Spike Up…..or Fake Out ?

Investor’s first read – Daily edge before the open
DJIA:21,012
S&P 500: 2,379
Nasdaq  Comp.:6,102
Russell 2000: 1,390
Tuesday, May 9, 2017    8:30 a.m.
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NOTE: There will be no post Wednesday, Thursday, Friday
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     The DJIA, S&P 500 and Nasdaq Comp simply look like they want to explode on the upside. It’s almost like slow motion, an invite for everyone to jump on board.
      The economy has a few soft spots, but is otherwise stable. The Trump promise for tax cuts, deregulation and a big spend is still on the table, and Q1 corporate earnings are better than projected weeks ago.
       France dodged a bullet, electing Emmanuel Macron over Marine Le Pen, giving the EU extended life.
TODAY
       
While the pattern suggests an upmove here, it is almost too picture perfect, increasing the odds that a spike in prices will be followed by a sharp pullback. It’s never this easy. A tough read for that reason.
       Nimble traders can play a breakout and bail with limited damage if wrong. It’s tricky and risky, otherwise.

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SUPPORT “today”:DJIA:20,956;S&P 500:2,395; Nasdaq Comp.:6,083
RESISTANCE:“today”:DJIA:21,074;S&P500:2,407;NASDAQ Comp.:6,121

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POLITICAL/STOCK MARKET

OPINION:  I’ve been writing about the stock market, companies and related subjects for 49 years. That stretch has included  seven bear/bull markets, wars, domestic and international crises, rank speculation, two market declines of 50%, political scandals, financial institution meltdowns, dramatic technological changes, grand bull markets.
      I have never seen or imagined that the integrity of our country would disgraced by the narcissistic  behavior of its President, Donald Trump where truth has no meaning.
      There is immeasurable risk here, as an extremist tight-wing Congress attempts to dismantle all the hard fought legislation passed over the years, intended to improve the quality of life for most of its citizens, strength of its institutions, competiveness of its corporations, and international stability.
       The downside is unthinkable. 
        What breeds hope is, that the bizarre action of the Trump administration and Congress has rallied huge numbers of people seeking to win back the country we want it to be, once was, and damn well should be, not a private party enjoyed by a few.
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THE PARIS ACCORD
      In a report today by Bloomberg News, President Trump wants to abandon the Paris accord against the better judgement of Secretary of State Rex Tillerson, Defense Secretary James Mattis, former Commander of the U.S. Pacific Command Admiral Sam J. Locklear, heads of the Group of Seven nations, and a host of other leading corporate and institutional individuals, including Alphabet Inc.’s Google, Apple, Facebook, as well as 200 investors with more than $15 Trillion under management.  WHY ?   Is this about Obama ?
      Tillerson says “Climate change poses strategically significant risks to the U.S. national security, directly impacting our critical infrastructure and increasing the likelihood  of humanitarian disasters, state failure and conflict.”
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HEALTHCARE:  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. 

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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 !!!
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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.
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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.

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

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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.
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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:
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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
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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.
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*Stock Trader’s Almanac
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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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.

 

 

 

 

 

 

 

 

     I’ve been writing about the stock market, companies and related subjects for 49 years. That stretch has included  seven bear/bull markets, wars, domestic and international crises, rank speculation, two market declines of 50%, political scandals, financial institution meltdowns, dramatic technological changes, grand bull markets.
      I have never seen or imagined that the integrity of our country would disgraced by the narcissistic  behavior of its President, Donald Trump where truth has no value.
      There is immeasurable risk here, as an extremist tight-wing Congress attempts to dismantle all the hard fought legislation over the years intended to improve the quality of life for most of its citizens, strength of its institutions, competiveness of its corporations, and international stability.
       The downside is unthinkable. 
        What breeds hope is, that the bizarre action of the Trump administration and Congress has rallied huge numbers of people seeking to win back a country we want to be, should be. 

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