First of Many Jolts to the BULL

Investor’s first read – Daily edge before the open
DJIA: 19,971
S&P 500: 2,280
Nasdaq Comp.:5,613
Russell 2000:1,352
Tuesday, January 31, 2017 9:09 a.m.
Yes, some doubts are creeping in as President Trump rushes to assure the people who elected him that he will fulfill campaign promises.
Politics aside, the heavy handed manner in which the Trump administration has gone about that mission is beginning to unsettle the market, which is comprised of Democrats, moderates, unaffiliateds, Libertarians, Republicans, as well as extremists.
While the market rise since the elections has been driven by hopes for corporate tax relief, deregulation and a lot of new spending, “confidence” drives stability, and right now, investors are beginning to worry that the Trump administration will destabilize everything here and abroad.
Nothing is more unsettling than disarray at the top.
There are 207 weeks left in this administration’s term, it should take its time implementing policy making sure it is lawful, fair and effective. Anything short of that limits the Street’s confidence.
Let’s not forget the Obama bull market was up 240% when the Trump gang took over, adding another 8% for a total gain of 248% for a bull that’s close to 8 years old ! This is the longest lasting bull market in 60 years. Only the 304% gain in the 1990 – 1998 bull market beats it.
Bottom line: While the potential is there for it to top all bull markets for both length and appreciation, it is vulnerable if its surroundings are destabilized.
Odds are the Street will bet of a higher market, drooling over the prospect of Nirvana where corporations are taxed at 15%, repatriated money held abroad to evade taxes is brought home and taxed 10%, protective regulations are lifted, and the government goes on a spending spree.
This is classic bull market stuff destined for the classic bear market in time.
Support: DJIA:;S&P 500:; Nasdaq Comp.:
RESISTANCE “today”:DJIA:;S&P 500:; Nasdaq Comp.:
– 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
Rape and pillage, and if they get a chance a coup d’etat of sorts where “all” checks and balances disappear.
That would please the alt-right …….as long as they run the show. Careful what you guys (and Kellyanne) wish for. There are still a lot of real Americans out here, and we are digging our cleats in for “the fight.”
All Trump’s executive orders are to please his base. Trump’s illegal ban on citizens entering the U.S. from mostly muslim countries of Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen gives the impression he is fulfilling one his campaign promise, or so is the puffery that accompanies his actions. Others include: the weakening of Obamacare, withdrawing from the Trans-Pacific Partnership, reinstatement of a ban on international abortion counselling, freeze on government hiring, advance of construction of the Keystone XL pipeline and Dakota Access, pledge to build a wall, a massive cut in regulations whereby any new regulation must be accompanied by the elimination of two regulations under the Office of Management and Budget (the two-out, one-in policy). While all of the above will encounter resistance, the latter is insane, a nightmare.
Trivia question of the day. Who issued the least executive orders per year over the last 120 years ?
While the Trump administration has done some stupid things since January 20, they are masters of manipulation and the mining of people’s preferences, and they have no respect for humanity, our Constitution, the meaning of the Bill of Rights.
IMHO, there is an element in this administration that wants total power, and will gut whatever they have to to gain it – they are “The Enemy Within.”
Tactics involve demonizing the press. That’s not new, Nixon did it all the time before and after Watergate. Trump and Nixon tend toward paranoia, both needed constant caressing of their ego. While Nixon craved acceptance by the upper crust, he was not outwardly a racist,
The Trump administration is all about the alt-right gaining total control of our governance. This is more about who they think we are than who we are. Watch your back. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

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.