Bubble, Bubble, Bubble

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,121
S&P 500: 3,140
Nasdaq: 8,647
Russell: 1,624
Wednesday  November 27, 2019
     9:26 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      The dot-com bubble saw a fivefold increase in the Nasdaq Composite between 1995 and 2000 followed by a 77% plunge after the bubble burst. It took 12 years for the Nasdaq to get back to  its 2000 peak price of 5,048.
       In December 1996, Fed Chief Alan Greenspan referred to surging speculation in high tech stocks as “irrational exuberance.”
His warning came four years too early as investors enchanted by the open-ended potential for dot-com companies, scrambled to get on board before the train left the station without them.  Most of these dot-com companies had little substance to justify anyone buying them, which proved to be true starting on March 12, 2000.
Add a new acronym to your growing list. It’s FOMO, short for “Fear Of Missing Out.”  Yes, fear of missing a chance to make more money, ergo buying stocks regardless of excessive valuation.  The idea for doing such a foolish thing is an investor expects to sell their stocks to  greater fool at a higher price.
Today’s market is looking like another inflating bubble in route to a burst. It too has been fed by an economic expansion lasting 10 years and a historically extreme price/earnings ratio, 30.8 versus a historic norm of 16.6.
What to do:
Since these manias tend to chug on relentlessly like the pink rabbit, it is best to simply raise a healthy cash reserve, even though that is the last thing you want to do.  At some point the bubble will burst with a 12%-18% vertical plunge in the market, just for openers.

TECHNICAL
Expect a lot of volatility between now and year-end. Year-end behavior by individual stocks tend to defy reason. Stock that should go up – go down, One’s that should go down – go up. It’s all about institutional portfolio adjustments and decisions based on taxes.

………………………………………….
Minor Support: DJIA:28,076; S&P 500:3,136; Nasdaq Comp.:8,641
Minor Resistance: DJIA:28,127; S&P 500:3,140; Nasdaq Comp.:8,651
………………………………………………………….

Tuesday November 26 “Fed’s Powell: Economic Glass More Than Half Full ?”
Really ?
Speculation is rising from hot to Scorching as the  smaller company Russell 2000 jumps more than 2% in a day to all-time highs. This is more bubble stuff and almost impossible for investors to ignore.
Gotta get in on this, is the mindset, hock the jewels and bet the ranch.  Who could blame anyone when the market keeps running from overvalued to incredibly overvalued, but who cares as long as it keeps rising.   Beyond classic late stage bull market, this is out of sight and much like the dot-com bubble in 1999-2000.
Fed’s Powell says the economic glass is more than half full.  I am awaiting economist A. Gary Shilling’s “INSIGHT” to confirm whether  Powell is right or wrong.
My bearishness is based on two things.  One,  Shilling’s well documented conclusion that our economy is in the early stages of recession, two, the extreme overvaluation of the S&P 500.
There has never been a recession without an accompanying bear market.
Does the market “know all” ?
Not if you consider we have had 8 bear markets since 1980, two of which were in excess of 50%.

 

I would refer to the Stock Trader’s Almanac more often if my space here was not limited.  Give it to yourself for Christmas. Not only does it contain more relevant information about everything you need (and want) to know about seasonal and timely trading, but it is accompanied by regular commentary. (Contact:800-762-2974)
The “Best Six Months” for owning stocks (Nov.1 to Apr 1) is one of its outstanding discoveries. It highlights a few year-end phenoms like the tendency for market weakness before Thanksgiving Day and strength after.
      The “Santa Claus Rally” was discovered in 1972 by founder Yale Hirsch whose jungle, “If Santa Should Fail to Call, Bears may Come to Broad and Wall,” sums it up in a few words.
Monday November 254  “Risk Rises as Bubble Inflates Further”
      “The Only Free Lunch” on Wall Street occurs in late December as stocks hitting 52-week new lows selectively cough up over-sold bargains  that will rebound after the tax selling abates.  December 20 is projected to be the bottom this year..
We live in uncertain times, both the economic expansion and bull market are long in the tooth. I have to go back to late 1972/early 1973 to find a time that I feel parallels the current time for economic. Stock market and political drama. Clearly we are witnessing a bubble in the stock market and it just keeps inflating.  CAREFUL ! The lure to go all in, even borrow to buy stocks becomes irresistible at these junctures.
……………………………………………………………………
Friday November 22  “Tariffs to Start Hurting Companies”
Here’s where push comes to shove.   Axios AM reports that “Big retailers are refusing to accept tariff price increases from their brand suppliers, telling the companies they will have to either eat the tariff costs or find another buyer.”
This stands to adversely impact the smaller companies that can afford it the least.  The next round of tariff increases will hit on December 15.
While I expect that date to be pushed into 2020, the ability for corporation managements to plan for the future must be next to impossible.
A tariff  increase would be the final straw in the efforts to avoid a recession.
I have never seen investors ignore serious warning signs to this extent.
It must be computer algos that are programmed to ignore bad news, or are not programmed to understand the dangers that exist for not adjusting for potential adversity.
Looking back, I assume many money managers and analysts will regret letting an algo do their thinking for them.
      Bull markets do end. Bear markets happen.

 

Thursday Nov. 21 “Too Many Lies and Misinformation”
Reuters reported Wednesday that the phase one trade deal   may be pushed into 2020.  Whoa ! Didn’t Trump’s economic guru Larry Kudlow announce last week that the U.S. and China were “getting close to reaching a trade deal….that “It’s not done yet, but there has been very good progress and the talks have been very constructive.”
Misleading statements like these  go back at least  to February with  Kudlow’s hype on trade progress like “fantastic”, good headway”, “positive surprises”, “lots of momentum” raising hopes for investors only to be dashed by news of no progress.
While the Fed is truthful, it falls short of being forthcoming.  The economy is not in a good place.
What happens when the Street discovers this endless spew of nonsense is no less that a Ponzi scheme to buy time until November 2020. 
Too much is at stake for  investors, some who have been chased into stocks in search of a return, others up in years and unable to afford a huge hit to their portfolio, yet others caught up in the cruise control bull market mania, only to get skewered by a massive plunge to reality in the stock market as a recession, already underway, becomes reality.
IT IS NOT TOO LATE TO RAISE CASH, A LOT OF IT, EVEN THOUGH RETURNS ON CASH ARE NEXT TO NOTHING.
The stock market sells at a price/earnings higher than any in the past except the dot-com bull market top in March 2000, which was followed by a 50% plunge in the S&P 500 and 78% plunge in the Nasdaq Comp.
       BOTTOM LINE:  This stock market does not discount any negatives, not a recession, not a stall in earnings, not impeachment, or  an endless haggle over trade.
Does the market “know all” ?
       That’s what  “they” say.  But the record says something different with  eight bear markets since 1980, two with drops in excess of 50%.
……………………………………………………………………….
Wednesday November 20 “All It Takes Is For A Few Big Hitters to Break Ranks and Sell”
      I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
………………………………………………………………………………….
Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

Fed’s Powell: Economic Glass More Than Half Full ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,066
S&P 500: 3,133
Nasdaq: 8,632
Russell: 1,621
Tuesday  November 26, 2019
     8:26 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Really ?
Speculation is rising from hot to Scorching as the  smaller company Russell 2000 jumps more than 2% in a day to all-time highs. This is more bubble stuff and almost impossible for investors to ignore.
Gotta get in on this, is the mindset, hock the jewels and bet the ranch.  Who could blame anyone when the market keeps running from overvalued to incredibly overvalued, but who cares as long as it keeps rising.   Beyond classic late stage bull market, this is out of sight and much like the dot-com bubble in 1999-2000.
Fed’s Powell says the economic glass is more than half full.  I am awaiting economist A. Gary Shilling’s “INSIGHT” to confirm whether  Powell is right or wrong.
My bearishness is based on two things.  One,  Shilling’s well documented conclusion that our economy is in the early stages of recession, two, the extreme overvaluation of the S&P 500.
There has never been a recession without an accompanying bear market.
Does the market “know all” ?
Not if you consider we have had 8 bear markets since 1980, two of which were in excess of 50%.
TECHNICAL
Expect a lot of volatility between now and year-end. Year-end behavior by individual stocks tend to defy reason. Stock that should go up – go down, One’s that should go down – go up. It’s all about institutional portfolio adjustments and decisions based on taxes.

