Absolutely NO ROOM for a Rally Failure Today

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,007
S&P 500: 2,883
Nasdaq Comp.:7,862
Russell 2000:1,500
Thursday August  8, 2019
  7:51 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Let me pose this question one more time.
Why is the Fed is such a hurry to cut interest rates ?
       Is it because it wants to make it easier for corporations to borrow money to buy back their own stock running the price up to enhance the value of Executive holdings and options ?
Is it because the Fed wants to punish investors in fixed income investments ?
         NO ! It’s because the Fed is scared stiff the economy will be in a recession in 2020, a presidential election year.
         According to AXIOS Markets (Dion Raboun  Aug. 7) and CME Group’s Fed Watch, the Street is pricing in a 50% likelihood that the Fed will cut rates three times by year-end.  Raboun added, the “only reason for the Fed to cut rates by one percentage points or more in a year would be that the U.S. economy is in peril.
The Street’s algos are programmed to buy at the market, but especially on dips in prices.
        If the money managers, brokers and analysts see a recession, they will have to change the algos, and since there has never been a recession without a bear market, their action will trigger a free-fall in stocks far worse than what we have seen in recent days.
        It will happen, if not this time down, then in the near- to intermediate term future.
The Fed is artificially and irresponsibly propping this market up with a lot of inaccurate rhetoric and now with rate cuts.
They should let the market adjust to known and perceived negatives and find a level that discounts them.  That would be a way to head off the flash crash which is a straight down phenom that does serious damage.
……………….
BOEING (BA)
A purely technical scenario:  Boeing (BA: 331) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  It seems its new support is closer to 327. Breaking that level would increase the odds of another leg down most likely below 300. This assessment is based on technical analysis.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.
………………………………………………………
Minor Support: DJIA:25,901; S&P 500:2,876;Nasdaq Comp.:7,830
Minor Resistance: DJIA:26,213; S&P500:2,903;Nasdaq Comp.:7,927
………………………………………………………….
A rally failure this afternoon would put these minor support levels at risk leading to a steep [plunge as more of the BIG money breaks ranks.
………………………………………….
Wednesday  August 7  “White House/Fed Hype May Not Be Enough”
     Yesterday I warned that after this week’s crunch in the market,  the administration and Fed would release whatever info they could muster up to stabilize the market.  Sure enough, St. Louis Fed president James Bullard  played the rate card, saying, “Further rate action may be desirable.” which helped bump a sagging market up to an upbeat close.
Trump’s economic adviser, Larry Kudlow, told CNBC yesterday that the United States  will remain committed to resuming negotiations with China in early September after stating Monday that the economy is in a strong position with money pouring in  from abroad seeking safety and higher interest rates.
If that is the case Larry, why is the Fed in a hurry to cut interest rates ?
There is a trade off here, the Street can celebrate rate cuts, but has to cope with a recession and there has never been a recession that has not been accompanied by a bear market.
So far, government hype has worked. When it fails to move markets,  it is time to head for cover.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 332) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.

………………………………………………….
Tuesday  Aug. 6, 2019 “The Party Is Over – Use Rally to Raise Crash Reserve”
 This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
     Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
………………………………………………………

Monday, August 5, “Technical Rally Possible at Any Time – Highly Risky”
I have been on record for warning that we are in the early stages of a recession and data over the weekend  in InvesTech Research’s interim bulletin indicates just that with graphs highlighting the ISM Manufacturing Index (Purchase Managers ), the ISM  New Orders Manufacturing Index and Chicago Business Barometer all on the threshold of crossing into no growth territory.
While Consumer Confidence (present and future) indices are at all-time highs, this extreme exuberance  normal at business expansion peaks.
However, JP Morgan is bullish, urging clients to us the current weakness to add stocks to their portfolios.
Granted, the sharp sell-off at the open stands to attract traders, the risks are high – just too many visible  and sub-surface negatives for a sustained rally in a market that is historically over valued.
If enough institutions agree, we will get a rally from these levels, but they are in the money management business and can’t afford to be bearish..
At much higher levels last Wednesday morningand before the Fed announcement of a rate cut, I headline “Traders – Sell the Rate Cut,” feeling the action was already priced in the market and the market was over due for a correction.
With the help of Trump’s Thursday warning to China of another 10% tariff on Chinese exports on September 1, the market tumbled and looks like it will follow through today before an attempt to rally today.
Nimble traders can exploit these wide swings in the market, but investors need a crash reserve.
……………………………………………..
Friday, August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………..
Thursday August 1, 2019  “Fed Scared Stiff of Recession in an Election Year”    

While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
……………………………………………………………

Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
……………………………………………………………..
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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

 

 

White House/Fed Hype May Not Be Enough

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,029
S&P 500: 2,881
Nasdaq Comp.:7,832
Russell 2000:1,502
Tuesday  August  7, 2019
  7:56 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
Yesterday I warned that after this week’s crunch in the market,  the administration and Fed would release whatever info they could muster up to stabilize the market.  Sure enough, St. Louis Fed president James Bullard  played the rate card, saying, “Further rate action may be desirable.” which helped bump a sagging market up to an upbeat close.
Trump’s economic adviser, Larry Kudlow, told CNBC yesterday that the United States  will remain committed to resuming negotiations with China in early September after stating Monday that the economy is in a strong position with money pouring in  from abroad seeking safety and higher interest rates.
If that is the case Larry, why is the Fed in a hurry to cut interest rates ?
There is a trade off here, the Street can celebrate rate cuts, but has to cope with a recession and there has never been a recession that has not been accompanied by a bear market.
So far, government hype has worked. When it fails to move markets,  it is time to head for cover.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 332) 
briefly broke below 330 again yesterday but failed to follow through on the downside.  Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily.  This can bump prices higher, the DJIA can get to 26,425 (S&P 500:2,926), but DJIA 25,700 (S&P500: 2,845) must hold or another leg down will follow.
………………………………………………………
Minor Support: DJIA:25,957; S&P 500:2,873;Nasdaq Comp.:7,821
Minor Resistance: DJIA:26,187; S&P500:2,891;Nasdaq Comp.:7,891
………………………………………………………….
A rally failure this afternoon would put these minor support levels at risk leading to a steep [plunge as more of the BIG money breaks ranks.
………………………………………….
Tuesday  Aug. 6, 2019 “The Party Is Over – Use Rally to Raise Crash Reserve”
 This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
     Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
………………………………………………………

