will see a flash crash until stocks find a level that discounts uncertainties and negatives as economic dominoes continue to tumble once beyond a bounce off Q1 depressed levels.
SUPPORT:
DJIA: 26,967
S&P 500: 3,267
Nasdaq Comp.:10,617
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Thursday September 10, 2020 (DJIA: 27,940) “Bulls must regain momentum, or….”

When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Ernie Tedeschi of Evercore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
                                                    
George Brooks
Investor’s first read.com
brooksie01@aol.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

Bulls Must Regain Momentum, or………..

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,940
S&P 500:3,398
Nasdaq Comp.:11,141
Russell:1,526
Thursday, September 10, 2020   
8:33 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

     When futures trading indicated a strong open for the market yesterday, I wrote that the rally throughout the day had to hold its gain or it would be a sign of weakness, i.e., no room for rally failures if you’re a bull.
      All market indexes exceeded  my resistance projections, but closed below  the day’s highs.  That is not what a robust rally looks like.
Futures indicate lower prices at the open today, so  the bulls will get another chance to demonstrate their strength. If they can override the selling at the open, they may just extend yesterday’s rally.
       Think tug of war where first one side looks like it is winning only to suddenly lose their edge when the other side gains the upper hand.
The simplicity of this analogy may not pass a quad’s need for complexity, but this is a game where humans tend to be human at times as greed and fear take the hand.
The failure of the bulls to close the day’s trading at the highs for the day indicates there are sellers out there, enough to  hold off the bulls.
We will see what the bulls have in their arsenal today.  A sharp reversal of selling between the open and 11 a.m. would lead to more upside.
However if it’s a no show by the bulls, the overdue correction I have been waiting for may by underway.
Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, a vaccine for COVID-19 and  a stimulus.
Resistance:
DJIA: 28,047
S&P 500:3,409
Nasdaq Comp.:11,176
…………………………………………………………………………………………………..
BOTTOM LINE:
      This is now a war between bulls and bears.  The bulls are hoping for a host of “fear-of-missing-out” buyers paying up for the overpriced stocks they buy, the bears are hoping for a rotation of strength out of growth stocks and into more stable industrials.  Both are historically overvalued and especially if corporate earnings fail to snap back quickly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Wednesday  September 9, 2020 (DJIA: 27,500) “Phony economy, phony stock market, Phony Administration”

Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
    Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
6) BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin to encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Erine Tedeschii of Everscore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
                                                    
George Brooks
Investor’s first read.com
brooksie01@aol.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.

 

 

 

 

 

 

Phony Economy, Phony Stock Market, Phony Administration

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,500
S&P 500:3,331
Nasdaq Comp.:10,847
Russell: 1,510
Wednesday, September 9, 2020   
8:08 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Here is what we are faced with now:
1) the correction over the last 3 days does not erase the extreme overvaluation of the stock market indexes.
2) Buyers will step in as they have on every correction since the March 23 bear market lows and trigger a rally.
3) If that rally is powerful, the market will return to last week’s highs.
4) if the rally lacks conviction, this correction has further to go.
5) The risk of a flash crash is high. These abrupt plunges have become the new normal. So many of these institutions track the same indicators, so it stands to reason the analysts and money managers will react in the same way, first to stop buying, second to sell.
6) Expect an  enormous amount of unsubstantiated hype going into the election from the Fed, the  Administration and the Street. There will be talk about an economic recovery, vaccine for COVID-19 and  a stimulus.  All bullshit !  We have seen a “bounce” in economic indicators from Q1’s  extreme lows, but odds are that’s all it is.  I expect a “W” recovery, possibly an extended “L”, but not  a “V”, as reality of the damage done by COVID hits the Street.
BOTTOM LINE:
Shouldn’t say this, will lose readers, be vilified by people I know, run off the road, etc., This economy is phony, stock market phony, Fed phony, and Administration phony.
At some point, all the damage that has been done to our unity as a nation, to our pursuit of healthcare solutions, to the rule of law so critical for the preservation of our democratic “republic,” to the foundations of our economy and government, and to outright decency will have to be repaired.
We are in far worse shape than we were four years ago, except the stock market it  has continued to surge.  Something has to give and I think it is the stock market, which is historically overpriced, by 30% – 45%.
Futures trading indicate a rally at the open.  It must be strong and hold its gain through the close. No room for rally failures.
RESISTANCE: Today’s rally should begin ti=o encounter resistance at:
DJIA: 27,717
S&P 500: 3,361
Nasdaq Comp.: 10,978
>>>>>>>>>>>>>>>>>>>
Near-term SUPPORT is:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Tuesday  September 8, 2020 (DJIA: 28,133) : “Bulls on the Ropes”

The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Erine Tedeschii of Everscore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Monday August 31, 2010 “ Fed Inflates Bubble Further With Policy Announcement”
Stock Market
– Fever increasing, quick money can be made in overheated markets like this, but the risk of a downdraft is high. The Street is betting on a quick recovery, but that WILL NOT happen if the economy is straight-jacketed by COVID-19.  Expect lies and more lies from this administration about a vaccine, treatment, and instant test results. The stock market must be up going into  the November 3 election, and they will stop at absolutely nothing to hype it.
Economy: Rebound within recession. Double dip possible. Current reports are mostly based on changes from depressed levels.  COVID-19 may not go away for a year or more.
What to do: 
Maintain a cash reserve in line with one’s tolerance for risk.
That affords protection against a sudden flash crash, as well as gives one the reserve to buy-in at lower prices.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