………………………………………….
Minor Support: DJIA:28,007; S&P 500:3,127; Nasdaq Comp.:8,622
Minor Resistance: DJIA:28,117; S&P 500:3,147 ; Nasdaq Comp.:8,647
………………………………………………………….

I would refer to the Stock Trader’s Almanac more often if my space here was not limited.  Give it to yourself for Christmas. Not only does it contain more relevant information about everything you need (and want) to know about seasonal and timely trading, but it is accompanied by regular commentary. (Contact:800-762-2974)
The “Best Six Months” for owning stocks (Nov.1 to Apr 1) is one of its outstanding discoveries. It highlights a few year-end phenoms like the tendency for market weakness before Thanksgiving Day and strength after.
      The “Santa Claus Rally” was discovered in 1972 by founder Yale Hirsch whose jungle, “If Santa Should Fail to Call, Bears may Come to Broad and Wall,” sums it up in a few words.
Monday November 254  “Risk Rises as Bubble Inflates Further”
      “The Only Free Lunch” on Wall Street occurs in late December as stocks hitting 52-week new lows selectively cough up over-sold bargains  that will rebound after the tax selling abates.  December 20 is projected to be the bottom this year..
We live in uncertain times, both the economic expansion and bull market are long in the tooth. I have to go back to late 1972/early 1973 to find a time that I feel parallels the current time for economic. Stock market and political drama. Clearly we are witnessing a bubble in the stock market and it just keeps inflating.  CAREFUL ! The lure to go all in, even borrow to buy stocks becomes irresistible at these junctures.
……………………………………………………………………
Friday November 22  “Tariffs to Start Hurting Companies”
Here’s where push comes to shove.   Axios AM reports that “Big retailers are refusing to accept tariff price increases from their brand suppliers, telling the companies they will have to either eat the tariff costs or find another buyer.”
This stands to adversely impact the smaller companies that can afford it the least.  The next round of tariff increases will hit on December 15.
While I expect that date to be pushed into 2020, the ability for corporation managements to plan for the future must be next to impossible.
A tariff  increase would be the final straw in the efforts to avoid a recession.
I have never seen investors ignore serious warning signs to this extent.
It must be computer algos that are programmed to ignore bad news, or are not programmed to understand the dangers that exist for not adjusting for potential adversity.
Looking back, I assume many money managers and analysts will regret letting an algo do their thinking for them.
      Bull markets do end. Bear markets happen.

 

Thursday Nov. 21 “Too Many Lies and Misinformation”
Reuters reported Wednesday that the phase one trade deal   may be pushed into 2020.  Whoa ! Didn’t Trump’s economic guru Larry Kudlow announce last week that the U.S. and China were “getting close to reaching a trade deal….that “It’s not done yet, but there has been very good progress and the talks have been very constructive.”
Misleading statements like these  go back at least  to February with  Kudlow’s hype on trade progress like “fantastic”, good headway”, “positive surprises”, “lots of momentum” raising hopes for investors only to be dashed by news of no progress.
While the Fed is truthful, it falls short of being forthcoming.  The economy is not in a good place.
What happens when the Street discovers this endless spew of nonsense is no less that a Ponzi scheme to buy time until November 2020. 
Too much is at stake for  investors, some who have been chased into stocks in search of a return, others up in years and unable to afford a huge hit to their portfolio, yet others caught up in the cruise control bull market mania, only to get skewered by a massive plunge to reality in the stock market as a recession, already underway, becomes reality.
IT IS NOT TOO LATE TO RAISE CASH, A LOT OF IT, EVEN THOUGH RETURNS ON CASH ARE NEXT TO NOTHING.
The stock market sells at a price/earnings higher than any in the past except the dot-com bull market top in March 2000, which was followed by a 50% plunge in the S&P 500 and 78% plunge in the Nasdaq Comp.
       BOTTOM LINE:  This stock market does not discount any negatives, not a recession, not a stall in earnings, not impeachment, or  an endless haggle over trade.
Does the market “know all” ?
       That’s what  “they” say.  But the record says something different with  eight bear markets since 1980, two with drops in excess of 50%.
……………………………………………………………………….
Wednesday November 20 “All It Takes Is For A Few Big Hitters to Break Ranks and Sell”
      I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
………………………………………………………………………………….
Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rises as Bubble Inflates Further

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,875
S&P 500: 3,110
Nasdaq: 8,519
Russell: 1,588
Monday  November 25, 2019
     9:17 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
I would refer to the Stock Trader’s Almanac more often if my space here was not limited.  Give it to yourself for Christmas. Not only does it contain more relevant information about everything you need (and want) to know about seasonal and timely trading, but it is accompanied by regular commentary. (Contact:800-762-2974)
The “Best Six Months” for owning stocks (Nov.1 to Apr 1) is one of its outstanding discoveries. It highlights a few year-end phenoms like the tendency for market weakness before Thanksgiving Day and strength after.
      The “Santa Claus Rally” was discovered in 1972 by founder Yale Hirsch whose jungle, “If Santa Should Fail to Call, Bears may Come to Broad and Wall,” sums it up in a few words.
The Only Free Lunch” on Wall Street occurs in late December as stocks hitting 52-week new lows selectively cough up over-sold bargains  that will rebound after the tax selling abates.  December 20 is projected to be the bottom this year..
We live in uncertain times, both the economic expansion and bull market are long in the tooth. I have to go back to late 1972/early 1973 to find a time that I feel parallels the current time for economic. Stock market and political drama. Clearly we are witnessing a bubble in the stock market and it just keeps inflating.  CAREFUL ! The lure to go all in, even borrow to buy stocks becomes irresistible at these junctures.

TECHNICAL
Expect a lot of volatility between now and year-end. Year-end behavior by individual stocks tend to defy reason. Stock that should go up – go down, One’s that should go down – go up. It’s all about institutional portfolio adjustments and decisions based on taxes.

………………………………………….
Minor Support: DJIA:27,851; S&P 500:3103; Nasdaq Comp.:8,501
Minor Resistance: DJIA:27,945; S&P 500:3,119; Nasdaq Comp.:8,537
………………………………………………………….