Monday, August 5, “Technical Rally Possible at Any Time – Highly Risky”
I have been on record for warning that we are in the early stages of a recession and data over the weekend  in InvesTech Research’s interim bulletin indicates just that with graphs highlighting the ISM Manufacturing Index (Purchase Managers ), the ISM  New Orders Manufacturing Index and Chicago Business Barometer all on the threshold of crossing into no growth territory.
While Consumer Confidence (present and future) indices are at all-time highs, this extreme exuberance  normal at business expansion peaks.
However, JP Morgan is bullish, urging clients to us the current weakness to add stocks to their portfolios.
Granted, the sharp sell-off at the open stands to attract traders, the risks are high – just too many visible  and sub-surface negatives for a sustained rally in a market that is historically over valued.
If enough institutions agree, we will get a rally from these levels, but they are in the money management business and can’t afford to be bearish..
At much higher levels last Wednesday morningand before the Fed announcement of a rate cut, I headline “Traders – Sell the Rate Cut,” feeling the action was already priced in the market and the market was over due for a correction.
With the help of Trump’s Thursday warning to China of another 10% tariff on Chinese exports on September 1, the market tumbled and looks like it will follow through today before an attempt to rally today.
Nimble traders can exploit these wide swings in the market, but investors need a crash reserve.
……………………………………………..
Tuesday, August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………..
August 1, 2019  “Fed Scares Stiff of Recession in an Election Year”    

While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
……………………………………………………………

Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
……………………………………………………………..

Tuesday July 30  “Stock Market Bubble to Burst”
   I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.
……………………………………………………….
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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

 

The Party Is Over ! Use Rally to Raise Crash Reserve

INVESTOR’S first read.com – Daily edge before the open
DJIA:25,717
S&P 500: 2,844
Nasdaq Comp.:7,726
Russell 2000:1,487
TuesdayAugust  6, 2019
  8:46 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
This is the rally I referred to in Yesterday’s blog, “Technical  Rally Possible at Any Time – Highly Risky.” That is exactly what this is.
    Expect the Trump administration to release anything possible designed to stabilize  this free-fall. My guess it will be plans to renew tariff talks with China or comments by China about the yuan
The White House-friendly Fed will trumpet talk of one or two more rate cuts by year-end both attempts to stop the carnage.
BEWARE: WHEN HYPE AT HIGH LEVELS FAILS TO GOOSE THE MARKET, IT IS TIME TO RUN FOR THE HILLS.
      This is looking more  and more like the beginning of a bear market, keeping in mind fed rate cuts preceded every recession going back to 1955.
It looks like the BIG  money is starting to jump  ship, breaking ranks with the quant/algo types who desperately need to reprogram their computers before getting crushed by reality.
A lot of investors have gotten hurt by the Fed, which irresponsibly sucked investors into the market with its hype  first, talk of rate cuts and an economy that is “in a good place,” then with last week’s rate cut.
This is all  amateurish folly. While able to move markets with just a few words, the Fed simply is unable to understand market action and gross overvaluation of stocks.
They should acknowledge the seriousness of  the weakness in our economy and global economies and let the market find a comfort level, but NEVER gloss it over and encourage investors to jump into a market that is overvalued.  Shame !
The Fed did a great job in the 2007 – 2009 Great Recession/Bear Market, but failed to prepare for the  recession that looms today by overstaying QE.
The horse has left the barn (the bear his/her den). If this is not the big downer, it is previews of coming attractions.
        This is why I have continually urged a sizable crash reserve. The new normal now is the flash crash, a vertical plunge in stock prices that strikes without enough warning to do some  selling.
         So what does an investor do now ?  A trader can act swiftly moving in on weakness to buy technically oversold stocks, then just as swiftly take profits on a rebound.
If this is the beginning of a 35% -45% crunch  investors, indifferent to risk, are in for  super angst.
………………………………………………..
BOEING (BA)
A purely technical scenario:  Boeing (BA: 331) 
briefly broke below 330 but failed to follow through this time. Based on price action, it looks like it will rally to 339 before dropping to 307 where another rally should take place before dropping below 300 to the mid-200s. Just a technical opinion – a warning for some, opportunity for others.
…………………………………………….
TECHNICAL
The Trump administration and Fed will release whatever info it can muster up to stabilize this market and it may work temporarily
………………………………………………………
Minor Support: DJIA:25,619; S&P 500:2,82,829;Nasdaq Comp.:7,686
Minor Resistance: DJIA:25,997; S&P500:2,881;Nasdaq Comp.:7,797
………………………………………………………….
A rally failure this afternoon would put these minor support levels at risk leading to a steep [plunge as more of the BIG money breaks ranks.
………………………………………….
Monday, August 5, “Technical Rally Possible at Any Time – Highly Risky”