     Bubble just keeps inflating, and it stands to inflate more after the Federal
Reserve just announced a big change in policy.
   For decades, the Fed was charged with fighting inflation by raising and lowering  its fed funds interest rates, injecting and withdrawing funds from the system in an effort to counter  recessions and expansions.
The policy change, announced at last week’s annual Jackson Hole policy conference, stands to keep interest rates near zero indefinitely, even if inflation rises well above their target rate of 2%.
 This  gives individuals little alternative but to buy stocks if they want some a chance at a return on their money.
The  timing could be disastrous, since by reasonable, time-tested measures of value, the stock market is vastly overvalued, and the Fed’s  action gooses a very pricey  market higher.
 The S&P 500 was overvalued before COVID hammered  it  down 36% in 21 days earlier this year, and it is so much more overvalued now that the S&P 500 is at new highs and corporate earnings are  taking a beating.
I believe in free trading stocks, not micro-management by a bunch of corner-office , balance-your-checkbook-everyday, bankers who never-ever respected the stock market’s need to constantly reflect known positives and negatives, as well as a consensus of the future without their intrusion.   Dangerous mentality !  We saw what happened with bubble #1 (January 2019 – February 2020). Now we are in bubble #2 and they just iced the cake with a very untimely announcement.  They should address asset overvaluation, not add to it.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

BOTTOM LINE:
Risks of a major correction to bring the market back to realistic levels are high, but this is a presidential election year and hype about everything will lure investors into the market.
BIG “IF”:  What if COVID continues to hobble the economy causing one economic domino after another to tumble well into 2021 ?
      After the market got hit in February and March, I did not think it could get close to pre-COVID levels, but massive stimulus by the Fed and Congress drove it higher.
     While I correctly forecast the February  Bull Market top  two months in advance, I have not been unable to do so this time, as investors scramble to buy stocks before they run higher  – a classic bubble pattern.
Fighting the Fed has its perils;
it has too much clout.  But all bubbles burst, either because they inflated too much, or because they get pricked by an event, as COVID did last February.
FYI:

Apple (AAPL: 499 ) split  4:1 Friday. Why is that important ?
Because the Dow Jones Industrial Average (DJIA) is price-weighted. On Monday AAPL will trade at roughly 125 instead 499, giving percentage moves in it one-quarter the impact it had before the split.

Since the March 23 lows, it has contributed 1,952 points to the DJIA, Friday close (28,653).

More on DOW: EXXOM Mobil (XOM:41), Raytheon (RTX: 62), Pfizer (PFE: 38) are being replaced by:
Salesforce (CRM: 271), Honeywell (HON:168) and Amgen (AMGN: 253).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Friday  Aug 21, 2020 (DJIA: 27,739)  FAANG Stocks Roar – Others Snore”  Warren Buffett says the market cap-to-GDP ratio “is probably the best single measure of where valuations stand at a given moment.”
James Emanuel, author and investor, highlighted it in his Aug.19 post to Seeking Alpha.com, using it as one of a number of hard-hitting indications of over valuation in the stock market.
Currently,  the Buffet indicator stands at 172% versus 109% at the bull market top in 2007 and  141% at the top of the dot-com bull market, and more than twice the long-term average of 82%.  (see full analysis below).
FAANG
The FAANG stocks are driving the S&P 500 and Nasdaq. Not only are their businesses strong, but they sport huge  market capitalizations which causes them to have a dominating impact on the S&P 500 and Nasdaq Comp.  as a whole.
Since the December 2018 lows the ProShares ex-technology ETF (SPXT) appreciated 29% through Aug. 20, while the SPDR S&P 500 ETF  (SPY, )including the technology stocks appreciated 40%.
The invesco QQQ trust series I EFT (QQQ) soared 94%  in the period. In hindsight, this was the play.
Since the Dec. 2018 lows the FAANG stocks appreciated an average of 161%

Facebook ( FB:+120%), Amazon (AMZN +150%), Apple (AAPL: 238%), Netflix (NFLX: +116%), Google (GOOG: +64%).
The BIG “buy-low/ sell high” question is:
My calculation here starts at the low in December 2018, what would a sane person do with their shares when the Feb./Mar. flash crash hit ?
Would they have sold before the crash, or during it  as the market roared back and they felt they were lucky to get out with a 40% ,  60% gain at some point along the way ?
So, why are investors racing in to buy the FAANG stocks at this level ?  Will this question look silly a month from now – FAANG stocks much higher.

