Breakout ……or Fake Out ?

Investor’s first read – Daily edge before the open
DJIA:21,006
S&P 500: 2,399
Nasdaq  Comp.:6,100
Russell 2000: 1,396
Monday, May 8, 2017    9:17 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

 EARNINGS  (Good)
      Q1 earnings are poised to post a gain of 13.5%, that a full one percentage point higher than projected a week ago, according to Factset, which provides a comprehensive breakout by industry. Week-to-week projections can vary, especially during reporting periods.

     Soooo, we have corporate earnings growing again after a stall, and the promise of higher growth in the future, depending on the magnitude of tax cuts and how much spending Congress votes for the  military and the nation’s  infrastructure.

 ECONOMY    (Mixed)     
      The economy is still a mixed bag.  While the jobs market  is hot, it apparently is not hot enough to  press hourly wages higher.  

      To-date, 15.2 million jobs have been added in the current economic expansion that started in June 2009.  The unemployment rate hit 4.4% in April, a new low for the current cycle, and down from a November 2009 high of 10.0%.
     Consumer confidence is at record high, but people are not buying. Motor vehicle sales edged up slightly in April, but have been in a slump  so far this year.

TODAY

     We have had three straight days where early sell offs were followed by a close near the highs of the day. That’s a positive.
      In the past, May has tended  turn the market sideways-to-down until fall. You may read about and old  Wall Street bromide, “Sell in May, and go away.” On more occasions than not, that would be good advice.  The Street has tended to buy more aggressively between November 1 and May 1, which is referred to as the “best six months to own stocks,” a rep it earned by outperforming  the six months between May1 and November 1.
      Both six month periods have had one or more major reversals within their six month span to warrant caution about betting too heavily on their outcome.
      Emmanuel Macron handily beat Marine Le Pen for the presidency of France Sunday 65.5% to 34.5%.  That’s good for the EU and stability abroad.
      While the economy is showing some soft areas (spending), it is perceived as solid. The stock market looks like it is ready for a big move up.
       Investors must feel the urge to go all-in, make the plunge. Easy does it
 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”:DJIA:20,951;S&P 500:2,394; Nasdaq Comp.:6,087
RESISTANCE:“today”:DJIA:21,103;S&P500:2,411;NASDAQ Comp.:6,124

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

POLITICAL/STOCK MARKET

NOW THE HOUSE REPUBLICANS OWN IT !

NOTE: This is just the beginning and information is still sketchy. One excellent source is the Henry J. Kaiser Foundation (www.kff.org)
      The House narrowly passed the American Health Care Act (AHCA) last week by a vote of 217 to 213. 
      The House failed twice to pass a similar version. The bill was rushed through without pursuing standard practices – discussions and cost and consequence scoring, by the CBO.

      It now goes to the Senate where it will encounter changes and possibly rejection. Senator Susan Collins, Maine, says there is no timeline for Senate consideration, only that she expects the Senate to take its time and do it right.
      AHCA is not the law of the land yet. All this negativity and uncertainty must make it next to impossible for Insurance companies to project risk and coverage.  That in itself stands to press ACA to the edge.      

       Republicans will now move on to tax deform where it will tip the scales further in favor of corporations and upper income persons.

THE RISK !     

      If successful, this administration’s late-stage stimulus will set the stage for a huge shortfall in US government receipts, resulting in the need to gut  dozens of government programs that address need and quality of life.
        For the most part Republicans, greedy bankers and financial institutions gave us the “Great Recession/Bear Market” 2007-2009.  The next one will be worse, because the government will lack the fiscal stimuli to pull the country out of its depressed state. 
       Can’t happen ?   Weren’t safeguards imposed through Dodd-Frank to prevent another meltdown ?
       Yes, however the House voted Thursday to roll back many of those measures, which they claim have slowed down economic growth. This is the same pattern of corporate “permissiveness” that set the stage for the 2007 – 2009 crash. ”Read “Too Big To Fail” by Sorkin, just don’t make it bedtime reading. 

……………………………………………………………………………
WHY NOTHING SAID ON COLLUSION BETWEEN THE TRUMP TEAM AND RUSSIAN OPERATIVES ?     

