Street Needs Passage of Trumpcare

Investor’s first read – Daily edge before the open

DJIA: 20,668

S&P 500: 2,344

Nasdaq  Comp.:5,793

Russell 2000:1,346

Wednesday,  March 22, 2017    8:55 a.m.

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TODAY

      Yesterday’s plunge in stock prices was a break in the market’s M.O. since the November elections.  There were no buyers on dips, suggesting something has changed over the last six months when the Street used every pullback however slight to buy.

       Let’s call it “second thoughts” about the Trump presidency.  For one, the FBI found no reason to support Trump’s assertion that he was wiretapped before the election, for another, the FBI was investigating Russian interference with the outcome of our election and possibly Republican collusion.

       Then too, Trump’s agenda for tax cuts, deregulation, and a big spend on the military and infrastructure may not happen as soon as the Street expected, and may even fall short of original targets.

       Of course,  there is a chance yesterday’s sell off was triggered by an increasing concern about the FBI’s investigation of Republican collusion with Russia to sway the outcome of the November elections in favor of Trump, and I think that is a valid concern.

        Expect a rally before noon. If that fails to hold, the message  would  suggest the Street still has doubts about Trumpcare succeeding.

        I expect House passage of Trumpcare, so a sell off into tomorrow’s open could give traders a buying opportunity in anticipation of passage sometime during the day.       

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SUPPORT “today”:DJIA:20,607;S&P 500:2,337;Nasdaq Comp.:5,776

RESISTANCE “today”:DJIA:20,721;S&P 500:2,353;Nasdaq Comp.:5,831

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CORPORATE EARNINGS (updated  March 3, 2014)

      Factset

Q1 earnings are projected to increase 9.0%.  2017 as a whole are projected at a plus 9.8% down from Dec. 31 estimates of 11.6%.  Currently, the P/E on trailing 12-month earnings is 19.8 x, and based on earnings 12 months out is 17.7 x. That compares with a 10-year average P/E of 13.9. 

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MY TECHNICAL ANALYSIS  of the 30 DJIA Companies:  (UPDATED 2/13/17)

 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  March 2, 2017,  a reasonable risk is 21,040 a more extreme risk is 20,938 Near-term upside potential is 21,367 .

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POLITICAL/STOCK MARKET

  Strange, how one man can impact history.   

  Without hedge-fund billionaire, Robert L. Mercer, Donald Trump would not be President, Stephen Bannon would likely be producing unflattering documentaries about pols, Breitbart News would be a remote platform for  the alt-right which would have zero visibility, there would not be the need to investigate Russian hacking  of our 2016 election, and the  Citizens United ruling would never have seen the light of day.

      Then too, incivility and lying would not be disgracing our Presidency and all those racists, white supremacists, neo-nazis, anti-semites, white nationalists, homophobes, conspiracists, nativists, misogynists, bigots, haters of  lifeforms would never have crawled out from under their respective rocks.  

       Mercer’s brilliance and money as a quantitative analyst capable of mining the most obscure data and synthesizing it into a common sense platform where it has multiple applications, including targeting preferences and character flaws, enabling him and Bannon to put Trump in office.

     Mercer made his billions trading algorithms for the Medallion fund over close to three decades.

       Reportedly, he has an intense dislike for the establishment, especially Republicans and wants government shrunk to the size of a pinhead.       

      Nothing has been said or written about what Mercer would replace  what’s left of the government after it has been razed.  

       GREAT !  Just what we need. 

       Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished by one huge regret – he backed the biggest con job in our nation’s history. This conclusion just my opinion, of course, using the world’s best computer – a human brain.

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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.

3-Expect major domestic violence this summer as alt-Right groups confront protestors against Trumpcare and Congress’ gutting of a host of popular government programs.

4-Seeds of a recession will be planted as Congress guts programs needed and used by millions.  Stock market has its final run.

3-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.     

 WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !

      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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Note: Source of weekly economic calendar and good recap of  indicators: mam.econoday.com.

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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.

 

 

 

 

 

 

 

 

 

 

 

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