Bottom Line:
I believe we are in the eye of one of the most  dangerous storms of our time. Currently,  economic indicators are bouncing off severely depressed levels. The Leading Economic Indicators bounced  1.4% in July but remain well below highs.  While July’s industrial production  rose 3%  it remains below pre-COVID levels.
The key will be when we come out of the eye of the storm.  Will the bumps off depressed levels follow through with a full recovery or turn down ?  Wall Street seems to think so, but they were wrong last January.
And if the economic dominoes continue to tumble.  Will they be bad enough to trigger a plunge in stock prices as the market searches for a level that discounts the bad news and the uncertainty that lies ahead ?
MUST READ:

The following  Seeking Alpha.com  post builds a  case for a major correction of 35% – 50%. This analysis emphasizes “all’ the points I have urged you to take seriously over the last 9 months.
He has the resources and space to do it in the detail that necessary to highlight  the points.
Must reading for serious investors.  Just copy and paste to your browser.

James Emanuel

https://seekingalpha.com/article/4369782-s-and-p-500-flying-in-danger-zone?utm_medium=email&utm_source=seeking_alpha&mail_subject=s-p-500-flying-in-the-danger-zone&utm_campaign=nl-macro-view&utm_content=link-0
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Thursday August 20, 2020 (DJIA:27,692) “Bubble #2 to Burst Any Time Now”

The stock market hit some headwinds yesterday following the release of the July Federal Reserves’minutes, which cut  its forecast for the economy.  The report, which is always released a month late, referred to the  risk for the economy as “significant.”
Black Rock’s Bob Miller said, “This strongly suggests  both monetary and fiscal policy support will continue to be required for the recovery to remain on track.”
       This is an election year, you can be sure both are going to happen. Democratic House Speaker Nancy Pelosi indicated she would be willing to discuss a compromise on  another relief  package, which should happen within a week or two.
Meanwhile the Street is looking beyond the pandemic to a full recovery.
It was nice to see a stock other than a techy do well. TARGET (TGT) reported strong earnings for Q2, its stock jumped 12.65% in response. Lowe’s (LOW) stock jumped as well after good earnings, both beneficiaries of the pandemic.
However, if you pull 94 stocks out of the S&P 500 that are considered “Technology,” you get a different story about the robust market rally since the March flash crash lows.  While the tech stocks on average were up 20% for the year as a whole, the remaining 408 stocks in the S&P 500 were down on average.
BOTTOM LINE:
The only outstandingly bullish development I see is the prospect for the Democrats to gain total control of the government, roll up its sleeves and  do the tough stuff that is needed to undue to damage done by this administration and  get America back on a winning track.
       Yes, there will be another stimulus bill and the Fed will do whatever it can to micro-manage the economy and stock market, but those are “props” to an economy that is currently in the “eye” of  a horrific storm.
The key will be what happens when we come out of the eye ?
         Will the economic dominoes continue to tumble ?  If so, the stock market will tumble. The entire disconnect between the market and the carnage in our economy and lives is based on an unjustified, naive assumption that all will be well by Q4 and beyond.
What spaceship is the Street flying on ?  We were on the brink of recession in Q4 of 2018, which the Fed was able to postpone until COVID-19 interceded.   What are we going back to ?
Why would the economy grow from this debacle when it is still unwinding ?
This isn’t high math, it’s common sense and the stock market has yet to begin to discount the adversity of what has happened and the uncertainty that confronts us.
          The adjustment to reality will be abrupt and most likely, a flash crash as institutions become aware (all at the same time) that there is no “V” recovery, it’s not even an “L,” it’s down, then sideways for the economy and stock market until the dominoes are no longer tumbling.
       OK, so no one wants to hear this ! Right ?  Why not just take a little off the table just in case I am right ?   In February and March, you saw what  can happen to the bluest of chips – DJIA down 38.4% in 21 days.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>                                                     
George Brooks
Investor’s first read.com
brooksie01@aol.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

Bulls on the Ropes

DJIA: 28,133
S&P 500:3,426
Nasdaq Comp.11,313:
Russell: 1,535
Tuesday, September 8, 2020   
8:18 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The sharp sell off Thursday and Friday created a greenstick fracture in the major market averages meaning this may be the beginning of a major correction.
The DJIA stabilized after bouncing off a major up-trendline, both the S&P 500 and Nasdaq Comp. recovered after breaking their trendlines.
Essentially, that means the tug of war between bulls and bears is now favoring the bears.
Today will open on the downside to test Friday’s lows
DJIA: 27,664
S&P500: 3,349
Nasdaq Comp.: 10,875)
We must now start to study rally attempts.  Can they follow through, or do they fail.  Obviously, the latter indicates a lower market, in this case a test of the next support level at:
DJIA: 27,200
S&P 500: 3,270
Nasdaq Comp.: 10,570.
These averages should run into resistance starting at:
DJIA: 28,476
S&P 500: 3,468
Nasdaq Comp.11,474.
The future of COVID-19 defies analysis. Potential vaccines will be announced before the election, but practical application before 2021 is doubtful.
The Street is betting on an economic recovery this year, but even if the economy recovers further, continued follow through is doubtful, since so much damage has been done across the board to our economy’s infrastructure.
The timing of another stimulus package is uncertain, trade tensions remain, a number of jobs will never comeback,  and while the consumer has cash, the willingness to part with it  is a big question mark with uncertainty about the market and economy running so high.
Election rhetoric will do nothing  to  calm fears and instill confidence in government.