     FBI’s Comey was before the Senate last week to explain his reasoning behind his decision to re-open the investigation of presidential candidate Clinton’s e-mails 11 days before election day, November 8, claiming he did not believe his decision cost Clinton the election even though Clinton’s poll numbers  dropped after the announcement.
       No objective person with the ability to think logically without bias could conclude  that.  I doubt it was his intent, but it was what it was – an error in judgement.   The Trump victory was a mistake, a big one, and when you make big mistakes, you will pay a big price.
       IS THE FIX IN ?  WOULD THE TRUTH BE SO DEVASTATING TO US INTERESTS AND ITS IMAGE THAT WE WON’T KNOW FOR YEARS WHEN SOMEONE WRITES A “TELL-ALL?”
       OR WILL THE FBI WAIT UNTIL AFTER THE MID-TERMS, OR THE 2020 ELECTION, TO RELEASE ITS FINDINGS ?  CLEARLY IT WON’T WANT TO SKEW THE RESULTS !!!
………………………………………………………………………….

Trump’s fascination with dictators
      
News that President Trump may under the right circumstances, meet with  North Korean President Kim Jong-un and Philippeans President Rodrigo Duterte, both ruthless dictators.
       Under the right circumstances that might be a good idea, though it undercuts  US National Security Agency policies.
        What is it with Trump’s fascination with dictators like this who have no regard for human rights, dignity, and life, men who answer to no one, especially a press ? Additionally, Trump has praised Vladimir Putin.
       Given his ultimate wish, would Trump opt for such untethered power ? 
Trump Moving to Center ?
      
Recently, Aol’s Eric Lutz  wrote, Donald Trump reportedly planning a shift to the center as he tries to reset his presidency.”  Apparently daughter Ivanka and husband Jared Kushner have been pressuring Trump to temper his politics, and perhaps making some progress.
       While it would be a good idea, since IMHO the Democrats currently appear in line to regain control of Congress in 2018.
       But Donald Trump is a narcissist, and that can include some or all of the following: vain, egotistic, selfish, ,stubborn, manipulative,  boastful, incapable of criticism resistance, superiority complex, defensive, shameless, arrogant, entitled, abusive, vindictive, untruthful, and a reality denier.  Fortunately, only 1% of people have this disorder, unfortunately, one of them is our president.
………………………………………………………………………………..

        What disturbs me is Trump dismisses his actions on ACA, immigration, his wall, sanctuary cities, etc.  as fulfilling his promises to his “base.”   Beg pardon Mr. Trump, but you are NOW the President of the United States, NOT president of a base which actually fell 2,865,075 votes short  of your opponent’s.
         ……………………………………………………………………………..
      
Education Secretary, billionaire, Betsy DeVos, wasted little time getting in lockstep with Trump’s rush to gut President Obama’s many initiatives to help young people. DeVos undercut  Obama’s initiatives to strengthen the rights of some 40 million student borrowers thus facilitating student debt repayment. Obama was responding to a rash of student defaults in face of false information and extra fees by lenders.
      How can scrapping rules designed to protect students burdened with debt, and vulnerable to predatory lending be in anyone’s interest  except the big money ?  What is it with this brand of Republican ?  Mean spirited ?  Clueless ?  I don’t get it.
      Small wonder resentment for the ultra rich is increasing.
…………………………………………………………………..
STARVE the BEAST  !
    
Trump’s plan to cut the corporate tax rate to 15% from 35% would trigger a $2.4 trillion shortfall in government revenues, forcing massive cuts to government programs, as well as increased taxes in other areas to offset the loss.   

     This is an opportunity of a lifetime for Republicans to fulfill their dream to devastate social programs across the board, i.e. slash government income and there is no alternative but to gut government programs. 
      It’s called “Starve The Beast,” and will result in a vast reduction in the quality of life of most Americans, especially those who put Trump in office.
      Congress will waste little time seizing an opportunity of their lifetime – to ruthlessly, senselessly and wantonly dismember a system that works well without the intrusion of Republicans.

……………………………………………………………………
I AM KEEPING THE FOLLOWING ALIVE BECAUSE IT HAS BEEN UPSTAGED BY TRUMP’S 100-DAY STAMPEDE TO  SAVE FACE.
………………………………………………………..

