I’m holding the sideways market prediction path from last Saturday’s show. It’s so awesome that the market is so bullish that its beating the prediction BUT… you guys got to see this.
Continue reading “S&P 500 Falling Money Flow While Put Buying Is Rising”
The S&P 500 is following the market prediction path fairly closely this week. The prediction was that markets would chop out and go sideways and then rise later in the month as traders front-run the start of the best 6 months of the year (November – April).
Continue reading “S&P 500 Sideways Market Prediction Then Up”
Markets outperformed all of the predicted paths this week which really testifies to the bullish sentiment still prevalent in markets since Trump’s Presidential victory in November of 2016. The Parabolic SAR on the S&P 500 has even given a buy signal.
Continue reading “Markets Outperform All Predictions This Week But Elevated Put Buying”
Whether we are talking about individual stocks, the stock market, or the economy, when you’re wrong just admit it and then move on. The goal is to make money, not to be right 100% of the time so you can stroke your ego.
AM TV and Peter Schiff predicted that the Federal Reserve could not stop their monthly QE injections into the economy. Even though the Fed kept cutting the monthly injection all the way down to zero, alternative media outlets AM TV and Peter Schiff kept saying the Fed wouldn’t stop the monthly infusions because they couldn’t as the patient (the economy) would die. Peter Schiff then went on to say that the Fed was not going to hike rates in December 2015 but instead actually cut rates. The Fed increased rates a quarter point right on schedule. For all of 2016, Peter Schiff has been saying that the Fed isn’t going to hike rates again but instead reverse course and lower rates. In December of 2016, the Fed will likely increase rates another quarter point.
Most alternative media outfits think they have to be crazed perma-bears to get viewers. Maybe they do. Rather than AM TV and Peter Schiff admitting they were wrong about the Federal Reserve, they double down on their wrong predictions and do another “interview” together, check it out.
There are some really good points in this interview, don’t get me wrong. However, to be a successful traders and investor, you can never be a perma-bear. You can never be a perma-bull. You have to adapt and respond to market conditions. That adaptation means you have to be willing to admit when you’re wrong and then to just move on.
Folks, watch out for fear mongering. Fear drives viewership and video view counts on YouTube but being forever fearful is a great way to lose all your money at trading. Some parts of the economy will no doubt suffer under a Trump Administration and higher interest rates; however, higher rates will be good for other parts of the economy like Banking. A Trump Administration will be bad for multinationals and the Dow and parts of the S&P 500; however, Trump will be great for domestic businesses and the Russell 2000.
Small cap stocks are the place to be in a Trump Administration. Trump’s economic policies will negatively impact large multinational corporations like Apple. Small cap stocks are all about domestic companies.
Small cap stocks generate most of their profits inside the US, exactly where Trump’s economic agenda is targeting.
Since Election Day, small cap stocks on the Russell 2000 Index have surged 12.3%, far better than the 3.05% gain for the large-company S&P 500 stock index, and the 3.6% gain for the Nasdaq.
A massive amount of money is moving into small caps. The Russell 2000 has closed up for 14 days straight since Trump won the election.
Both the Fed and Wall Street analysts are forecasting a 3% GDP growth rate for Q3. After yesterday’s release of many economic reports, I would put the GDP growth rate for Q3 at 1.5% at most. Let’s look at yesterday’s economic releases on the charts.
The NY Empire manufacturing index came in at -2%. That number is -84.53% lower than a year ago.
All the major components of the Empire manufacturing index are contracting.
The Philly Fed survey beat, coming in at 12.8 which is an increase of 455.6% from a year ago.
However, employment is still contracting.
Industrial production fell by -1.1 percent for the 12th straight month of contraction.
The Daily Shot makes the observation that the improvement early this summer was in part helped by utilities cranking on all cylinders to keep the air conditioners around the country running. As that contribution subsidies, we are back to the downtrend from the Spring.
Here is the manufacturing component of the US industrial production (year-over-year).
US retail sales fell in August and are continuing to slow.
Inventory growth continues to slow just like retail sales.
Most of the charts above, I went back five years on the data. Let’s look at what the S&P 500 has done over the last five years and compare performance.
The S&P 500 is up nearly +90% over the last five years while the U.S. economy fundamentals have deteriorated over that same time frame. Folks, that’s the Federal Reserve’s monetary policy propping up the stock market and creating a huge bubble in securities.
The U.S. government is pulling out all the stops on the idea that consumers are strengthening, and that GDP will surge higher in the second half of 2016.
Below is the latest Real Personal Consumption Expenditures released on Monday.
Personal income also continues to grow…
Growing real personal consumption and income has led to an upward revision in Q3 GDP…
If the economy is going to strengthen by so much in Q3, why hasn’t the Fed raised interest rates? A whopping six years after the Great Recession supposedly ended, why are rates still at emergency low levels?
Traders have been lied to for so many years by the U.S. government, the Federal Reserve, and Wall Street, nobody knows what to believe anymore. For example, every year Wall Street analysts and the Federal Reserve do a rain dance in the mainstream media to the tune that the economy will strengthen in the second half of the year. It has not happened.
We have five consecutive quarters of falling earnings. How can the economy be strengthening when sales and hence earnings are falling for most S&P 500 companies?
There is so much dishonesty going on about the fundamentals of the U.S. economy that I prefer to weight my analysis more on technicals. Fundamentals are what the “smart money” is saying. Technicals are what the “smart money” is doing.