BOTTOM LINE:
       Why load up on stocks  when prices are so high and confidence so low ?
The stampede to buy stocks since the March 23 lows has developed into  bubble.
Every effort will be made by the three amigos (Fed, Administration, Street) to prop the market up until November 3. It will get ugly, not the environment where stocks flourish.
Odds are high that the correction will carry further than the levels I noted above.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Friday September 4, 2020 (DJIA: 28,292) “Beware of Hype about Vaccine and Economy
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Erine Tedeschii of Everscore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Monday August 31, 2010 “ Fed Inflates Bubble Further With Policy Announcement”
Stock Market
– Fever increasing, quick money can be made in overheated markets like this, but the risk of a downdraft is high. The Street is betting on a quick recovery, but that WILL NOT happen if the economy is straight-jacketed by COVID-19.  Expect lies and more lies from this administration about a vaccine, treatment, and instant test results. The stock market must be up going into  the November 3 election, and they will stop at absolutely nothing to hype it.
Economy: Rebound within recession. Double dip possible. Current reports are mostly based on changes from depressed levels.  COVID-19 may not go away for a year or more.
What to do: 
Maintain a cash reserve in line with one’s tolerance for risk.
That affords protection against a sudden flash crash, as well as gives one the reserve to buy-in at lower prices.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

     Bubble just keeps inflating, and it stands to inflate more after the Federal
Reserve just announced a big change in policy.
   For decades, the Fed was charged with fighting inflation by raising and lowering  its fed funds interest rates, injecting and withdrawing funds from the system in an effort to counter  recessions and expansions.
The policy change, announced at last week’s annual Jackson Hole policy conference, stands to keep interest rates near zero indefinitely, even if inflation rises well above their target rate of 2%.
 This  gives individuals little alternative but to buy stocks if they want some a chance at a return on their money.
The  timing could be disastrous, since by reasonable, time-tested measures of value, the stock market is vastly overvalued, and the Fed’s  action gooses a very pricey  market higher.
 The S&P 500 was overvalued before COVID hammered  it  down 36% in 21 days earlier this year, and it is so much more overvalued now that the S&P 500 is at new highs and corporate earnings are  taking a beating.
I believe in free trading stocks, not micro-management by a bunch of corner-office , balance-your-checkbook-everyday, bankers who never-ever respected the stock market’s need to constantly reflect known positives and negatives, as well as a consensus of the future without their intrusion.   Dangerous mentality !  We saw what happened with bubble #1 (January 2019 – February 2020). Now we are in bubble #2 and they just iced the cake with a very untimely announcement.  They should address asset overvaluation, not add to it.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

BOTTOM LINE:
Risks of a major correction to bring the market back to realistic levels are high, but this is a presidential election year and hype about everything will lure investors into the market.
BIG “IF”:  What if COVID continues to hobble the economy causing one economic domino after another to tumble well into 2021 ?
      After the market got hit in February and March, I did not think it could get close to pre-COVID levels, but massive stimulus by the Fed and Congress drove it higher.
     While I correctly forecast the February  Bull Market top  two months in advance, I have not been unable to do so this time, as investors scramble to buy stocks before they run higher  – a classic bubble pattern.
Fighting the Fed has its perils;
it has too much clout.  But all bubbles burst, either because they inflated too much, or because they get pricked by an event, as COVID did last February.
FYI:

Apple (AAPL: 499 ) split  4:1 Friday. Why is that important ?
Because the Dow Jones Industrial Average (DJIA) is price-weighted. On Monday AAPL will trade at roughly 125 instead 499, giving percentage moves in it one-quarter the impact it had before the split.

Since the March 23 lows, it has contributed 1,952 points to the DJIA, Friday close (28,653).

More on DOW: EXXOM Mobil (XOM:41), Raytheon (RTX: 62), Pfizer (PFE: 38) are being replaced by:
Salesforce (CRM: 271), Honeywell (HON:168) and Amgen (AMGN: 253).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Friday  Aug 21, 2020 (DJIA: 27,739)  FAANG Stocks Roar – Others Snore”  Warren Buffett says the market cap-to-GDP ratio “is probably the best single measure of where valuations stand at a given moment.”
James Emanuel, author and investor, highlighted it in his Aug.19 post to Seeking Alpha.com, using it as one of a number of hard-hitting indications of over valuation in the stock market.
Currently,  the Buffet indicator stands at 172% versus 109% at the bull market top in 2007 and  141% at the top of the dot-com bull market, and more than twice the long-term average of 82%.  (see full analysis below).
FAANG
The FAANG stocks are driving the S&P 500 and Nasdaq. Not only are their businesses strong, but they sport huge  market capitalizations which causes them to have a dominating impact on the S&P 500 and Nasdaq Comp.  as a whole.
Since the December 2018 lows the ProShares ex-technology ETF (SPXT) appreciated 29% through Aug. 20, while the SPDR S&P 500 ETF  (SPY, )including the technology stocks appreciated 40%.
The invesco QQQ trust series I EFT (QQQ) soared 94%  in the period. In hindsight, this was the play.
Since the Dec. 2018 lows the FAANG stocks appreciated an average of 161%

Facebook ( FB:+120%), Amazon (AMZN +150%), Apple (AAPL: 238%), Netflix (NFLX: +116%), Google (GOOG: +64%).
The BIG “buy-low/ sell high” question is:
My calculation here starts at the low in December 2018, what would a sane person do with their shares when the Feb./Mar. flash crash hit ?
Would they have sold before the crash, or during it  as the market roared back and they felt they were lucky to get out with a 40% ,  60% gain at some point along the way ?
So, why are investors racing in to buy the FAANG stocks at this level ?  Will this question look silly a month from now – FAANG stocks much higher.

