A mixed week with the Dow Jones down 5 points (-0.01%) and the Nasdaq up 68 points (+0.90%)
As we have been saying, the stock market remains at an incredibly important juncture. Things are about to accelerate in an unexpected way. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
While the stock market continues its improbable levitation, all sorts of fundamental drivers continue on with their respective deterioration at an accelerating pace. Let’s take a quick look.
So why does Seyhun’s model now predict a drop for the market in the coming year? According to the model, insiders – those who by definition have the most insight into the future performance of their own stocks – sold more of their company’s stock in the first half of February relative to buying, than they have in a decade. Five of every six companies for which there were recent insider transactions have experienced net selling.
That said, the model creator is already making excuses about his own model, saying it’s important to not “put too bearish of an interpretation” on the data because it came after a large rally. Insiders have “no choice” but to sell when their compensation comes in the form of equity, he told Barron’s, calling the selling nothing more than “opportunistic behavior”. That remains to be seen.
#1 Farm loan delinquencies just hit the highest level that we have seen in 9 years.
#2 We just learned that U.S. exports declined by 4 billion dollars during the month of December.
#3 J.C. Penney just announced that they will be closing another 24 stores.
#4 Victoria’s Secret has just announced plans to close 53 stores.
#5 On Thursday, Gap announced that it will be closing 230 stores over the next two years………
Trump still did not get the idea that the MOU and the trade agreement were the same thing and asked: “Are they going to put that into another agreement?”
An exasperated Lighthizer danced around for a bit talking about “major hurdles”, concluding “assuming you decide on an agreement, it will be signed by the two people and it will be a trade agreement between the United States and China.”
Trumpian Vocabulary
Trump was pleased.
However, the fact remains that the underlying issues in the financial system are still in place. Those issues are:
1) Too much debt/ leverage.
2) Too little capital.
And if the Fed is not going to be able to normalize policy to reduce leverage in the system, then the Political elite will need to come up with other sources of capital to do so.
With that in mind, the current political agenda to push for Wealth Taxes, cash grabs and other means of raising capital all makes sense.
However, fear not my dear friends,
“The ‘shock and awe’ upside scenario involves rescinding all U.S.-China tariffs instantly, causing certain tariff-sensitive firms to raise 2019 guidance, while the Fed commits to keeping reserves at ~$1.3T+. If all this were to come to pass, then the SPX will easily make a run towards 3K.”
Hmm, I wonder what they call the rally off of December 26th low. To rather quickly summarize, fundamental data continues its deterioration while bullish sentiment has never been higher.
Luckily, you don’t have to guess what the stock market will do next under such extreme conditions. If you would like to find out exactly what the stock market will do next, in both price and time, based on our timing and mathematical work, please Click Here.
Please Note: Our latest call was a direct hit. While everyone was panicking our work projected an important bottom on December 27th (+/- 1 trading day) on the Dow at 21,725 (+/- 50 points). An actual bottom was put in place on December 26th at 21,713.