I have been on record for warning that we are in the early stages of a recession and data over the weekend  in InvesTech Research’s interim bulletin indicates just that with graphs highlighting the ISM Manufacturing Index (Purchase Managers ), the ISM  New Orders Manufacturing Index and Chicago Business Barometer all on the threshold of crossing into no growth territory.
While Consumer Confidence (present and future) indices are at all-time highs, this extreme exuberance  normal at business expansion peaks.
However, JP Morgan is bullish, urging clients to us the current weakness to add stocks to their portfolios.
Granted, the sharp sell-off at the open stands to attract traders, the risks are high – just too many visible  and sub-surface negatives for a sustained rally in a market that is historically over valued.
If enough institutions agree, we will get a rally from these levels, but they are in the money management business and can’t afford to be bearish..
At much higher levels last Wednesday morningand before the Fed announcement of a rate cut, I headline “Traders – Sell the Rate Cut,” feeling the action was already priced in the market and the market was over due for a correction.
With the help of Trump’s Thursday warning to China of another 10% tariff on Chinese exports on September 1, the market tumbled and looks like it will follow through today before an attempt to rally today.
Nimble traders can exploit these wide swings in the market, but investors need a crash reserve.
……………………………………………..
Tuesday, August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………..
August 1, 2019  “Fed Scares Stiff of Recession in an Election Year”    

While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
……………………………………………………………

Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
……………………………………………………………..

Tuesday July 30  “Stock Market Bubble to Burst”

      I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.
……………………………………………………….
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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

Technical Rally Possible at Any Time – Highly Risky

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,485
S&P 500: 2,932
Nasdaq Comp.:8,004
Russell 2000:1,533
Monday August  5, 2019
  8:16 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      I have been on record for warning that we are in the early stages of a recession and data over the weekend  in InvesTech Research’s interim bulletin indicates just that with graphs highlighting the ISM Manufacturing Index (Purchase Managers ), the ISM  New Orders Manufacturing Index and Chicago Business Barometer all on the threshold of crossing into no growth territory.
While Consumer Confidence (present and future) indices are at all-time highs, this extreme exuberance  normal at business expansion peaks.
However, JP Morgan is bullish, urging clients to us the current weakness to add stocks to their portfolios.
Granted, the sharp sell-off at the open stands to attract traders, the risks are high – just too many visible  and sub-surface negatives for a sustained rally in a market that is historically over valued.
If enough institutions agree, we will get a rally from these levels, but they are in the money management business and can’t afford to be bearish..
At much higher levels last Wednesday morningand before the Fed announcement of a rate cut, I headline “Traders – Sell the Rate Cut,” feeling the action was already priced in the market and the market was over due for a correction.
With the help of Trump’s Thursday warning to China of another 10% tariff on Chinese exports on September 1, the market tumbled and looks like it will follow through today before an attempt to rally today.
Nimble traders can exploit these wide swings in the market, but investors need a crash reserve.
………………………………………………..
BOEING (BA)   (no change to Friday)
If in a purely technical scenario, Boeing (BA:334)  breaks below 330. it would drop to 307 from which it could  bounce to 327 before breaking below 300 to 269. Just a technical opinion – a warning for some, opportunity for others
…………………………………………….
TECHNICAL

Minor Support: DJIA:26,200; S&P 500:2,895;Nasdaq Comp.:7,895
Minor Resistance: DJIA:26,600; S&P500:2,941;Nasdaq Comp.:7,998

………………………………………….
August 2, 2019 “More Tariffs    Bluster….or Blunder ?”
We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………..
August 1, 2019  “Fed Scares Stiff of Recession in an Election Year”    

While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
……………………………………………………………

Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
……………………………………………………………..

Tuesday July 30  “Stock Market Bubble to Burst”

      I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.
……………………………………………………….
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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

More Tariffs – Bluster….. or Blunder ?

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,583
S&P 500: 2,953
Nasdaq Comp.:8,111
Russell 2000:1,550
Friday August  2, 2019
  9:08 a.m.
NOTE: this commentary was written on Thursday night and thus does not have the benefit of overnight and early morning news.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      We are now in a correction phase of the Fed-induced rally from mid-June to mid-July.  Whether that becomes more of a correction depends on just how spooked the Street gets from President Trump’s threat to not just raise tariffs on $300 billion of Chinese goods 10% on September 1, but may even up it to 25% or more.
That sounds like bluster, but the uncertainty that can be created over the remaining 29 days of August is capable of  hammering a  market that has been run up unnecessarily on hopes of a rate cut.
Obviously with individual, household, business and corporate and government debt at inflated levels higher rates would have been a disaster.
But who can afford to borrow at this point.
Well, possibly Corporations buying back their own stock, but stocks are still pricey, so how much sense does that make ?
We have been riding the crest of a rising wave of unrealistic expectations, also known as a bubble.
I have urged readers to establish a crash reserve in line with their tolerance for risk for over a year.
The pattern has been for the market to snap back after corrections, which some may interpret as a reason to ignore risk.  Right ……..but at one’s potential demise.
………………………………………………..
BOEING (BA)
If in a purely technical scenario, Boeing (BA:334)  breaks below 330. it would drop to 307 from which it could  bounce to 327 before breaking below 300 to 269. Just a technical opinion – a warning for some, opportunity for others
…………………………………………….
TECHNICAL

Minor Support: DJIA:26,437; S&P 500:2,927;Nasdaq Comp.:8,039
Minor Resistance: DJIA:26,631; S&P500:2,967;Nasdaq Comp.:8,137

………………………………………….
August 1, 2019  “Fed Scares Stiff of Recession in an Election Year”
    

While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
……………………………………………………………

Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
……………………………………………………………..