Bottom Line:
I believe we are in the eye of one of the most  dangerous storms of our time. Currently,  economic indicators are bouncing off severely depressed levels. The Leading Economic Indicators bounced  1.4% in July but remain well below highs.  While July’s industrial production  rose 3%  it remains below pre-COVID levels.
The key will be when we come out of the eye of the storm.  Will the bumps off depressed levels follow through with a full recovery or turn down ?  Wall Street seems to think so, but they were wrong last January.
And if the economic dominoes continue to tumble.  Will they be bad enough to trigger a plunge in stock prices as the market searches for a level that discounts the bad news and the uncertainty that lies ahead ?
MUST READ:

The following  Seeking Alpha.com  post builds a  case for a major correction of 35% – 50%. This analysis emphasizes “all’ the points I have urged you to take seriously over the last 9 months.
He has the resources and space to do it in the detail that necessary to highlight  the points.
Must reading for serious investors.  Just copy and paste to your browser.

James Emanuel

https://seekingalpha.com/article/4369782-s-and-p-500-flying-in-danger-zone?utm_medium=email&utm_source=seeking_alpha&mail_subject=s-p-500-flying-in-the-danger-zone&utm_campaign=nl-macro-view&utm_content=link-0
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Thursday August 20, 2020 (DJIA:27,692) “Bubble #2 to Burst Any Time Now”

The stock market hit some headwinds yesterday following the release of the July Federal Reserves’minutes, which cut  its forecast for the economy.  The report, which is always released a month late, referred to the  risk for the economy as “significant.”
Black Rock’s Bob Miller said, “This strongly suggests  both monetary and fiscal policy support will continue to be required for the recovery to remain on track.”
       This is an election year, you can be sure both are going to happen. Democratic House Speaker Nancy Pelosi indicated she would be willing to discuss a compromise on  another relief  package, which should happen within a week or two.
Meanwhile the Street is looking beyond the pandemic to a full recovery.
It was nice to see a stock other than a techy do well. TARGET (TGT) reported strong earnings for Q2, its stock jumped 12.65% in response. Lowe’s (LOW) stock jumped as well after good earnings, both beneficiaries of the pandemic.
However, if you pull 94 stocks out of the S&P 500 that are considered “Technology,” you get a different story about the robust market rally since the March flash crash lows.  While the tech stocks on average were up 20% for the year as a whole, the remaining 408 stocks in the S&P 500 were down on average.
BOTTOM LINE:
The only outstandingly bullish development I see is the prospect for the Democrats to gain total control of the government, roll up its sleeves and  do the tough stuff that is needed to undue to damage done by this administration and  get America back on a winning track.
       Yes, there will be another stimulus bill and the Fed will do whatever it can to micro-manage the economy and stock market, but those are “props” to an economy that is currently in the “eye” of  a horrific storm.
The key will be what happens when we come out of the eye ?
         Will the economic dominoes continue to tumble ?  If so, the stock market will tumble. The entire disconnect between the market and the carnage in our economy and lives is based on an unjustified, naive assumption that all will be well by Q4 and beyond.
What spaceship is the Street flying on ?  We were on the brink of recession in Q4 of 2018, which the Fed was able to postpone until COVID-19 interceded.   What are we going back to ?
Why would the economy grow from this debacle when it is still unwinding ?
This isn’t high math, it’s common sense and the stock market has yet to begin to discount the adversity of what has happened and the uncertainty that confronts us.
          The adjustment to reality will be abrupt and most likely, a flash crash as institutions become aware (all at the same time) that there is no “V” recovery, it’s not even an “L,” it’s down, then sideways for the economy and stock market until the dominoes are no longer tumbling.
       OK, so no one wants to hear this ! Right ?  Why not just take a little off the table just in case I am right ?   In February and March, you saw what  can happen to the bluest of chips – DJIA down 38.4% in 21 days.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>                                                     
George Brooks
Investor’s first read.com
brooksie01@aol.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.