Friday November 22  “Tariffs to Start Hurting Companies”
Here’s where push comes to shove.   Axios AM reports that “Big retailers are refusing to accept tariff price increases from their brand suppliers, telling the companies they will have to either eat the tariff costs or find another buyer.”
This stands to adversely impact the smaller companies that can afford it the least.  The next round of tariff increases will hit on December 15.
While I expect that date to be pushed into 2020, the ability for corporation managements to plan for the future must be next to impossible.
A tariff  increase would be the final straw in the efforts to avoid a recession.
I have never seen investors ignore serious warning signs to this extent.
It must be computer algos that are programmed to ignore bad news, or are not programmed to understand the dangers that exist for not adjusting for potential adversity.
Looking back, I assume many money managers and analysts will regret letting an algo do their thinking for them.
      Bull markets do end. Bear markets happen.

 

Thursday Nov. 21 “Too Many Lies and Misinformation”
Reuters reported Wednesday that the phase one trade deal   may be pushed into 2020.  Whoa ! Didn’t Trump’s economic guru Larry Kudlow announce last week that the U.S. and China were “getting close to reaching a trade deal….that “It’s not done yet, but there has been very good progress and the talks have been very constructive.”
Misleading statements like these  go back at least  to February with  Kudlow’s hype on trade progress like “fantastic”, good headway”, “positive surprises”, “lots of momentum” raising hopes for investors only to be dashed by news of no progress.
While the Fed is truthful, it falls short of being forthcoming.  The economy is not in a good place.
What happens when the Street discovers this endless spew of nonsense is no less that a Ponzi scheme to buy time until November 2020. 
Too much is at stake for  investors, some who have been chased into stocks in search of a return, others up in years and unable to afford a huge hit to their portfolio, yet others caught up in the cruise control bull market mania, only to get skewered by a massive plunge to reality in the stock market as a recession, already underway, becomes reality.
IT IS NOT TOO LATE TO RAISE CASH, A LOT OF IT, EVEN THOUGH RETURNS ON CASH ARE NEXT TO NOTHING.
The stock market sells at a price/earnings higher than any in the past except the dot-com bull market top in March 2000, which was followed by a 50% plunge in the S&P 500 and 78% plunge in the Nasdaq Comp.
       BOTTOM LINE:  This stock market does not discount any negatives, not a recession, not a stall in earnings, not impeachment, or  an endless haggle over trade.
Does the market “know all” ?
       That’s what  “they” say.  But the record says something different with  eight bear markets since 1980, two with drops in excess of 50%.
……………………………………………………………………….
Wednesday November 20 “All It Takes Is For A Few Big Hitters to Break Ranks and Sell”
      I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
………………………………………………………………………………….
Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

Tariffs Starting to Hurt Companies

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,766
S&P 500: 3,1-3
Nasdaq: 8,506
Russell: 1,583
Friday  November 22, 2019
     9:04 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Here’s where push comes to shove.   Axios AM reports that “Big retailers are refusing to accept tariff price increases from their brand suppliers, telling the companies they will have to either eat the tariff costs or find another buyer.”
This stands to adversely impact the smaller companies that can afford it the least.  The next round of tariff increases will hit on December 15.
While I expect that date to be pushed into 2020, the ability for corporation managements to plan for the future must be next to impossible.
A tariff  increase would be the final straw in the efforts to avoid a recession.
I have never seen investors ignore serious warning signs to this extent.
It must be computer algos that are programmed to ignore bad news, or are not programmed to understand the dangers that exist for not adjusting for potential adversity.
Looking back, I assume many money managers and analysts will regret letting an algo do their thinking for them.
      Bull markets do end. Bear markets happen.
TECHNICAL
Expect a lot of volatility between now and year-end. Year-end behavior by individual stocks tend to defy reason. Stock that should go up – go down, One’s that should go down – go up. It’s all about institutional portfolio adjustments and decisions based on taxes.

………………………………………….
Minor Support: DJIA:27,607; S&P 500:3,096; Nasdaq Comp.:8,467
Minor Resistance: DJIA:27,817; S&P 500:3,111; Nasdaq Comp.:8,517
………………………………………………………….

Thursday Nov. 21 “Too Many Lies and Misinmformation”
Reuters reported Wednesday that the phase one trade deal   may be pushed into 2020.  Whoa ! Didn’t Trump’s economic guru Larry Kudlow announce last week that the U.S. and China were “getting close to reaching a trade deal….that “It’s not done yet, but there has been very good progress and the talks have been very constructive.”
Misleading statements like these  go back at least  to February with  Kudlow’s hype on trade progress like “fantastic”, good headway”, “positive surprises”, “lots of momentum” raising hopes for investors only to be dashed by news of no progress.
While the Fed is truthful, it falls short of being forthcoming.  The economy is not in a good place.
What happens when the Street discovers this endless spew of nonsense is no less that a Ponzi scheme to buy time until November 2020. 
Too much is at stake for  investors, some who have been chased into stocks in search of a return, others up in years and unable to afford a huge hit to their portfolio, yet others caught up in the cruise control bull market mania, only to get skewered by a massive plunge to reality in the stock market as a recession, already underway, becomes reality.
IT IS NOT TOO LATE TO RAISE CASH, A LOT OF IT, EVEN THOUGH RETURNS ON CASH ARE NEXT TO NOTHING.
The stock market sells at a price/earnings higher than any in the past except the dot-com bull market top in March 2000, which was followed by a 50% plunge in the S&P 500 and 78% plunge in the Nasdaq Comp.
       BOTTOM LINE:  This stock market does not discount any negatives, not a recession, not a stall in earnings, not impeachment, or  an endless haggle over trade.
Does the market “know all” ?
       That’s what  “they” say.  But the record says something different with  eight bear markets since 1980, two with drops in excess of 50%.
……………………………………………………………………….
Wednesday November 20 “All It Takes Is For A Few Big Hitters to Break Ranks and Sell”
      I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
………………………………………………………………………………….
Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

Too Many Lies and Misinformation

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,821
S&P 500: 3,108
Nasdaq: 8,526
Russell: 1,591
Thursday  November 21, 2019
     8:55 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Reuters reported Wednesday that the phase one trade deal   may be pushed into 2020.  Whoa ! Didn’t Trump’s economic guru Larry Kudlow announce last week that the U.S. and China were “getting close to reaching a trade deal….that “It’s not done yet, but there has been very good progress and the talks have been very constructive.”
Misleading statements like these  go back at least  to February with  Kudlow’s hype on trade progress like “fantastic”, good headway”, “positive surprises”, “lots of momentum” raising hopes for investors only to be dashed by news of no progress.
While the Fed is truthful, it falls short of being forthcoming.  The economy is not in a good place.
What happens when the Street discovers this endless spew of nonsense is no less that a Ponzi scheme to buy time until November 2020. 
Too much is at stake for  investors, some who have been chased into stocks in search of a return, others up in years and unable to afford a huge hit to their portfolio, yet others caught up in the cruise control bull market mania, only to get skewered by a massive plunge to reality in the stock market as a recession, already underway, becomes reality.
IT IS NOT TOO LATE TO RAISE CASH, A LOT OF IT, EVEN THOUGH RETURNS ON CASH ARE NEXT TO NOTHING.
The stock market sells at a price/earnings higher than any in the past except the dot-com bull market top in March 2000, which was followed by a 50% plunge in the S&P 500 and 78% plunge in the Nasdaq Comp.
       BOTTOM LINE:  This stock market does not discount any negatives, not a recession, not a stall in earnings, not impeachment, or  an endless haggle over trade.
Does the market “know all” ?
       That’s what  “they” say.  But the record says something different with  eight bear markets since 1980, two with drops in excess of 50%.
………………………………………………………………………………
TECHNICAL
Expect volatility between now and year-end.
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
………………………………………….
Minor Support: DJIA:27,776; S&P 500:3,104; Nasdaq Comp.:8,516
Minor Resistance: DJIA:27,853; S&P 500:3,114; Nasdaq Comp.:8,537
………………………………………………………….