Tuesday July 30  “Stock Market Bubble to Burst”

      I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.
……………………………………………………….
Monday  July 29     “Fed Fever Festering”

I have experienced 13 bull market tops, and they all had similar characteristics – one of the most prevalent being that most investors simply believed the bull market would never end.
I have experienced 14 bear market bottoms, and all had similar characteristics – one of the most prevalent being most investors simply believed the carnage would never end.
The tops and bottoms come as a surprise.  Buyers tend to jump in quickly after a top thinking lower prices are giving them a rare opportunity to buy more.
After a bottom. sellers tend to dump stocks as a new bull market is underway, thinking  they are getting a second chance to lighten up.
We are in a bubble, an extreme characterized by stocks selling at an extreme price earnings ratio  (P/E) seen only once in a hundred years, the dot-com bubble in 2000 when many of the  Street’s favorites  didn’t have earnings to measure, and never did.  The Nasdaq Comp. plunges 78%, the S&P 500 50%.
This time is different.  It is the Blue chips that are overpriced, with the Shiller P/E above 30, well above any in the past except 1999’s P/E of 44.
On Wednesday, the Fed will announce its decision on a cut in interest rates. The Street is expecting a quarter-point cut, but with the market rising, that could already be discounted in advance and traders may sell heavily.
Failure to cut would cause selling at least after the announcement.
…………………………………………………….
Friday  July 26,     “Double Bubble Trouble”
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
……………………………………………………..
Thursday  July  25
 “Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

 

 

 

 

Feds Scared Stiff of Recession in an Election Year

INVESTOR’S first read.com – Daily edge before the open
DJIA:26,864
S&P 500: 2,980
Nasdaq Comp.:8,175
Russell 2000: 1,574
Thursday August  1, 2019
  9:08 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
While the Fed finally cut its fed funds rate a quarter point to 2.00 – 2.25 percent, to better line US interest rates up with global rates, but more so because they see a recession looming..
But  a quarter point wasn’t enough for President Trump who wanted a one-half point cut to ensure 2020 won’t be a recession year.
Early signs of a recession are already present, and while a worsening of the economy may be delayed a smidge, this economy is showing signs of  tiring.
The market took a hit yesterday, partly because the rate cut wasn’t greater, but also because the Fed’s action was designed to head off a recession, which  has not been discounted by the stock market averages.
As I have  been saying, there have been bear markets without recessions, but not recessions without a bear market.
       The market should  rally briefly then sell off to test yesterday’s lows before attempting to regain the ground it lost yesterday.
…………………………………………….
TECHNICAL

Minor Support: DJIA:26,763; S&P 500:2,973;Nasdaq Comp.:8,141
Minor Resistance: DJIA:26,926; S&P500:2,991;Nasdaq Comp.:8,207

………………………………………….
Wednesday   July 31 “Traders – Sell a Rate Cut”

      The BIG day !  The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.

Tuesday July 30  “Stock Market Bubble to Burst”

      I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.

Monday  July 29     “Fed Fever Festering”

I have experienced 13 bull market tops, and they all had similar characteristics – one of the most prevalent being that most investors simply believed the bull market would never end.
I have experienced 14 bear market bottoms, and all had similar characteristics – one of the most prevalent being most investors simply believed the carnage would never end.
The tops and bottoms come as a surprise.  Buyers tend to jump in quickly after a top thinking lower prices are giving them a rare opportunity to buy more.
After a bottom. sellers tend to dump stocks as a new bull market is underway, thinking  they are getting a second chance to lighten up.
We are in a bubble, an extreme characterized by stocks selling at an extreme price earnings ratio  (P/E) seen only once in a hundred years, the dot-com bubble in 2000 when many of the  Street’s favorites  didn’t have earnings to measure, and never did.  The Nasdaq Comp. plunges 78%, the S&P 500 50%.
This time is different.  It is the Blue chips that are overpriced, with the Shiller P/E above 30, well above any in the past except 1999’s P/E of 44.
On Wednesday, the Fed will announce its decision on a cut in interest rates. The Street is expecting a quarter-point cut, but with the market rising, that could already be discounted in advance and traders may sell heavily.
Failure to cut would cause selling at least after the announcement.
…………………………………………………….
Friday  July 26,     “Double Bubble Trouble”
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
……………………………………………………..
Thursday  July  25
“Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Wednesday   (July 24) “Full-Blown-Bubble-Buy Mode…. Until…POP !

Special Counsel Robert Mueller testifies before Congress today starting at 8:30. To date, the Street could care less about politics or national events.
The Street has been  in full-blown-bubble-buy mode since late December. Don’t get in its way, the Street wants to continue to party.
At some point it will be last call, then drink up, bar closing, but not until far too many late-comers barge in to buy………… at the top.
This has been a tough top to call thanks to the Fed’s ongoing  obsession with micro-managing the stock market.
After an ill-conceived December bump in its fed funds rate, the Fed turned on a dime to change policy to promise it has the Street’s back in the event the market tanks before or during the presidential election.
Without cutting its rate, the Fed was able to verbally goose stocks out of a 20% Q4 plunge and orchestrate a 28% rebound.
Next Wednesday, it will announce its decision to cut its rate or to hold at 2.5%, which in June it said it would hold through 2021 unless the economy deteriorates.
Obviously, the Street expects a cut, it has been buying aggressively.
The Street and public would be better served if the Fed did not hype the market, promising rate cuts while claiming the “economy was in  a good place.”
IF THE FED SEES A RECESSION ON THE HORIZON, THE LAST THING IT SHOULD HAVE  DONE IS ENCOURAGE INVESTORS TO BUY.
We have never had a recession without a bear market. We have had bear markets without recessions.

