Confidence Waning

Investor’s first read – Daily edge before the open
DJIA: 20,093
S&P 500: 2,294
Nasdaq Comp.:5,560
Russell 2000:1,370
Monday, January 30, 2017 9:13 a.m.
Looks like a downer at the then. The key here is, how eager are investors to buy on a pullback ?
Has his first week in office increased or decreased consumer and investor confidence, the real driver of stock prices.
I think it is too early to tell with the intermediate-to-long-term picture. Short-term, we can get a correction.
Again, I remind readers, the market will march to the drumbeat of Trump’s promises – corporate and selective tax cuts, deregulation, and a big spend on infrastructure and the military, assuming Congressional approval.
Any sign that one, two or all of these won’t happen within 18 months and the market will have rto find a new comfort level at lower prices.
Support: DJIA:20,017 ;S&P 500:2,287; Nasdaq Comp.:5,641
RESISTANCE “today”:DJIA:20,136;S&P 500:2,299; Nasdaq Comp.:5,071
– 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
Who is going to pay for the Canada/US wall to stop Americans from fleeing President Trump ?
President Trump counselor, Kellyanne Conway recently told protestors to “Get over it, he’s just getting started.”
That’s what a lot of Americans are afraid of.
What matters to the Street is, will his rush to wield a mace to hated programs and his determination to drive wedges between Americans and countries destroy the credibility of his office, alienate Congress and confidence in the future ?
If true, he is off to a good start, and a lot of damage can be done in four years.
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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