Wednesday November 20 “All It Takes Is For A Few Big Hitters to Break Ranks and Sell”
      I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
………………………………………………………………………………….
Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
Thursday Nov. 14  “Bull Market Top Forming
     The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
………………………………………………………………………
Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
………………………………………………………………………………
Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
………………………………………………………………
Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
……………………………………………………………………

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

 

 

 

 

 

 

 

 

 

All It Takes Is For a Few Big Hitters to Break Ranks and Sell

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,934
S&P 500: 3,120
Nasdaq: 8,570
Russell: 1,598
Wednesday  November 20, 2019
     9:15 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
I wish I could bring good news, who likes to start the day with negativity ?  There are pockets of strength with recent jumps in Boeing (BA: +8.3%, Disney: DIS: +15%, Lam Research: LCRX: +22%), but sudden moves like those are part buying for appreciation potential. As well as short covering.
This is late stage bull market behavior. The Street doesn’t want the party to end. MarketWatch reports that the Hulbert Stock Newsletter Sentiment index reflects bullish readings of 65.6%, that’s higher than 95% of the readings since the dot-com bubble burst that preceded drops of 50% for the S&P 500  and 78% for the Nasdaq Comp. between 2000 and 2002.
IMHO, this bull market has been driven to extreme valuations by corporations buying back stock and hype, by the Fed on interest rate policy and the Administration on trade hopes.
IMHO, we are on the threshold of a bear market and recession, if we aren’t in one already.
The normal tendency for investors is to hang in as long as possible to make just one more score before the downturn starts.
That’s where the pummeling  begins and it doesn’t end until fear triggers a lot of selling at the bottom of the bear market.
TECHNICAL
Expect volatility between now and year-end.
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
………………………………………….
Minor Support: DJIA:27,811; S&P 500:3,113; Nasdaq Comp.:8,491
Minor Resistance: DJIA:27,941; S&P 500:3,123; Nasdaq Comp.:8,569
………………………………………………………….

Tuesday  November 20 “Reminds Me of 1973-1974 (S&P 500 – 49.9%)
       In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
……………………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
Thursday Nov. 14  “Bull Market Top Forming
     The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
………………………………………………………………………
Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
………………………………………………………………………………
Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
………………………………………………………………
Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
……………………………………………………………………

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

 

 

 

 

 

 

 

 

Reminds Me of 1973-1974 (S&P 500 – 49.9%)

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,036
S&P 500: 3,122
Nasdaq: 8,849
Russell: 1,592
Tuesday  November 19, 2019
     9:15 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
In my “Folly Sci 20/20”, I  contended that President Trump will not be the Republican candidate  in 2020.  If that is the case, odds are good the Republicans will lose control of the White House and most likely  control of Congress.
While the stock market has done well during Democrat presidencies (depending on when you start your calculations), the Street currently favors Republicans.
Whether Trump runs and is beaten or resigns for health or other reasons, the news  would rock the stock market.
This stock market is on cruise control driven by computer algos that obviously have not been programmed to consider a market without Trump.
          In the early 1970s, it was the “One Decision” stocks, the “Nifty Fifty,” stocks that investors should buy and hold forever.   This market reminds me of that one-way mentality.  Price/earnings ratios  for the Fifty were as excessive then as they are now for the S&P 500, which at 30.4 for the Shiller P/E  is 82% above the arithmetic mean.
Holding them would have ultimately been profitable (Polaroid and Xerox exceptions), 7 bear markets and  4 recessions over 15 years stood to force their sale at some time.
CONCLUSION:  At some point, reality will set in – there are no new eras for stocks, never have been.  Recessions happen and bear markets  consistently accompany recessions.
I have been wrong about the timing of a bear market.  This market mania will continue for days, weeks or a month or two until the spell is snapped by an event or until buyers are a no-show.
The first week in January comes to mind, possibly because the current scene reminds me of 1973, the beginning of the 1973-1974  bear market ( recession  Nov. 1973 – Mar. 1975), a period  marred by  President Nixon’s resignation in face of impeachment proceedings and the OPEC oil embargo.
When it breaks, there will be little time to react, in fact the first jog down will look like a buying opportunity before a straight down 12% -18% plunge.
TECHNICAL
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
………………………………………….
Minor Support: DJIA:28,017; S&P 500:3,117; Nasdaq Comp.:8,537
Minor Resistance: DJIA:28,041; S&P 500:3,123; Nasdaq Comp.:8,559
………………………………………………………….

Monday  November 18  “Bulls Fear Nothing…Is There a Message here ?”
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
………………………………………………………………………….
 Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
Thursday Nov. 14  “Bull Market Top Forming
     The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
………………………………………………………………………
Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
………………………………………………………………………………
Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
………………………………………………………………
Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
……………………………………………………………………

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

 

 

 

 

 

 

 

Bulls Fear Nothing……Is There a Message Here ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 28,004
S&P 500: 3,120
Nasdaq: 8,540
Russell: 1,596
Monday  November 18, 2019
     9:15 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The Federal Open Market Committee (FOMC) meets Wednesday but no presser is scheduled.  Even so. a follow up commentary  can be expected.  I see nothing new except platitudes about the economy being in a good place (it isn’t).
       Leading economic indicators for October will be reported Thursday  at 10 a.m. and are expected to mark the third straight decline in this important index. It is doubtful  the Street will react.
The main focus here is on trade talks which the Administration claims are going well ??
In spite of the fact House impeachment proceedings are not going well for President Trump, the Street does not seem to care.
All told, the Street is not concerned with anything, and that is classic bull market arrogance/denial.
When the bear strikes, it will be straight down 12% -18% for openers.
When ?
Early January is a good bet.
TECHNICAL
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
Friday  Nov 15  “Bear Market….. WHY ?
Why a bear market ?
   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.
…………………………………………………………………….
Thursday Nov. 14  “Bull Market Top Forming
     The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
………………………………………………………………………
Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
………………………………………………………………………………
Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
………………………………………………………………
Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
……………………………………………………………………

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

 

 

 

 

 

 

Bear Market ! WHY ?

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,781
S&P 500: 3,096
Nasdaq: 8,479
Russell: 1,588
Friday  November 15, 2019
     9:15 a.m. 
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      Why a bear market ?   A couple things come to mind.
Lies, lies, lies at the highest level,  a clueless indifferent public, press bias, debt, debt, debt, arrogance, greed, denial, earnings, inequality imbalance, overvaluation assets (stocks, real estate) ………. Too few people expect it.
What will the bear look like ?
Straight down.  Traders, hedge funds and fast money will hit the exits first and overwhelm cruise-control buyers. The public will follow and the institutions will hold out until fear and pressure by clients screaming “raise cash.”
       FYI that happens near the bottom when everyone wants out and few (myself) are urging readers to work back in.
After an initial plunge of 12% – 18%, numerous attempts to rally will fail as new negatives and negative pundit commentary pound the market lower.
WHAT MUST BE UNDERSTOOD HERE IS:  there are no new eras, no markets that go uncorrected.  Excesses get punished beyond reason just like bull markets run to excess beyond reason.
EXTREMES: If one has the smarts and psychological discipline the exploitation of extremes is how BIG money is made.
Unfortunately, this is so much about human behavior the buy low/sell high adage is almost impossible to achieve.
This economy is phony, the market is phony and our governance is phony. That spells TROUBLE.
        WHEN ?   January !
WHY ?   More in coming days.