Trust the market to find the  comfort level that discounts known and perceived negatives and positives.
………………………………………………
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

 

 

 

 

 

Traders – Sell a Rate Cut

INVESTOR’S first read.com – Daily edge before the open
DJIA:27,198
S&P 500: 3,013
Nasdaq Comp.:8,273
Russell 2000: 1,583
Wednesday July 31, 2019
  8:08 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
The BIG day ! 
The Fed has been hinting at a rate cut since January when it suddenly reversed its policy of raising rates to one of ease – the reason – it wanted to head off a recession that threatened to strike in 2020, a presidential election year.
It’s hype was the main reason Q4’s 20% plunge in the S&P 500 was reversed and it surged 28% in seven months.   That’s power – raw power.
       The Street expects a rate cut  at 2:00 p.m. today.
If it doesn’t happen, the market will take a hit, how much depends on what Fed Chair Jerome Powell says in his press conference at 2:30.
I expect him to have good things to say about the economy even if  the Fed cuts its fed funds rate to head off a recession.
If they don’t cut its rate, he will allude to the possibility of a cut in September (no FOMC meeting in August).
One way or another, he will try to stabilize a market that has risen a lot in a short period of time.
IMHO, the Fed has acted irresponsibly over the last seven months. It panicked after Q4’s 20% plunge in the market, as well as in response to rising signs of a recession, Without really acknowledging the latter, it gave the Street reason to believe it would cut its rate and in essence cover its back in the event the market plunged  again.
         So, here we are at all-time highs, 28% above the December 26 lows and still facing the prospect of a recession, which the market hasn’t discounted.
While there have been bear markets without a recession there has never been a recession without a bear market.
         My message to the Fed – let the market find a level that discounts current and possible events – don’t tamper with the level of stock prices.  If the Fed can’t head off a recession this stock market has a long way down to go to discount a recession and the Fed is responsible for investors getting hurt.
 …………………………………………….
TECHNICAL

Minor Support: DJIA:26,200; S&P 500:3,001;Nasdaq Comp.:8,243
Minor Resistance: DJIA:27,3066; S&P500:3,025;Nasdaq Comp.:8,306

………………………………………….
Tuesday July 30  “Stock Market Bubble to Burst”

      I don’t know when the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.

Monday  July 29     “Fed Fever Festering”

I have experienced 13 bull market tops, and they all had similar characteristics – one of the most prevalent being that most investors simply believed the bull market would never end.
I have experienced 14 bear market bottoms, and all had similar characteristics – one of the most prevalent being most investors simply believed the carnage would never end.
The tops and bottoms come as a surprise.  Buyers tend to jump in quickly after a top thinking lower prices are giving them a rare opportunity to buy more.
After a bottom. sellers tend to dump stocks as a new bull market is underway, thinking  they are getting a second chance to lighten up.
We are in a bubble, an extreme characterized by stocks selling at an extreme price earnings ratio  (P/E) seen only once in a hundred years, the dot-com bubble in 2000 when many of the  Street’s favorites  didn’t have earnings to measure, and never did.  The Nasdaq Comp. plunges 78%, the S&P 500 50%.
This time is different.  It is the Blue chips that are overpriced, with the Shiller P/E above 30, well above any in the past except 1999’s P/E of 44.
On Wednesday, the Fed will announce its decision on a cut in interest rates. The Street is expecting a quarter-point cut, but with the market rising, that could already be discounted in advance and traders may sell heavily.
Failure to cut would cause selling at least after the announcement.
…………………………………………………….
Friday  July 26,     “Double Bubble Trouble”
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
……………………………………………………..
Thursday  July  25
“Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Wednesday   (July 24) “Full-Blown-Bubble-Buy Mode…. Until…POP !

Special Counsel Robert Mueller testifies before Congress today starting at 8:30. To date, the Street could care less about politics or national events.
The Street has been  in full-blown-bubble-buy mode since late December. Don’t get in its way, the Street wants to continue to party.
At some point it will be last call, then drink up, bar closing, but not until far too many late-comers barge in to buy………… at the top.
This has been a tough top to call thanks to the Fed’s ongoing  obsession with micro-managing the stock market.
After an ill-conceived December bump in its fed funds rate, the Fed turned on a dime to change policy to promise it has the Street’s back in the event the market tanks before or during the presidential election.
Without cutting its rate, the Fed was able to verbally goose stocks out of a 20% Q4 plunge and orchestrate a 28% rebound.
Next Wednesday, it will announce its decision to cut its rate or to hold at 2.5%, which in June it said it would hold through 2021 unless the economy deteriorates.
Obviously, the Street expects a cut, it has been buying aggressively.
The Street and public would be better served if the Fed did not hype the market, promising rate cuts while claiming the “economy was in  a good place.”
IF THE FED SEES A RECESSION ON THE HORIZON, THE LAST THING IT SHOULD HAVE  DONE IS ENCOURAGE INVESTORS TO BUY.
We have never had a recession without a bear market. We have had bear markets without recessions.

Trust the market to find the  comfort level that discounts known and perceived negatives and positives.
………………………………………………
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

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 120 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 3.6% which was hit in May.  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 123 months is 4 times the average of the last 15 bulls going back to 1957
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

Stock Market Bubble to Burst ?

