Before I get into this week’s episode and Momentum Monday gory details – Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.
Onwards…
It was an ugly Monday in the markets. This is live footage of last week’s buyers.
I will get right to this week’s episode which covers the overall markets, what seems to be holding up (Restaurants and Staple stocks) and how I am changing my main watchlist (20 minutes):
As I wrote last week on the blog, try and panic early (last Thursday for instance).
Now we are back into the abyss it seems.
There have been some horrifying events in the USA in 2018 as gun violence accelerates, the California fires rage, fear mongering comes from the White House, hate crimes and speech proliferates and Nationalism is endorsed by the President. I think it’s clear that Mexico will not pay for ‘the wall’, there is no wall coming, and the troops sent to protect us from Caravans might be of better use helping in Puerto Rico and California.
Rising interest rates, basic interest rate math on our deficit, silly valuations and a bad market mood are not helping.
No wonder the market is heavy.
It seems like the ‘Trumpy Bear‘ is upon us and it really might be vicious. Nobody knows but I go through my homework each night to prepare.
Let me do a quick overview of some specific ugliness you should be paying attention to…
1. Goldman Sachs is crashing and few seem to notice. I take that back…Malaysia notices.
2. Apple is now down 20 percent from all time highs and given back the big run that took them up and through $1 trillion.
3. Technically the S&P and Nasdaq are rolling over and very heavy. I share this chart not for you to panic because like last week, there will be bounces. You need to understand field position and we should be playing defense right now (I call it STFR).
4. Oil prices are in crash mode.
The President has telegraphed his game plan. He is all in on fear with a side dish of the economy. He will take credit for anything good that happens in the stock market and blame the FED and the Democrats for anything bad.
While he tweets away, remember that the market knows his game plan. After the Democrats won the ‘House’ last week, the markets quickly went into relief rally. NOBODY doubts that the Democrats controlling the House is a horrible headache for Trump and the GOP. That was being priced in leading up to the actual election and the only surprise was the Democrats self loathing at the lack of a bigger ‘blue wave’. What is unknown is just how crazy and dangerous a cornered Fat Nixon can get. I liked this post from David Roth titled ‘This All Trump Has Left‘. In short:
Trump won’t stop. He won’t stop because he’s never told the truth in his life and because this is all he has and all he has ever had. He wakes up every day to the mess he’s made and says and does whatever he must, at whatever cost, to get through the day. Like many in his generation, Trump has mistaken the end of his life for the end of the world. He can’t imagine, let alone care about, what will be left after he is gone, if only because no one who matters to him will be around for it. His politics, such as they exist, boil down to this: he is trying to hold on, and will spend the rest of his life trying not to be found out. Every day is like this now. He could do this forever—he talks often about serving for longer than one more term—but that’s mostly because he has so much invested in never stopping. He is over-leveraged as always; he can only ever do more.
In the most basic sense, just in terms of getting off his ass to do the basic boring things presidents do, Trump can’t do the job. He can’t care and he won’t work and he never tells the truth both because he doesn’t know it and is afraid to know it. There is no reason to ask him or anyone who works for him questions—a half-truth isn’t true enough and even a half-lie is still a lie, and they will never do better than either. The work that needs doing, which Trump and his people cannot do or even see, is plain and urgent. It’s all much bigger than him.
This is what the markets are now trying to price in. The market will do this of course, but guessing how and when is why we play the game.
I am always the optimist so I will end with the ‘bounce and or rally‘ scenario from Urban who writes the fabulous (and free) Fat Pitch.
Turnaround Tuesday?