TECHNICAL
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
………………………………………….
Minor Support: DJIA:; S&P 500:; Nasdaq Comp.:
Minor Resistance: DJIA:; S&P 500:; Nasdaq Comp.:
………………………………………………………….
Thursday Nov. 14  “Bull Market Top Forming
     The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
………………………………………………………………………
Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
………………………………………………………………………………
Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
………………………………………………………………
Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
……………………………………………………………………

Friday November 9 “At an Intersection Waiting for the Light to Change”

Let me open with a pitch for the annual Stock Trader’s Almanac, just out. Purchase is accompanied by frequent market analysis to keep it current.
I purchased the first Almanac in 1968, Its founder/publisher, Yale Hirsch, is a legend in the investment analysis/publishing business with many groundbreaking stock market discoveries  in recurring technical patterns and seasonality.
The good news is, it is power-packed with daily, weekly, monthly savvy. The bad news is, once you start reading, all else takes a back seat. Son Jeffrey has taken it over and adds a whole lot more each year plus frequent follow-ups  to this treasure trove of timely information. Contact: 978-750-8400.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE MARKET:
The Street is in a quandary, the market is seriously overvalued on a historical basis, unless corporate earnings find a way to rebound.   That is generally expected to happen next year but that is  where a problem exists.  If earnings DON’T rebound, the Street will have to revise them downward, which with an overvalued market spells bear market.
        I believe they will be revised downward, as a recession looms  in spite of the Fed’s efforts to prop the economy until the 2020 elections are over.
        Is the Fed politically biased ? It looks like it, but for whom ? Yes, delaying would help Trump – if he runs.( I don’t think so, I sense Nikki Haley will be their candidate).  If the Fed feels the  need for a change, they may want to make sure the recession/bear market is in full swing by mid 2020. They have the power. It would be nice if they understood the need for stock prices to find a level that discounts reality rather than trying to micro-manage levels, which the tend to screw up on a regular basis.   Bankers !
Don’t take impeachment proceedings lights whatever your political preferences.  This process could expose a whole lot more than expected. Loss of the Presidency, Senate, House  and more changes stock market dynamics, bad initially, good long-term.
…………………………………………………………

Thursday  November 7  “Trade Breakthrough  ?    Careful !

The market will get a boost today from news that China says a deal would result in the United States rolling back tariffs. At this time, it looks like progress would be pursued  step by step  as points are negotiated.
     But one reason stocks are hitting new highs is just that – perceived progress.
We already know everything appears to be pushed into December as the two countries haggle over a location to have talks.
Even so, stocks need some tangible news on trade before doubts set in “again.”
This is so classic with dominating issues between countries – On again, off, again, on again……
The announcement takes the heat off both leaders and gives them a better chance  at negotiating small concession rather than one big all encompassing  solution.

Obviously, a disappointment in U.S./China trade talks would whack stocks at this pricey level
But the real sleeper would be any significant downgrade in 2020 earnings.  That is not expected  at this time based on what I see on FactSet and  searches on Google.
As noted often, the Street is unconcerned (clueless) about impeachment proceedings  launched against President Trump. It is serious as it stands.  What is more serious is, where this can go.  It may be just the beginning.
 That is another thing the Street hasn’t taken time to consider…. That is what a Fed micro-managed bull market can do to sensitivity. The stock market is no place for delusion….for long.
Conclusion: Favorable trade news out of China, how about the United States ?  Does it go along or have a different solution. Failure to go along kills a rally from lofty levels.  Agreement with China’s concept  is worth more upside.
………………………………………………………………………………………..
Wednesday  Nov. 6  “Street in Denial – Economy, Trade, Impeachment”

After Reuters reported progress in U.S./China trade talks and a likely delay in U.S. tariffs on European autos, the stock market cannot afford any disappointments.
       In fact, at these levels, the stock market is vulnerable, and unless news gets much better from here, the stock market is fully priced.
In November 2016, the Street  celebrated the election of Donald Trump with a strong rally in the stock market.
But the Street has not given consideration to his removal from office via resignation, impeachment/conviction, or defeat in 2020.
With impeachment proceedings well underway, it is likely it will begin to think about alternatives.
A 10-year old bull market wipes out memories of the  most recent bear market (2007 – 2009) where the S&P 500 dropped 57%. At the time the world looked like it was ending, and without gallant efforts by the Bush and Obama administrations and the Fed, we would still be recovering from a global meltdown.
I think tops are tougher to call than bottoms. No one wants bull markets to end, everyone wants bear markets to.  Unless a bear market is triggered by dramatic news, tops take longer to develop as the market begins to sense worsening economic news. However, investors are usually in a state of denial trying to eke out one more big score, and with prodding by the pros in the Street, they keep buying.
Bottoms tend to develop faster, as mounting fear convinces investors prices will continue to fall, and they better sell out completely, resulting in one or more selling climaxes until there are no sellers left.
So, where am I going with all this ?

The end will come when it is least expected, and the outcome will be ugly. Be sure to have a cash reserve and sit close to the exits with the restyou’re your holdings.
…………………………………………………….

Tuesday Nov. 5, 2019 “Bubble  Expands Further”
The next  12 months will be wild as impeachment proceedings move forward, trade talks stir anxiety, and the U.S. economic numbers flow in indicating recession or a pause before a recession.
So far, the Street has a single focus – BUY regardless of any outcome. Most of these decisions are computer based, with human tweaks now and then. That is the primary reason that the Street ignores looming negatives.
Expect “DOW 30,000” to be hyped, as well an economy that is finally recession-free.
What I am reading suggests otherwise, but investors don’t want to hear that in bull markets, and that is why they get hurt in bear markets.
Some investors will think they can sell near the top but not until they make some more money before then.  Some are sure they can ride out a recession/bear market over 6 to 15 months then start making money all over again for the next two to four years.
The problem with that logic is after a 30% plunge in prices the news environment becomes so negative that investors begin to fear that  lower prices are inevitable and the safe thing to do is “sell” with losses big enough it takes years to recoup the damage done by the bear market.
The Fed has decided it will micro-manage the economy and stock market. I don’t think Fed Chief Jerome Powell is smart enough to do that. To his credit though, I don’t think anyone is smart enough to micro manage anything so huge and unpredictable.
You see, there are always several balls up in the air in that business any one of which can come down when least expected and change to situation.
One of those balls already came down – impeachment. The other is the Feds attempt to goose the economy and stock market when the latter is already significantly over valued based on prior valuations.
Another ball that can come down is global depression. I don’t expect that, no one does, and that is why it can happen. This would feature economic stagnation at zero growth levels and a stock market that after a 50% decline has no more bounce than a soggy playground soft ball.
Yet another ball that can come down is one that no one on earth suspects !!
Be very careful here.  With a new market high hyped whether it is a fraction of a point or many points, the urge to go all-in surges.  It’s called a “BUBBLE.”
…………………………………………………………………..
Monday Nov 4  “I Am Wrong….so far   Bubble Still Bubbling – Careful
OMG !   The bubble of all bubbles.  Why is the Fed doing this ? Three rate cuts in less than a year.