 

 

 

 

 

 

 

Beware of Hype about Vaccine and Economy

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,292
S&P 500: 3,455
Nasdaq Comp.:11,458
Russell: 1,544
September 4, 2020   
7:20 a.m.
……………………………………..
brooksie01@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

November 15, 2019 (DJIA – 28,004)   I Called for a bear market to start in January, that the initial plunge would be 12%-18% – “straight down.” It started mid-February, dropped 16.3%, rallied then  plunged another 32.8%.
…………………………………………………..
January 20, 2020 (DJIA:29,348) My blog,  “INSANITY,” projected a bear market decline of  30% – 45%. The DJIA plunged 38.4% in 21 days.
………………………………………………….
With the DJIA at 18,591on March 24, I wrote that , while I see lower prices later in the year, I expect a big rally with the upside potential of DJIA 22,037 (S&P 500 : 2,617) – it went higher.
With the DJIA at 23,942 (S&P 500) on April 15, I
called for  an end to  rally, up 29% but well short of  today.   how far the rally extended.  On May 18, I began to warn of  Bubble #2
August 6, I headline “SELL” with DJIA at 27,201 (S&P 500:3,327). Another “Fed” bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
DJIA down 807 pts.  (2.78%)
S&P 500 down 125 pts. (3.51%)
Nasdaq Comp. down     598 pts.  (4.9%)
Don’t tell me the algos have a conscience, or is it a smidge of acrophobia ?
      A correction was overdue with speculative fever surging and fear of missing out driving investment decisions.
Classic bubble mania.
A clue to the health of the market  will be seen today in the intensity of the rebound.
      A token rebound would be to DJIA: 28,597; S&P 500: 3,487; Nasdaq Comp.: 11,597.
Beyond that, would suggest buyers are still in panic mode.
BOTTOM LINE:
The three amigos, the Fed, Administration and Street, aren’t going to like this with 41 days left before the elections.
    Beware of:
1) in spite of yesterday’s plunge, the market is still overvalued, very overvalued based on a host of time-tested measures of value.
2) investors will be bombarded by misinformation and  baseless hype about  a vaccine and economic recovery between now and November 3.
A rally can give investors a chance to reduce risk by raising cash in line with their tolerance for risk.  A swing from growth stocks to industrials is underway with 20 of the 30 Dow Jones industrials still below pre-COVID levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECENT POSTS:
Thursday  September 3, 2020 “20 of 30 Dow Stocks Below February Highs”

Ten of the 30 Dow Jones  industrials are up since COVID-19 ended the 2009 – 2020 bull market in February with a 21-day, 38.4% plunge in the DJIA. Two are unchanged, and 18 are still below February all-time highs.
     Four Dow stocks have added 2,102 points to the DJIA (Home Depot, Apple, Microsoft, Walmart), or about 8% for the average as a whole.