INVESTOR’S first read.com – Daily edge before the open
DJIA:27,221
S&P 500: 3,020
Nasdaq Comp.:8,293
Russell 2000: 1,569
Tuesday July 30, 2019
  7:54 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
I don’t know when
the bubble will burst, maybe today, tomorrow, next week, month, or four months from now.  Bubbles just keep inflating until – POP !
As a bubble, the more the stock market goes up in face of  deteriorating U.S. and global economies and struggling corporate earnings   growth, the greater the risk.
Forget that dividends discounted into the future crap, the value of a stock on a given day is what buyers and sellers say it is.
On October 3, 2018,  buyers and sellers said the S&P 500 was worth 2,939.  On December 26, they said the S&P 500 was worth 2,346, or 20.4% less.
Now they think it is worth 3,025.
If the Fed did not intervene with lip service starting in January this year, the market would trade a lot lower than it is now, much closer to reality in face of the looming adversity the Fed is trying to head off.
Investors, the pros and the manipulators behind the scene ramp up greed and fear to extreme turning points at bull market tops and bear market bottoms.
         This time the Fed’s attempt to micro-manage the economy and stock market as we head into a presidential election year has sucked investors into stocks at levels where the downside risk far exceeds the upside potential.
         THE UNTHINKABLE FOR THE STREET WOULD BE IF THE FED DOES NOT CUT RATES.
         While that should be good news economically, in that it suggests the Fed is not spooked by the economy’s softness, it wouldn’t go over big with the Street which has run stocks up in anticipation of a cut.
My concern is that just one major piece unexpected bad news or that  one major institution will break ranks, and sell and the spell will be broken and we will be in a savage bear market that will start off with a 12% to 18% free-fall, then down another 35% down too boot.
That’s the risk I see , risk here deserves respect.
…………………………………………….
TECHNICAL

Minor Support: DJIA:27,119; S&P 500:3,020;Nasdaq Comp.:8,267
Minor Resistance: DJIA:27,286; S&P500:3,028;Nasdaq Comp.:8,347

………………………………………….
Monday  July 29
     “Fed Fever Festering”

I have experienced 13 bull market tops, and they all had similar characteristics – one of the most prevalent being that most investors simply believed the bull market would never end.
I have experienced 14 bear market bottoms, and all had similar characteristics – one of the most prevalent being most investors simply believed the carnage would never end.
The tops and bottoms come as a surprise.  Buyers tend to jump in quickly after a top thinking lower prices are giving them a rare opportunity to buy more.
After a bottom. sellers tend to dump stocks as a new bull market is underway, thinking  they are getting a second chance to lighten up.
We are in a bubble, an extreme characterized by stocks selling at an extreme price earnings ratio  (P/E) seen only once in a hundred years, the dot-com bubble in 2000 when many of the  Street’s favorites  didn’t have earnings to measure, and never did.  The Nasdaq Comp. plunges 78%, the S&P 500 50%.
This time is different.  It is the Blue chips that are overpriced, with the Shiller P/E above 30, well above any in the past except 1999’s P/E of 44.
On Wednesday, the Fed will announce its decision on a cut in interest rates. The Street is expecting a quarter-point cut, but with the market rising, that could already be discounted in advance and traders may sell heavily.
Failure to cut would cause selling at least after the announcement.
…………………………………………………….
Friday  July 26,     “Double Bubble Trouble”
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
……………………………………………………..
Thursday  July  25
“Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Wednesday   (July 24) “Full-Blown-Bubble-Buy Mode…. Until…POP !

Special Counsel Robert Mueller testifies before Congress today starting at 8:30. To date, the Street could care less about politics or national events.
The Street has been  in full-blown-bubble-buy mode since late December. Don’t get in its way, the Street wants to continue to party.
At some point it will be last call, then drink up, bar closing, but not until far too many late-comers barge in to buy………… at the top.
This has been a tough top to call thanks to the Fed’s ongoing  obsession with micro-managing the stock market.
After an ill-conceived December bump in its fed funds rate, the Fed turned on a dime to change policy to promise it has the Street’s back in the event the market tanks before or during the presidential election.
Without cutting its rate, the Fed was able to verbally goose stocks out of a 20% Q4 plunge and orchestrate a 28% rebound.
Next Wednesday, it will announce its decision to cut its rate or to hold at 2.5%, which in June it said it would hold through 2021 unless the economy deteriorates.
Obviously, the Street expects a cut, it has been buying aggressively.
The Street and public would be better served if the Fed did not hype the market, promising rate cuts while claiming the “economy was in  a good place.”
IF THE FED SEES A RECESSION ON THE HORIZON, THE LAST THING IT SHOULD HAVE  DONE IS ENCOURAGE INVESTORS TO BUY.
We have never had a recession without a bear market. We have had bear markets without recessions.

Trust the market to find the  comfort level that discounts known and perceived negatives and positives.
………………………………………………
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

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 120 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 3.6% which was hit in May.  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 123 months is 4 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 Fever Festering

INVESTOR’S first read.com – Daily edge before the open
DJIA :27,192
S&P 500: 3,025
Nasdaq Comp.:8,330
Russell 2000: 1,578
Monday July 29, 2019
  9:17 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
      I have experienced 13 bull market tops, and they all had similar characteristics – one of the most prevalent being that most investors simply believed the bull market would never end.
I have experienced 14 bear market bottoms, and all had similar characteristics – one of the most prevalent being most investors simply believed the carnage would never end.
The tops and bottoms come as a surprise.  Buyers tend to jump in quickly after a top thinking lower prices are giving them a rare opportunity to buy more.
After a bottom. sellers tend to dump stocks as a new bull market is underway, thinking  they are getting a second chance to lighten up.
We are in a bubble, an extreme characterized by stocks selling at an extreme price earnings ratio  (P/E) seen only once in a hundred years, the dot-com bubble in 2000 when many of the  Street’s favorites  didn’t have earnings to measure, and never did.  The Nasdaq Comp. plunges 78%, the S&P 500 50%.
This time is different.  It is the Blue chips that are overpriced, with the Shiller P/E above 30, well above any in the past except 1999’s P/E of 44.
On Wednesday, the Fed will announce its decision on a cut in interest rates. The Street is expecting a quarter-point cut, but with the market rising, that could already be discounted in advance and traders may sell heavily.
Failure to cut would cause selling at least after the announcement.
 …………………………………………….
TECHNICAL