It’s like the alternative is unthinkable……NO ! what the Fed is doing is unthinkable !

With their rhetoric, the Fed is sucking investors into the market as the major averages are hitting all-time  highs.  This is what the Fed normally does in recessions when stocks are plummeting.

The Shiller price/earnings ratio is higher than the 1987 Black Tuesday crunch (down 36%), than 2007 Great Bear market ( down 50%), but still below the 2000 dot-com bubble burst ( down 57%).

The DJIA is set to  follow the S&P 500 and Nasdaq Composite with a breakout of the trading range that has constrained it for two years. The NYSE Composite still has a way to go.

Axios points out that the S&P 500 is up 4% since optimism was announced October 11 about phase one of the U.S./China trade talks.  Odds favor more announcements of progress on trade coming out of the White House as impeachment proceedings move forward.

Bottom line:
I have been wrong  here with my warnings about the direction of stock prices. I expected a bull market top which historically occurs months ahead of a recession.  According the A. Gary Shilling’s November “INSIGHT,” we are in a recession, and he backs his conclusion with facts and reason, referring to the consumer as the “last straw.”
There is no sanity in the expansion of bubbles, they have to run their course.
The danger is they are irresistible for investors who are drawn in deeper and deeper until the inevitable burst and plunge.  Adding to investors’ demise is they are drawn in even more so by the initial plunge, thinking this is a “gift.”
It is a ride that is moving too fast for anyone to get off. Besides, humans being human make it impossible even if they saw the break coming.
………………………………………………………………………….

Friday  Nov. 1  “Fed’s Bold Gamble…Just That ….. a Gamble”

The market will just  have to digest what is going on, including corporate earnings, conflicting economic reports, stock market seasonal tendencies (Best Six Months), Fed policy panic, and impeachment procedures.
The latter is the wild card, the only known is that it will be divisive in a political environment that is already divisive.
So far, the Street couldn’t care less  – NOT smart !   Confidence, or a dearth of it, rules in the end as far as stock prices are concerned.
But decisions on Wall Street are so “algoized” it’s hard to tell when a change in analyst/money manager marching orders will occur, but any change from the automatic buy at any price mentality to defer purchase or “sell” will have an immediate, profound impact on the market.
Obviously, the Fed has ramped up its quest to micro-manage the economy and stock market – BIG mistake !
Hands off,  at least as far as the stock market is concerned. Let it find a level that discounts known and prospective conditions and events.
Fed policy is now what it would normally be, after a recession and bear market are already well on their way, so what will the Fed do if this effort to head off a recession/bear market fails ?   Uncharted waters.
………………………………………………..

Thursday  Oct. 31  “Fed PANIC !   Begs the Question – Why ?”
      Fed Chief Jerome Powell had this to say at his post-FOMC press conference yesterday. “There’s plenty of risk left, but I have to say the risks seem to have subsided.”
Really ?   Why then, did the Fed decide to cut interest rates for the third time in less than a year ?
Powell has  to stop sugar-coating the situation. If the economy is bad enough to cut rates three times in less than a year, the Fed is doing investors a huge disservice by sucking them in at all-time market highs where the S&P 500 is more overpriced than any time in history except the 1999-2000 dot-com bull market highs which preceded a 50.5% drop in the S&P 500 and 78% drop in the Nasdaq Comp.
      As I see it, the Fed is panicking in the face of a global recession and a presidential election next year.
Some progress is expected on the U.S./China trade front – both countries are feeling the pain of tariffs and the damage it is doing to corporate decision making.
Trump needs a win during impeachment proceedings, so he will do his best to ensure some progress.  Xi Jinping, China’s president, will likewise make concessions unless he decides to play hardball with Trump under pressure from within his own country.
Bottom line: The Fed is doing now what it normally does after a recession is well underway when the stock market is down sharply, not historically overvalued.
If it fails to head off a recession, it will have little firepower to prevent the recession from getting worse and lasting longer.
…………………………………………………….

Wednesday Oct. 30 “Street Worried About Fed Rate Cut Today ?”
     The first of three estimates of Q3 GDP came in today at annual rate of  1.9%, better than the Street’s 1.6%, a positive  unless the Fed decides not to announce a  cut in its fed funds rate today.  While the Q3 GDP is better than expected, it is lower than Q2’s  growth rate of 2.1% and  Q1’s 3.1%.  The next key report will be the Employment Situation report  at 8:30 Friday.
While this market is overvalued historically, one more push up is possible in response to better than expected Q3 GDP and Q3 earnings that so far are above expectations though  projected from intentionally low-balled levels.
The stock market bubble continues to deflate then inflate, chasing investors out only to suck them back in – a highly risky situation.
No one want to miss out on an opportunity to make more money. That has to be weighed against one’s tolerance for risk if  the next move is down 35%-45%.
…………………………………………………………………………

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

 

 

 

 

 

Bull Market Top Forming

INVESTOR’S first read.com – Daily edge before the open
DJIA: 27,783
S&P 500: 3,094
Nasdaq: 8,482
Russell: 1,598
Thursday   November 14, 2019
     8:43 a.m. 
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gbifr79@gmail.com
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TODAY:
The DJIA is not the market average (index) the pros use.  It’s 30  blue company stocks combined in a price-weighted average that gives more weight to higher priced stocks.   The Street prefers the S&P 500, weighted by market cap (shares X price).
But when the press and investors in general refer to the market being up or down a number of points, it is referring to the 30 Dow Jones industrial average (DJIA).
While yesterday’s gain of  92 points for the DJIA looked like another good day, the average would have been down 8 points if Disney (DIS) was not up 10.18 points.
Three days ago it was Boeing (BA) that distorted the DJIA with a one-day 24-point jump. Without it the DJIA would have been down 154 points.
This kind of misinformation lulls investors into a false sense of security, i.e. there is no need to raise cash, the market was up today.
       Currently the technical indicators support  positive market action, though  stretched and vulnerable.
President Trump won’t be removed from office, a Republican Senate would not do that. He may resign, though.  But the Republican brand will be damaged and their control of the presidency  and the Senate put in jeopardy by the impeachment process/conclusion.
The market is up 45% since the Republicans gained control of the presidency and for two years both houses in 2016.  Loss of control would adversely impact the market from these lofty levels at least over the intermediate term.
At some point, the Street will begin to worry about this. If too many of the big hitters see it all at once, we’ll get a flash crash, DJIA down 12% – 18%.
TECHNICAL
The Street will have to deal with the impeachment proceedings again today. So far the Street could care less about what is happening at the highest level in our country. That’s sheer arrogance. Of course it matters. The Street punishes corporations for management dysfunction, why not for running the country ?
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Minor Support: DJIA:27,707; S&P 500:3,055; Nasdaq Comp.:8,461
Minor Resistance: DJIA:27,794; S&P 500:3,098; Nasdaq Comp.:8,487
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Wednesday November 13  “Where a Correction Becomes a Bear Market”