Change from pre-COVID all-time highs in February
S&P 500: + 5.8%
Nasdaq Comp.: + 22.5%
Dow Jones Transportation Index:  + 0.8%
DJIA:   – 1.4%
Market averages that have not beat February highs
Russell 2000:
 – 6.9%
New York  Composite Index of 1,900 stocks:- 6.4%
ValueLine Composite
of 1,675 stocks, an “unweighted” index giving equal weight to each stock: – 15.4%
  The Nasdaq is distorted by a handful of large market cap Tech stocks. While that is true to some extent for the S&P 500, which is the institutional benchmark index.  That said, it’s hitting an all-time high may attract enough volume to enable these behemoths to unload big positions.
BOTTOM LINE:
Yesterday,  I referred to CNN’s Fear/Greed Index which is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
     Jessee Felder, The Felder Report takes this put/call ratio to  higher level at;
https://thefelderreport.com/2020/09/02/a-speculative-feeding-frenzy-like-weve-never-seen-before/?mc_cid=499dd877f3&mc_eid=36092ac89a
There appears to be a shift from growth stocks to industrials, which would make sense, since a handful of big-name growth stocks have had huge runs, though so much depends on a vaccine for COVID.
BEWARE of hype by the three amigos, the Fed, Administration and Wall Street to include a vaccine and an economic recovery.
Already we see hype on COVID as  CDC director, Dr. Robert Redfield has told governors to prepare for the large scale distribution  of a vaccine by November 1 (2 days before the elections).
Dr. Fauci, NIAID director, predicts a safe and effective vaccine by year-end.
The conservative Kiplinger letter forecasts  “the strangest  economic recession and recovery of your lifetime” for a Q3 GDP  increase of 19% at an annual rate, “twice as much as during the Great Recession of 2007-2009.”
Q2 declined 31.7% (ann.rate). Kiplinger sees a solid gain in 2021, and a return to pre-COVID levels by 2022.  How’s that for pre-election hype ?
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Wednesday September 2, 2020 (DJIA: 28,645)  A “W not a “V”  ?
     This bubble has far exceeded any I could have imagined, rivaling the dot-com 2000 bubble that took the S&P 500 price/earnings ratio (P/E) to 44. The bubble burst on March 24, 2000 leading to declines in the S&P 500 of 50.5% and 78.4% in the Nasdaq Comp.
The S&P 500 PE is now 32.5 times earnings, but that stands to rise in face of slipping corporate earnings.
While the 2000 bubble was powered by dot-com/Internet stocks with no fundamental substance, both bubbles have one thing in common – panic.
CNN’s Fear/Greed Index is well into  extreme territory. Based on a ratio of put option and call option buying, the Index has not reflected this little interest in puts in two years.
Currently, the economy is rebounding from severely depressed levels in March/April, suggesting a “V” recovery.
However, a report by Axios AM today suggests otherwise.  Based on unprecedented job losses business failures and reduced spending, Axios warns of another slide in the economy.
      Darius Dale of Hedgeeye Risk Management sees the U.S. economy transitioning from a depression to a recession and not a recovery.
Erine Tedeschii of Everscore ISI  is concerned with layoffs that have gone from temporary to permanent and a rising rate of ling-term unemployment.
Compared with the Great recession (2007-2009)the three times as many  job have been lost this times  and four times as many people on government unemployment insurance.
BOTTOM LINE:
The Street is betting that the economy will surge back well beyond  pre-COVID levels.  Problem with that rationale is, COVID is still very much with us, curtailing spending and and  optimism about the future.
While the 21-day , 35% plunge in stock prices in February/March was severe, stocks were not down long enough to create respect for what can happen to a  portfolio in a recession.
After an 11- year long economic expansion and bull market, the Street may have become desensitized to risk.
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Monday August 31, 2010 “ Fed Inflates Bubble Further With Policy Announcement”
Stock Market
– Fever increasing, quick money can be made in overheated markets like this, but the risk of a downdraft is high. The Street is betting on a quick recovery, but that WILL NOT happen if the economy is straight-jacketed by COVID-19.  Expect lies and more lies from this administration about a vaccine, treatment, and instant test results. The stock market must be up going into  the November 3 election, and they will stop at absolutely nothing to hype it.
Economy: Rebound within recession. Double dip possible. Current reports are mostly based on changes from depressed levels.  COVID-19 may not go away for a year or more.
What to do: 
Maintain a cash reserve in line with one’s tolerance for risk.
That affords protection against a sudden flash crash, as well as gives one the reserve to buy-in at lower prices.
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     Bubble just keeps inflating, and it stands to inflate more after the Federal
Reserve just announced a big change in policy.
   For decades, the Fed was charged with fighting inflation by raising and lowering  its fed funds interest rates, injecting and withdrawing funds from the system in an effort to counter  recessions and expansions.
The policy change, announced at last week’s annual Jackson Hole policy conference, stands to keep interest rates near zero indefinitely, even if inflation rises well above their target rate of 2%.
 This  gives individuals little alternative but to buy stocks if they want some a chance at a return on their money.
The  timing could be disastrous, since by reasonable, time-tested measures of value, the stock market is vastly overvalued, and the Fed’s  action gooses a very pricey  market higher.
 The S&P 500 was overvalued before COVID hammered  it  down 36% in 21 days earlier this year, and it is so much more overvalued now that the S&P 500 is at new highs and corporate earnings are  taking a beating.
I believe in free trading stocks, not micro-management by a bunch of corner-office , balance-your-checkbook-everyday, bankers who never-ever respected the stock market’s need to constantly reflect known positives and negatives, as well as a consensus of the future without their intrusion.   Dangerous mentality !  We saw what happened with bubble #1 (January 2019 – February 2020). Now we are in bubble #2 and they just iced the cake with a very untimely announcement.  They should address asset overvaluation, not add to it.
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BOTTOM LINE:
Risks of a major correction to bring the market back to realistic levels are high, but this is a presidential election year and hype about everything will lure investors into the market.
BIG “IF”:  What if COVID continues to hobble the economy causing one economic domino after another to tumble well into 2021 ?
      After the market got hit in February and March, I did not think it could get close to pre-COVID levels, but massive stimulus by the Fed and Congress drove it higher.
     While I correctly forecast the February  Bull Market top  two months in advance, I have not been unable to do so this time, as investors scramble to buy stocks before they run higher  – a classic bubble pattern.
Fighting the Fed has its perils;
it has too much clout.  But all bubbles burst, either because they inflated too much, or because they get pricked by an event, as COVID did last February.
FYI:

Apple (AAPL: 499 ) split  4:1 Friday. Why is that important ?
Because the Dow Jones Industrial Average (DJIA) is price-weighted. On Monday AAPL will trade at roughly 125 instead 499, giving percentage moves in it one-quarter the impact it had before the split.

Since the March 23 lows, it has contributed 1,952 points to the DJIA, Friday close (28,653).

More on DOW: EXXOM Mobil (XOM:41), Raytheon (RTX: 62), Pfizer (PFE: 38) are being replaced by:
Salesforce (CRM: 271), Honeywell (HON:168) and Amgen (AMGN: 253).
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Friday  Aug 21, 2020 (DJIA: 27,739)  FAANG Stocks Roar – Others Snore”  Warren Buffett says the market cap-to-GDP ratio “is probably the best single measure of where valuations stand at a given moment.”
James Emanuel, author and investor, highlighted it in his Aug.19 post to Seeking Alpha.com, using it as one of a number of hard-hitting indications of over valuation in the stock market.
Currently,  the Buffet indicator stands at 172% versus 109% at the bull market top in 2007 and  141% at the top of the dot-com bull market, and more than twice the long-term average of 82%.  (see full analysis below).
FAANG
The FAANG stocks are driving the S&P 500 and Nasdaq. Not only are their businesses strong, but they sport huge  market capitalizations which causes them to have a dominating impact on the S&P 500 and Nasdaq Comp.  as a whole.
Since the December 2018 lows the ProShares ex-technology ETF (SPXT) appreciated 29% through Aug. 20, while the SPDR S&P 500 ETF  (SPY, )including the technology stocks appreciated 40%.
The invesco QQQ trust series I EFT (QQQ) soared 94%  in the period. In hindsight, this was the play.
Since the Dec. 2018 lows the FAANG stocks appreciated an average of 161%

