Street Still Using Dips to Buy

Investor’s first read – Daily edge before the open
DJIA: 20,054
S&P 500: 2,294
Nasdaq Comp.5,682:
Russell 2000:1,358
Thursday, February 9, 2017 9:08 a.m.
A soft open yesterday took little time to find buyers, just another indication that the Street still believes tax cuts, deregulation and a big spend are just around the corner.
Yesterday’s post suggested these goodies won’t be dispensed as quickly as the Street currently believes, especially deregulation.
Tax cuts won’t be the bonanza originally thought, and we will see if a Republican Congress is as reluctant to spend as it was under the Obama administration.
As indicated below under Political/stock market, I am alarmed by the behavior of President Trump. The Street really doesn’t care much about civil rights, fairness, a social conscience, or anything in the Bill of Rights. Its mantra is to make money in whatever way it can, ethically or unethically, legally or illegally, fairly or unfairly, so stocks can run in spite of what happens in Washington..
It is no surprise that Trump’s swashbuckling, crude, blundering actions has not phased the Street, even though (IMHO) his actions are dismantling so much of the great accomplishments over the last 60 years.
At some point, probably when it’s too late, the Street will wake up to a world that no longer trusts our government, including a large percentage of Americans, and reluctantly bail out, much like the cartoon of the oblivious person who unknowingly walks off the cliff and only plunges when he looks down.
SUPPORT “today”: DJIA:20,020; S&P 500:2,291; Nasdaq Comp.:5,674
RESISTANCE “today”:DJIA:20,119;S&P 500:2,299;Nasdaq Comp.:5,697
– 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
I have never seen, or imagined, anything as bizarre as the behavior of this administration in more than 60 years of voting. IMHO, the Trump presidency is a BIG mistake, and when you make big mistakes, you pay a big price.
Narcissist : People who are excessively vain, paranoid, egotistic, selfish, stubborn, manipulative, boastful, incapable of criticism or resistance, ruthless, feel superior, defensive, shameless, arrogant, entitled, remorseless, abusive, vindictive, untruthful, and deny reality. It is estimated that 1% of all people have this personality disorder, and unfortunately America has one of those for its president.
He is a human wrecking ball and will further divide America at a time it needs to be united – that’s UN-AMERICAN !
It’s time for Americans to step up and say, “ENOUGH !” Trump has a disapproval rating in excess of 53% and that has to include people who voted for him.
Unchecked, Trump will set the United States back a hundred years. Not only will he instigate the dismantling of the European Community, but possibly but possibly the same for NATO.
At some point his plundering ego will adversely impact the stock market. If the BIG money gets spooked, that will happen soon and the correction will be swift and severe.
If the BIG money hangs tough, the market has a lot further to go.
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:
*Trump’s Dodd-Frank Do-Over Diverted to Slow Lane With Obamacare, Steven T. Dennis and Elizabeth Dexheimer (2/7/2017) and “Trump’s Dodd-Frank Do-Over Diverted to Slow Lane With Obamacare.
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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