Minor Support: DJIA:27,156; S&P 500:3,019;Nasdaq Comp.:8,318
Minor Resistance: DJIA:27,238; S&P500:3,029;Nasdaq Comp.:8,344

………………………………………….
Friday  July 26,     “Double Bubble Trouble”
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
……………………………………………………..
Thursday  July  25
“Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Wednesday   (July 24) “Full-Blown-Bubble-Buy Mode…. Until…POP !

Special Counsel Robert Mueller testifies before Congress today starting at 8:30. To date, the Street could care less about politics or national events.
The Street has been  in full-blown-bubble-buy mode since late December. Don’t get in its way, the Street wants to continue to party.
At some point it will be last call, then drink up, bar closing, but not until far too many late-comers barge in to buy………… at the top.
This has been a tough top to call thanks to the Fed’s ongoing  obsession with micro-managing the stock market.
After an ill-conceived December bump in its fed funds rate, the Fed turned on a dime to change policy to promise it has the Street’s back in the event the market tanks before or during the presidential election.
Without cutting its rate, the Fed was able to verbally goose stocks out of a 20% Q4 plunge and orchestrate a 28% rebound.
Next Wednesday, it will announce its decision to cut its rate or to hold at 2.5%, which in June it said it would hold through 2021 unless the economy deteriorates.
Obviously, the Street expects a cut, it has been buying aggressively.
The Street and public would be better served if the Fed did not hype the market, promising rate cuts while claiming the “economy was in  a good place.”
IF THE FED SEES A RECESSION ON THE HORIZON, THE LAST THING IT SHOULD HAVE  DONE IS ENCOURAGE INVESTORS TO BUY.
We have never had a recession without a bear market. We have had bear markets without recessions.

Trust the market to find the  comfort level that discounts known and perceived negatives and positives.
………………………………………………
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

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 120 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 3.6% which was hit in May.  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 123 months is 4 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Double Bubble Trouble

INVESTOR’S first read.com – Daily edge before the open
DJIA :27,140
S&P 500: 3,003
Nasdaq Comp.:8,238
Russell 2000: 1,561
Friday July 26, 2019
  9:17 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

TODAY:
On Tuesday, I used Boeing (BA) as an example of late-stage bull market arrogance, where the Street ignores bad news thinking it’ll go away, after all it’s onward and upward in a bull market that has no end.
BA’s stock was on a tear in July even in face of the grounding of its 737 Max jets by major airlines.
Over the next two days, BA plunged to 345 from 373, not due to my comments (!!), but because savvy pros dumped it, happy for the gift of higher prices. Technically, I can see BA dropping to the  270 – 290 area by year-end.
BA is one of this bull markets big winners, a darling of institutions.
The demise of these kind of Street favorites is a warning signal that a bear market is looming. There will be others, nothing is sacred when stuff hits the fan.
On that note, the Street still  feels like it is bulletproof, after all, the Fed has made it loud and clear it has its back, that it will jawbone and cut rates to prop stock prices up at least until after election day in 2020.
        But a cut in its benchmark rate (Fed funds) has preceded every recession over the last 50 years and no recession has ever occurred without a bear market.
       …………………………………………….
TECHNICAL
A rally failure today would be bad news.
Minor Support: DJIA:27,091; S&P 500:2,997;Nasdaq Comp.:8,221
Minor Resistance: DJIA:27,237; S&P500:3,013;Nasdaq Comp.:8,264

………………………………………….
Thursday  July  25
“Impeachment Proceedings Would Trigger a Bear Market”

The initial reaction to the Mueller testimony yesterday was seen by both sides as a ho-hummer, short on optics and new news.
A closer look at questions and answers indicates it provided the fodder for impeachment proceedings and that could be the first time the Street realizes another four years of Trump is at risk.
While the U.S. Senate would never vote to convict, the Republican Party may decide it must quickly run someone else or risk losing the presidency and the Senate.
More than two-thirds of this bull market’s gain of 353% has occurred under a Democrat president (Obama), but its extension has occurred since the election of Trump at a time the stock market was becoming overbought on a historical basis.
It is soooo much more overvalued today with the Shiller price/earnings ratio higher than at any time  ever except the  ridiculous dot-com bubble burst in 2000.
At the time, the Street and everyone else expected  the market to keep surging.  It didn’t, the S&P 500 dropped 50% and the Nasdaq Comp. dropped 78%.
         I am trying here to build a case for a sizable cash reserve of 30% – 50% or higher if  an investor sees a need for cash in the near future (college, retirement, big purchase) and cannot ride out an extended bear market which can, and will begin without notice.
………………………………………………..
Wednesday   (July 24) “Full-Blown-Bubble-Buy Mode…. Until…POP !