Facebook ( FB:+120%), Amazon (AMZN +150%), Apple (AAPL: 238%), Netflix (NFLX: +116%), Google (GOOG: +64%).
The BIG “buy-low/ sell high” question is:
My calculation here starts at the low in December 2018, what would a sane person do with their shares when the Feb./Mar. flash crash hit ?
Would they have sold before the crash, or during it  as the market roared back and they felt they were lucky to get out with a 40% ,  60% gain at some point along the way ?
So, why are investors racing in to buy the FAANG stocks at this level ?  Will this question look silly a month from now – FAANG stocks much higher.

Bottom Line:
I believe we are in the eye of one of the most  dangerous storms of our time. Currently,  economic indicators are bouncing off severely depressed levels. The Leading Economic Indicators bounced  1.4% in July but remain well below highs.  While July’s industrial production  rose 3%  it remains below pre-COVID levels.
The key will be when we come out of the eye of the storm.  Will the bumps off depressed levels follow through with a full recovery or turn down ?  Wall Street seems to think so, but they were wrong last January.
And if the economic dominoes continue to tumble.  Will they be bad enough to trigger a plunge in stock prices as the market searches for a level that discounts the bad news and the uncertainty that lies ahead ?
MUST READ:

The following  Seeking Alpha.com  post builds a  case for a major correction of 35% – 50%. This analysis emphasizes “all’ the points I have urged you to take seriously over the last 9 months.
He has the resources and space to do it in the detail that necessary to highlight  the points.
Must reading for serious investors.  Just copy and paste to your browser.

James Emanuel

https://seekingalpha.com/article/4369782-s-and-p-500-flying-in-danger-zone?utm_medium=email&utm_source=seeking_alpha&mail_subject=s-p-500-flying-in-the-danger-zone&utm_campaign=nl-macro-view&utm_content=link-0
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RECENT POSTS:
Thursday August 20, 2020 (DJIA:27,692) “Bubble #2 to Burst Any Time Now”

The stock market hit some headwinds yesterday following the release of the July Federal Reserves’minutes, which cut  its forecast for the economy.  The report, which is always released a month late, referred to the  risk for the economy as “significant.”
Black Rock’s Bob Miller said, “This strongly suggests  both monetary and fiscal policy support will continue to be required for the recovery to remain on track.”
       This is an election year, you can be sure both are going to happen. Democratic House Speaker Nancy Pelosi indicated she would be willing to discuss a compromise on  another relief  package, which should happen within a week or two.
Meanwhile the Street is looking beyond the pandemic to a full recovery.
It was nice to see a stock other than a techy do well. TARGET (TGT) reported strong earnings for Q2, its stock jumped 12.65% in response. Lowe’s (LOW) stock jumped as well after good earnings, both beneficiaries of the pandemic.
However, if you pull 94 stocks out of the S&P 500 that are considered “Technology,” you get a different story about the robust market rally since the March flash crash lows.  While the tech stocks on average were up 20% for the year as a whole, the remaining 408 stocks in the S&P 500 were down on average.
BOTTOM LINE:
The only outstandingly bullish development I see is the prospect for the Democrats to gain total control of the government, roll up its sleeves and  do the tough stuff that is needed to undue to damage done by this administration and  get America back on a winning track.
       Yes, there will be another stimulus bill and the Fed will do whatever it can to micro-manage the economy and stock market, but those are “props” to an economy that is currently in the “eye” of  a horrific storm.
The key will be what happens when we come out of the eye ?
         Will the economic dominoes continue to tumble ?  If so, the stock market will tumble. The entire disconnect between the market and the carnage in our economy and lives is based on an unjustified, naive assumption that all will be well by Q4 and beyond.
What spaceship is the Street flying on ?  We were on the brink of recession in Q4 of 2018, which the Fed was able to postpone until COVID-19 interceded.   What are we going back to ?
Why would the economy grow from this debacle when it is still unwinding ?
This isn’t high math, it’s common sense and the stock market has yet to begin to discount the adversity of what has happened and the uncertainty that confronts us.
          The adjustment to reality will be abrupt and most likely, a flash crash as institutions become aware (all at the same time) that there is no “V” recovery, it’s not even an “L,” it’s down, then sideways for the economy and stock market until the dominoes are no longer tumbling.
       OK, so no one wants to hear this ! Right ?  Why not just take a little off the table just in case I am right ?   In February and March, you saw what  can happen to the bluest of chips – DJIA down 38.4% in 21 days.
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George Brooks
Investor’s first read.com
brooksie01@aol.com
A Game-On Analysis, LLC publication
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.