Street Not Spooked By Protests

Investor’s first read – Daily edge before the open
DJIA: 19,864
S&P 500: 2,278
Nasdaq Comp.5,614:
Russell 2000:1,361
Wednesday, February 1, 2017 8:44 a.m.
For the most part, the Street cares little about civil rights, equality, justice, and the many social issues affecting Americans.
Pragmatically, the Street wants to make money in the market and from commissions and fees.
A two-day jolt like that seen on Monday and Tuesday in response to the public outrage of Trump’s ban on citizens from seven Mid-East countries and the firing of the sitting Attorney General for not upholding the ban, is about all one can expect.
The early sell off yesterday was met by buyers as all major market averages except the DJIA recouped their losses, the Russell 2000 posted a nice gain.
The Street is mesmerized by the prospect of a big corporate tax cut, deregulation, and a lot of new spending on the military and infrastructure.
However, there are hurdles to overcome. Blundering and overreach by the Trump administration can spook the Street, as well as a trade war, shooting war, the Fed, and a Congress that decides a sharp increase in spending isn’t going to happen.
If the BIG money decides it doesn’t like what it sees in the Trump administration, it will bail out. Its selling and lack of buying support will open the door to a steep plunge.
Odds of that happening are increasing, but I don’t see that happening yet.
SUPPORT “today”: DJIA: 19,763;S&P 500:2,270 ; Nasdaq Comp.:5,590
RESISTANCE “today”:DJIA:19,957;S&P 500:2,289; Nasdaq Comp.:5,639
– 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
Yesterday’s Trivia question” Who issued the least executive orders per year over the last 120 years ?
Answer: President Obama

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.
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 necessary 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.

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