Buyers on Dips Keep Bull Alive

Investor’s first read – Daily edge before the open
DJIA: 20,052
S&P 500: 2,292
Nasdaq Comp.: 5663
Russell 2000:1,366
Tuesday, February 7, 2017 9:04 a.m.
For the most part, the stock market has moved higher over the last three months in response to promises of major corporate tax cuts, deregulation and a whole lot of spending on the infrastructure and military.
That’s a big bet on the future, especially since the market was been historically overpriced when the market surged after the November elections, primarily due to four quarters of declining corporate earnings.
But that began to change in Q3 when earnings began to stabilize. Q4 beat expectations. At year end, Factset projected a gain of 3.1% for Q4, but it looks like that will be closer to 4.6%.
Factset expects 2017earnings to rise 11.4%, which will bring values back to a more realistic level.
We are still seeing buyers on dips in the market. As long as that does not become sellers on bounces, the Bull lives. Bull and bear markets are a reflection of sentiment about the present and perceived future, a tug of war that can go nowhere or can favor one side or the other until the balance changes. That hasn’t happened yet. Corrections are met with eager buyers, keeping the trend positive.
Who knows at this point whether taxes will be cut, regulations lifted and deficit hawks in Congress will approve big spending programs. Unless it begins to look like this added stimulus will be delayed or won’t happen in a big way, the bulls will dominate the market.

SUPPORT “today”: DJIA:20,025; S&P 500:2,290; Nasdaq Comp.:5,655
RESISTANCE “today”:DJIA:20,113;S&P 500:2,297;Nasdaq Comp.:5,681
– the prospect of big corporate tax cuts, deregulation, a big spend on the military and the infrastructure and the restructuring of long-standing trade agreements.
-the uncertainties of the repeal of Obamacare
-talk of privatization of Medicare and Social Security
-possible undermining of NATO and the European Union
-a trade war of sorts.
-lifting of sanctions on Russia for its incursion in the Crimea and actions in Syria, adding to questions already breached.
-continued internal polarization of America and the possible extension of such to other countries.
-intense economic stimulation by the Trump/Republican Congress stands to trigger a rebound of inflationary pressures forcing the Fed to bump interest rates sooner than expected.
-an increasing erosion of investor confidence in President Trump
It’s time for Americans to step up and say, “ENOUGH !” Trump has a disapproval rating in excess of 53% and that has to include people who voted for him.
Unchecked, Trump will set the United States back a hundred years. Not only will he instigate the dismantling of the European Community, but possibly but possibly the same for NATO.
At some point his plundering ego will adversely impact the stock market. If the BIG money gets spooked, that will happen soon and the correction will be swift and severe.
If the BIG money hangs tough, the market has a lot further to go.
I have never seen, or imagined, anything this bizarre in more than 60 years of voting.
Narcissist : People who are excessively vain, egotistic, selfish, stubborn, manipulative, boastful, incapable of criticism or resistance, feel superior, defensive, shameless, arrogant, entitled, abusive, vindictive, untruthful, deny reality. It is estimated that 1% of all people have this personality disorder, and unfortunately America has one of those for its president.
He is a human wrecking ball and will widen an already wide split in the United States – simply Un-American. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Corporate earnings (update)
Factset now sees Q4 earnings for the S&P 500 up 3.4% vs. a Dec.31 est. of 3.0%.. Earnings for 2017 are expected to increase 11.4%. Currently, the P/E based on earnings 12 months out is 16.9 x, which compares with a 10-year average P/E of 14.4 and a 5-year P/E of 15.1.
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 January 27, 2017, a reasonable risk is 20,013 a more extreme risk is 19,947 Near-term upside potential is 20,288.
 OPPORTUNITY: RISK: Selective opportunity ! Risk is reality at some point
 CASH RESERVE: 25% – 35%.
 KEY FACTORS: Speculative fever driven by expectations of tax cuts, lifting of regs., and lots of money dumped on economy.
Note: Source of weekly economic calendar and good recap of indicators:
George Brooks
Investor’s first read
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.

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