The Street is in denial  – too much of a good thing – a Fed-mis-managed, over-extended economic recovery and bull market has erased memories of what can happen when  buyers vanish and  the bottom falls out of the market.
This 10-year old bull market has had numerous corrections, but the market has always bounced back as corporate buybacks and Fed intervention triggered rebounds.
      But, here’s where a correction becomes a bear market.
A correction starts from an overbought condition, or as the result of bad news.
The correction  takes the market down to a level the Street thinks represents a good point to buy. Traders investors, institutions and corporations  step in expecting a rebound to new highs.
BUT new negatives hit the market and pound it below the level everyone thought represented a buying opportunity.
This process repeats again  and again as new negatives prevent a rebound, worse yet drives it lower.
Optimism fades, fear creeps in.  Attempts to rebound encounter sellers, investors fearing the worst is yet to come, and for the first time since the market topped out, they are right.
I don’t know when all this will happen. I thought it should have started many months ago.
The Fed, Street and Administration hype will continue to inflate the bubble.
When it starts it will be straight down 12% to 18%. Valuations mean little until they suddenly do, as the Street senses the Fed is powerless to prop the economy and stock market up.
The GOOD NEWS is:   The carnage will end but not until all those deluded, cocky, clueless bulls are too petrified to buy.
        Total damage:  It depends on the “new negatives,” but anywhere from 38% to 58%.
The bear bottom will not be a “V” shaped turn, but  most likely will feature numerous wide swings up and down before an up turn gains traction.
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Wednesday  November 13  “ Flash Crash – the New Normal – Careful”
This is what a stock market run by algorithms looks like  –  booooring !
        Well maybe not for inactive investors who  simply want predictability.
Algos  for investment decisions have been designed to take human emotion out of the equation and to reduce the mental workload of investment professionals who don’t like the angst of boiling  all key elements of market analysis down every day.
Clearly algos take a lot of volatility out of market swings, but at the end of the day, they must be programmed to anticipate all of the unknowns that could adversely impact stocks.
I have often written that the biggest challenge to investors and especially professionals in that there are always  “several
balls up in the air,” anyone of which can come down suddenly to change the direction of the stock market.
       If algos aren’t programmed to cope,  the investment portfolios will get clobbered.
It appears the new normal  for market corrections is the flash crash, a precipitous plunge in stock prices (8% – 18%) without warning as  investors (pros)  abandon the conclusions of their algo and stampede  out the exit door.
We last saw a flash crash in Q4 of 2018 with the S&P 500 plunging 20% in 3 months.  It took the market 4 months to recoup that loss.
OK, so what’s my point
Be damn sure you have a cash reserve in line with your tolerance for risk, so you are ready for the next flash crash.
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Monday November 11  “Impeachment Proceedings Could Crunch Stocks:

This will be a light week for reports on the economy.  The main focus will be on U.S. House impeachment hearings, which will go public this week.
That could put a lid on stock prices as uncertainty builds, but  the debate will be along party lines with conviction of President Trump by the Republican  Senate doubtful.
Nevertheless, the process will adversely impact confidence and concern for the Republicans that they may lose control of the presidency and both houses of Congress next year if this plays out poorly.
Risk of downside is heightened by the fact the market averages are trading near all-time highs.
So far, the Street has ignored the impeachment process – not a good idea.  Perhaps that’s the kind of bulletproof mentality that accompanies an  economic expansion/bull market after 10years.
I don’t believe in “new eras.”  Bear markets have a way of showing up when least expected.   Careful.
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Friday November 9 “At an Intersection Waiting for the Light to Change”

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THE MARKET:
The Street is in a quandary, the market is seriously overvalued on a historical basis, unless corporate earnings find a way to rebound.   That is generally expected to happen next year but that is  where a problem exists.  If earnings DON’T rebound, the Street will have to revise them downward, which with an overvalued market spells bear market.
        I believe they will be revised downward, as a recession looms  in spite of the Fed’s efforts to prop the economy until the 2020 elections are over.
        Is the Fed politically biased ? It looks like it, but for whom ? Yes, delaying would help Trump – if he runs.( I don’t think so, I sense Nikki Haley will be their candidate).  If the Fed feels the  need for a change, they may want to make sure the recession/bear market is in full swing by mid 2020. They have the power. It would be nice if they understood the need for stock prices to find a level that discounts reality rather than trying to micro-manage levels, which the tend to screw up on a regular basis.   Bankers !
Don’t take impeachment proceedings lights whatever your political preferences.  This process could expose a whole lot more than expected. Loss of the Presidency, Senate, House  and more changes stock market dynamics, bad initially, good long-term.
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Thursday  November 7  “Trade Breakthrough  ?    Careful !

The market will get a boost today from news that China says a deal would result in the United States rolling back tariffs. At this time, it looks like progress would be pursued  step by step  as points are negotiated.
     But one reason stocks are hitting new highs is just that – perceived progress.
We already know everything appears to be pushed into December as the two countries haggle over a location to have talks.
Even so, stocks need some tangible news on trade before doubts set in “again.”
This is so classic with dominating issues between countries – On again, off, again, on again……
The announcement takes the heat off both leaders and gives them a better chance  at negotiating small concession rather than one big all encompassing  solution.

Obviously, a disappointment in U.S./China trade talks would whack stocks at this pricey level
But the real sleeper would be any significant downgrade in 2020 earnings.  That is not expected  at this time based on what I see on FactSet and  searches on Google.
As noted often, the Street is unconcerned (clueless) about impeachment proceedings  launched against President Trump. It is serious as it stands.  What is more serious is, where this can go.  It may be just the beginning.
 That is another thing the Street hasn’t taken time to consider…. That is what a Fed micro-managed bull market can do to sensitivity. The stock market is no place for delusion….for long.
Conclusion: Favorable trade news out of China, how about the United States ?  Does it go along or have a different solution. Failure to go along kills a rally from lofty levels.  Agreement with China’s concept  is worth more upside.
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Wednesday  Nov. 6  “Street in Denial – Economy, Trade, Impeachment”

After Reuters reported progress in U.S./China trade talks and a likely delay in U.S. tariffs on European autos, the stock market cannot afford any disappointments.
       In fact, at these levels, the stock market is vulnerable, and unless news gets much better from here, the stock market is fully priced.
In November 2016, the Street  celebrated the election of Donald Trump with a strong rally in the stock market.
But the Street has not given consideration to his removal from office via resignation, impeachment/conviction, or defeat in 2020.
With impeachment proceedings well underway, it is likely it will begin to think about alternatives.
A 10-year old bull market wipes out memories of the  most recent bear market (2007 – 2009) where the S&P 500 dropped 57%. At the time the world looked like it was ending, and without gallant efforts by the Bush and Obama administrations and the Fed, we would still be recovering from a global meltdown.
I think tops are tougher to call than bottoms. No one wants bull markets to end, everyone wants bear markets to.  Unless a bear market is triggered by dramatic news, tops take longer to develop as the market begins to sense worsening economic news. However, investors are usually in a state of denial trying to eke out one more big score, and with prodding by the pros in the Street, they keep buying.
Bottoms tend to develop faster, as mounting fear convinces investors prices will continue to fall, and they better sell out completely, resulting in one or more selling climaxes until there are no sellers left.
So, where am I going with all this ?