Special Counsel Robert Mueller testifies before Congress today starting at 8:30. To date, the Street could care less about politics or national events.
The Street has been  in full-blown-bubble-buy mode since late December. Don’t get in its way, the Street wants to continue to party.
At some point it will be last call, then drink up, bar closing, but not until far too many late-comers barge in to buy………… at the top.
This has been a tough top to call thanks to the Fed’s ongoing  obsession with micro-managing the stock market.
After an ill-conceived December bump in its fed funds rate, the Fed turned on a dime to change policy to promise it has the Street’s back in the event the market tanks before or during the presidential election.
Without cutting its rate, the Fed was able to verbally goose stocks out of a 20% Q4 plunge and orchestrate a 28% rebound.
Next Wednesday, it will announce its decision to cut its rate or to hold at 2.5%, which in June it said it would hold through 2021 unless the economy deteriorates.
Obviously, the Street expects a cut, it has been buying aggressively.
The Street and public would be better served if the Fed did not hype the market, promising rate cuts while claiming the “economy was in  a good place.”
IF THE FED SEES A RECESSION ON THE HORIZON, THE LAST THING IT SHOULD HAVE  DONE IS ENCOURAGE INVESTORS TO BUY.
We have never had a recession without a bear market. We have had bear markets without recessions.

Trust the market to find the  comfort level that discounts known and perceived negatives and positives.
………………………………………………
Tuesday   (July 23)   “Market Bubbling Over ????”

Even in face of a pending horrendous earnings report, Boeing’s (BA) stock is up sharply over the last 10 days.  Axios reports BA will post a $5 billion after-tax charge in Q2, after the grounding of its 737 Max jets by Southwest (LUV), American (AAL) and United (UAL).
Its Plans to buy back are on hold while  its chief competitor, Europe’s Airbus, has delivered 150 jets to airlines so far this year.
Perhaps, the Street is overlooking BA’s present problems, but are BA’s problems over ?
This is late stage bull market arrogance. We have seen it at market tops before.
There were some very savvy investment professionals  turned bearish in Q 4 last year.  That obviously contributed to the 20% shellacking the market took in 2018’s final three months.
At the time their bearishness was believable – the market was falling  out of bed.
Also, at the time, the Fed was raising interest rates with three planned for this year.
But signs of a recession were surfacing and the Fed reversed from restrictive to ease and the stock market took off recouping all of its Q4 loss.
My two most respected sources are urging readers to sit close to the exit, which I have been doing for many months.
There is only so much that can be said about risk at market tops (few listen; likewise there is only so much that can be said at market bottoms about opportunity (few listen).
………………………………………………

Monday   (July 22, 2019)
Street Betting on Rate Cut -Is It Already Priced-In ?
      Finally, the long-awaited FOMC meeting and decision by the Fed to cut its Fed funds rate.
The S&P 500 is up 20% since late December mostly due to Fed hype about its policy change and likelihood of a rate cut, but no action – yet.
The question the Street hasn’t asked is why would the Fed do this ?
The long and short answer is the same, the Fed feels compelled to prevent a recession, especially in a presidential election year.
A recession would be devastating to President Trump’s re-election.
A lot of very smart economists and market analysts are forecasting a recession, and have the stats to back it up.
      That would mean stocks, which are historically more over-valued than at any time in history except the 2000 dot-com bubble burst, is vulnerable to a big setback.
The Street does not want the party to end and may be overplaying its hand.
This kind of tunnel vision occurs at market tops.
The only way to protect one’s portfolio is to maintain a cash reserve in line with their tolerance for risk, because the new normal for corrections and bear market appears to be a sharp, steep plunge in prices that does not give investors a chance to raise cash once it starts.
That is hard to do when the market keeps edging up
…………………………………………………….
Friday    (July 19)  “Drop in Leading Economic Indicators – a Warning”
June’s Leading Economic  Indicators (LEI) posted its biggest decline in three years, a reminder to investors the 10-year economic expansion is slowing, and may be in the early stages of recession.
Based on 10 key components of economic health, the LEI dropped 0.3% in June. New orders for manufacturing, housing permits and unemployment insurance filings contributed to the decline.
The index has been struggling since February as March and April posted gains of only 0.1% and May was zero.
The S&P 500 is one of the 10, so it was not a drag on the index.
On that subject, the most reliable “leading” indicator of a recession is the stock market, turning up prior to economic recoveries and down prior to the beginning of recessions.
Recent strength in stock prices reflects the Street’s expectation of a fed funds rate cut on the 31st (next Wednesday).
……………………………………………………………
Thursday  (July 18) “Why, Oh Why, Would the Fed Cut Rates ???”

The Street has celebrated a cut in the Fed funds rate on the 31st in advance, without considering two things.  One, it may not happen.  Two, the Fed would be doing so to head off a recession.
No recession has ever occurred without a bear market accompanying it. In fact, Fed interest rate cuts have preceded all  recessions in the last 50 years.
So why the celebration ?
       Does the Street believe the Fed can prevent a recession ?
Possible !
       If it can’t, the stock market is headed south, especially since it is significantly overpriced. Based on the Shiller price/earnings ratio, the S&P 500 is pricier than at any time ever except the 2000 – 2002 bubble-burst fiasco, which triggered a 50% drop in the S&P 500 (78% drop Nasdaq Comp.).
Buyers of stocks are seeking some kind of yield, since that is no longer possible in bonds.  That’s fine so long as an investor doesn’t see the value of their stocks drop 20% or more.
At some point, buyers will walk away, realizing paying up for stocks with the risk of recession running high. That will contribute to a downdraft in stocks. That will trigger selling in stocks. That will be the beginning of a bear market.
There are no “new eras.” Reality rules. At best, the Fed can delay a recession/bear market, it will happen.
………………………………………………..
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 120 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 3.6% which was hit in May.  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 123 months is 4 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.