PREUTERS WORLD NEWS APRIL 19, 4:20 PM
“A Russian government think tank controlled by Vladimir Putin developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system, three current and four former U.S. officials told Reuters.
      Russian documents appear to confirm what U.S. intelligence agencies have believed  all along that Russia influenced the outcome of our presidential election. 
      Yesterday, Reuters released documents, which were prepared by the Russian Institute for Strategic Studies[https://en.riss/], after the election that confirm this conclusion.
      It recommended that a, “propaganda campaign on social media and Russian backed global news outlets to encourage U.S. voters to elect a president who would take a softer line toward Russia than the administration of then-President Barach Obama, the seven officials said.”
     Additionally, a second institute document recommended Russia end its pro-Trump propaganda and intensify messaging about voter fraud to undermine the U.S. electoral system’s legitimacy and damage Clinton’s reputation.
      So far, investigations by U.S. institutions and Congress have not concluded collusion between Trump’s team and Russian operatives occurred.
     But U.S. investigations are still being conducted.
     I personally believe collusion DID take place, and odds are GOOD that it reaches far beyond collusion, that based on what I see and how people in the administration are acting.
……………………………………………………………….

TRUMP  – TOAST ?
      Just a hunch, but I think collusion regarding influencing the election is only part of something much bigger, like major league money transfers for options on oil investments, real estate holdings, and land deals. That’s why it is taking so much time.
      If we begin to see more and more of VP Pence, it may suggest the end for Trump is getting closer. Clearly, the inside knows something is about to break.  Trump is “toast,” IMVHO.
      There are so many people who know so much, and they are going to be watching out for number ONE, and that is not Donald Trump.

……………………………………………………………………………………………………………….
WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !
       THE STAGE IS BEING SET NOW !
      
Expect the Trump administration to put the United States on a war footing within one year, probably regarding North Korea.  For one, it would justify its big military spend. For another, it would facilitate a mid-term election victory, since voters are reluctant to change  Congress significantly when the nation is gearing up for war.. It worked for George Bush in 2003.  Finally, it would deflect attention away from the Trump/Russia issue, that could sink the administration.
ALL OF THE ABOVE HAS THE POTENTIAL TO ADVERSELY IMPACT THE STOCK MARKET  AND   MERITS CONSIDERATION.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

CORPORATE EARNINGS (updated  April 14, 2017)
Factset
      Q1 earnings are projected to increase 13.5%. Q2 growth  is projected at +7.2%, Q3 at +7.7%, and Q4 at +12.5%. For 2017 as a whole growth is projected at a plus 10.0%.  Currently, the P/E on forward  earnings is 17.5 x. That compares with a 10-year average P/E of 14.0. Energy is the big contributor to Q1, S&P 500 growth.  While its percentage growth rate cannot be calculated since the sector was losing money a year ago it is in the black to the tune of $8.5 billion vs. a loss of $1.5 billion in Q1 2016. Materials:
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 4/28/17)
      On occasion, I technically analyze each of the 30 DJIA stocks  for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
      As of  April 25, 2017,  a reasonable risk is 20,763 a more extreme risk is 20,571.Near-term upside potential is 21,333
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ODDS FAVOR
1-Trump’s presidency will implode within three years, Bannon will be gone, along with Breitbart News and Alt-Right’ influence.
2-Trump will put the United States on a war footing with North Korea in coming months with or without China’s cooperation.

Conclusion: It is happening now
3-Expect major domestic violence this summer as alt-Right groups confront protestors against tax reform and Congress’ gutting of a host of popular government programs.

Conclusion: It started on Easter weekend in Berkeley.
4-Seeds of a recession will be planted as Congress guts programs needed and used by millions.  Stock market has its final run.
5-Social Security and Medicare will be targeted for drastic changes if the Republicans hold control of both houses in 2018 and Congress is successful in gutting most of social service programs and the EPA per Trump’s wish list.     
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>                                                       Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
…………………………………………………………………….

*Stock Trader’s Almanac
……………………………………………………………………..

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 
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.

 

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.