The end will come when it is least expected, and the outcome will be ugly. Be sure to have a cash reserve and sit close to the exits with the restyou’re your holdings.
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Tuesday Nov. 5, 2019 “Bubble  Expands Further”
The next  12 months will be wild as impeachment proceedings move forward, trade talks stir anxiety, and the U.S. economic numbers flow in indicating recession or a pause before a recession.
So far, the Street has a single focus – BUY regardless of any outcome. Most of these decisions are computer based, with human tweaks now and then. That is the primary reason that the Street ignores looming negatives.
Expect “DOW 30,000” to be hyped, as well an economy that is finally recession-free.
What I am reading suggests otherwise, but investors don’t want to hear that in bull markets, and that is why they get hurt in bear markets.
Some investors will think they can sell near the top but not until they make some more money before then.  Some are sure they can ride out a recession/bear market over 6 to 15 months then start making money all over again for the next two to four years.
The problem with that logic is after a 30% plunge in prices the news environment becomes so negative that investors begin to fear that  lower prices are inevitable and the safe thing to do is “sell” with losses big enough it takes years to recoup the damage done by the bear market.
The Fed has decided it will micro-manage the economy and stock market. I don’t think Fed Chief Jerome Powell is smart enough to do that. To his credit though, I don’t think anyone is smart enough to micro manage anything so huge and unpredictable.
You see, there are always several balls up in the air in that business any one of which can come down when least expected and change to situation.
One of those balls already came down – impeachment. The other is the Feds attempt to goose the economy and stock market when the latter is already significantly over valued based on prior valuations.
Another ball that can come down is global depression. I don’t expect that, no one does, and that is why it can happen. This would feature economic stagnation at zero growth levels and a stock market that after a 50% decline has no more bounce than a soggy playground soft ball.
Yet another ball that can come down is one that no one on earth suspects !!
Be very careful here.  With a new market high hyped whether it is a fraction of a point or many points, the urge to go all-in surges.  It’s called a “BUBBLE.”
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Monday Nov 4  “I Am Wrong….so far   Bubble Still Bubbling – Careful
OMG !   The bubble of all bubbles.  Why is the Fed doing this ? Three rate cuts in less than a year.

It’s like the alternative is unthinkable……NO ! what the Fed is doing is unthinkable !

With their rhetoric, the Fed is sucking investors into the market as the major averages are hitting all-time  highs.  This is what the Fed normally does in recessions when stocks are plummeting.

The Shiller price/earnings ratio is higher than the 1987 Black Tuesday crunch (down 36%), than 2007 Great Bear market ( down 50%), but still below the 2000 dot-com bubble burst ( down 57%).

The DJIA is set to  follow the S&P 500 and Nasdaq Composite with a breakout of the trading range that has constrained it for two years. The NYSE Composite still has a way to go.

Axios points out that the S&P 500 is up 4% since optimism was announced October 11 about phase one of the U.S./China trade talks.  Odds favor more announcements of progress on trade coming out of the White House as impeachment proceedings move forward.

Bottom line:
I have been wrong  here with my warnings about the direction of stock prices. I expected a bull market top which historically occurs months ahead of a recession.  According the A. Gary Shilling’s November “INSIGHT,” we are in a recession, and he backs his conclusion with facts and reason, referring to the consumer as the “last straw.”
There is no sanity in the expansion of bubbles, they have to run their course.
The danger is they are irresistible for investors who are drawn in deeper and deeper until the inevitable burst and plunge.  Adding to investors’ demise is they are drawn in even more so by the initial plunge, thinking this is a “gift.”
It is a ride that is moving too fast for anyone to get off. Besides, humans being human make it impossible even if they saw the break coming.
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Friday  Nov. 1  “Fed’s Bold Gamble…Just That ….. a Gamble”

The market will just  have to digest what is going on, including corporate earnings, conflicting economic reports, stock market seasonal tendencies (Best Six Months), Fed policy panic, and impeachment procedures.
The latter is the wild card, the only known is that it will be divisive in a political environment that is already divisive.
So far, the Street couldn’t care less  – NOT smart !   Confidence, or a dearth of it, rules in the end as far as stock prices are concerned.
But decisions on Wall Street are so “algoized” it’s hard to tell when a change in analyst/money manager marching orders will occur, but any change from the automatic buy at any price mentality to defer purchase or “sell” will have an immediate, profound impact on the market.
Obviously, the Fed has ramped up its quest to micro-manage the economy and stock market – BIG mistake !
Hands off,  at least as far as the stock market is concerned. Let it find a level that discounts known and prospective conditions and events.
Fed policy is now what it would normally be, after a recession and bear market are already well on their way, so what will the Fed do if this effort to head off a recession/bear market fails ?   Uncharted waters.
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Thursday  Oct. 31  “Fed PANIC !   Begs the Question – Why ?”
      Fed Chief Jerome Powell had this to say at his post-FOMC press conference yesterday. “There’s plenty of risk left, but I have to say the risks seem to have subsided.”
Really ?   Why then, did the Fed decide to cut interest rates for the third time in less than a year ?
Powell has  to stop sugar-coating the situation. If the economy is bad enough to cut rates three times in less than a year, the Fed is doing investors a huge disservice by sucking them in at all-time market highs where the S&P 500 is more overpriced than any time in history except the 1999-2000 dot-com bull market highs which preceded a 50.5% drop in the S&P 500 and 78% drop in the Nasdaq Comp.
      As I see it, the Fed is panicking in the face of a global recession and a presidential election next year.
Some progress is expected on the U.S./China trade front – both countries are feeling the pain of tariffs and the damage it is doing to corporate decision making.
Trump needs a win during impeachment proceedings, so he will do his best to ensure some progress.  Xi Jinping, China’s president, will likewise make concessions unless he decides to play hardball with Trump under pressure from within his own country.
Bottom line: The Fed is doing now what it normally does after a recession is well underway when the stock market is down sharply, not historically overvalued.
If it fails to head off a recession, it will have little firepower to prevent the recession from getting worse and lasting longer.
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Wednesday Oct. 30 “Street Worried About Fed Rate Cut Today ?”
     The first of three estimates of Q3 GDP came in today at annual rate of  1.9%, better than the Street’s 1.6%, a positive  unless the Fed decides not to announce a  cut in its fed funds rate today.  While the Q3 GDP is better than expected, it is lower than Q2’s  growth rate of 2.1% and  Q1’s 3.1%.  The next key report will be the Employment Situation report  at 8:30 Friday.
While this market is overvalued historically, one more push up is possible in response to better than expected Q3 GDP and Q3 earnings that so far are above expectations though  projected from intentionally low-balled levels.
The stock market bubble continues to deflate then inflate, chasing investors out only to suck them back in – a highly risky situation.
No one want to miss out on an opportunity to make more money. That has to be weighed against one’s tolerance for risk if  the next move is down 35%-45%.
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What No One on Wall Street Wants to Hear
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 122 months, the longest  in history, twice as long as the average length of 11 cycles since 1945.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate is 3.5% which was hit in September.  Technically, we won’t know when the start of the current recession is official for months after the fact, since that conclusion is  reached by the Nat’l Bureau of Economic Research (NBER) and they consider  host of economic indicators.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 126 months is 4.2 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
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George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.