Syria, N.Korea,Delayed Stimulus Weigh

Investor’s first read – Daily edge before the open
DJIA: 20,651
S&P 500: 2,353
Nasdaq  Comp.5,866:
Russell 2000:1,377
Wednesday, April  12, 2017    9:14 a.m.
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      Stocks are still under distribution, as rallies fail to follow through. To its credit, the market has held up well in face of tensions in Syria and once again in North Korea.
     
The United States has already  responded to Syria’s gas attack, and U.S. warships are currently headed for North Korea.
      Reportedly, President Trump was in touch with China President Xi Jinping yesterday, the latter urging a peaceful resolution. Trump has already stated the U.S. would solve the problem with or without China’s help.
      In terms of nuclear weapons and a delivery capability, China and the U.S. are on the same page with China already not importing coal from North Korea, and may even extend that to oil to make its point.
      Reportedly, South Korea has not yet mobilized its military forces beyond the norm, suggesting a serious confrontation between the U.S. and N. Korea is not expected.
      On a more positive note, and as a result of their recent meeting at Mar-a-Lago, Xi has proposed a 100-day plan for both U.S. and China to discuss ways to lessen the trade deficit between countries.
      While details have not been worked out, the drift of a solution would be for China to reduce its exports to the U.S. and expand markets for U.S. goods in China.
TODAY
      It looks like another test of the April lows (DJIA: 20,517, S&P 500: 2,344). Breaking that a test of the March lows (DJIA: 20,412, S&P 500: 2,322) is in order. The Street has had good reason to bail out, but hangs tough expecting peaceful resolutions of international tensions and an eventually a massive stimulus.
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SUPPORT “today”:DJIA:20,561;S&P 500:2,343; Nasdaq Comp.:5,843
RESISTANCE:“today”:DJIA:20,703;S&P500:2,361;NASDAQ Comp.:5,883

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POLITICAL/STOCK MARKET

      The rape and pillage of our federal government continues, as Republican Thomas Massie  introduced a bill in February aimed at terminating the Department of Education effective December 31, 2018. This coincided with the Senate confirmation of Conservative Betsy DeVos, a long time advocate of school vouchers and critic of public education.

      As a budget is being developed, we can expect a major revamping of the nation’s government structure and huge cuts.
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      The U.S. Navy strike group, Carl Vinson, is currently headed for the western Pacific Ocean in the vicinity of the Korean peninsula, but will not arrive until next week.
      My guess is that the objective of the meeting between Trump and China President Xi Jinping was to inform Xi  the United States was going to move warships into the region in a show of force after North Korea’s recent missile launch. Both presidents agreed that North Korea’s nuclear development has reached a “serious stage.”  On February 26, China banned all imports of coal from North Korea in response to its continuing missile launches.
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      After President Trump’s inauguration, former President, George W. Bush, was heard to comment, “That was some weird S_ _ _.”   Very prophetic “W.”.
      The Trump administration is undergoing a major shakeup, with national security adviser General H.R. McMaster and  Secretary of Defense James Mattis stepping in to stabilize an out of control bunch of inexperienced people in high places. Some speculate Trump shifting to a more centrist strategy.
      Steve Bannon’s demotion set a new tone, away from the isolationist, nationalism mindset and possibly back to maintaining military and economic balance, cultivating global strategic relationships to deter China from filling vacuums we would create under the Alt-Right, Ayn Rand approach to self-destruction. 
      Get rid of the Alt-Right influence and we have only to deal with Trump’s arrogance, warped ego and immeasurable lack of qualifications for the job.
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Syria Attack Was All About Trump’s 35% Approval Rating         

        It worked ! His approval rating is 40, up from 35. I Have continually warned that Trump would put the U.S. on a war footing to boost patriotic support and his approval rating.  We now have a double-header – Syria last week and now a U.S. Naval strike group is headed toward the Korean peninsula.
       Last week,  Syrian airfield strike with 59 Tomahawk missiles launched from two Destroyers in the Mediterranean Sea was in retaliation for Asaad’s use of Sarin gas on April 4 that killed more than 70 civilians.
      For Trump, this is an about face on intervention in the Mid-East, and the only reason I can see is he expects it to boost his approval ratings.
      In 2013 he urged President Obama not to retaliate against Asaad for his use of nerve agent sarin in 2013 tweeting “Again to our very foolish leader do not attack Syria –If you do many bad things will happen & from that fight the U.S.gets nothing.”  – “The only reason President Obama wants to attack Syria is to save face over his very dumb RED LINE statement. DO NOT attack Syria.” (Sept. 5, 2017).
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HOUSE INTELLIGENCE COMMITTEE
       What happened to the hearings ?  Looks like Syria  was yet another distraction, perhaps this one unplanned. Chairman of the House Intelligence Committee, Devin Nunes has temporarily ceded control of  the investigation of pre-election collusion between Russia and the Trump team to Mike Conway of Texas, whining charges by “several left-wing activists” that he made unauthorized disclosures of classified information relative to the investigation.
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TRUMP SQUIRMS BUT A WAR FOOTING MAY BAIL HIM OUT
      The more Trump squirms to find a way to divert attention from the main issue demanding resolution, the guiltier he looks.
      The current diversion is Susan Rice who Trump accused of being politically motivated when certain Trump associate were included in a sweep of foreign officials last year by U.S. intelligence agencies. Their identities are usually not revealed, but may be if national security is an issue. To everyone’s surprise, Trump claims in a tweet that Rice committed a crime when certain individuals were “unmasked”. Rice was National Security Advisor to President Obama from 2013 to 2017.
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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  March 31, 2017)
Factset
      Q1 earnings are projected to increase 8.9%. That compares with a Q1 est. on Dec. 31 of +12.5%.  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 17.5 x. That compares with a 10-year average P/E of 14.0. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 3/29/17 and )
      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 29, 2017,  a reasonable risk is 20,413 a more extreme risk is 20,196.Near-term upside potential is 21,113
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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 tax reform 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.
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.     
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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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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