A positive day with the Dow Jones up 143 points (+0.58%) and the Nasdaq up 3 points (+0.04%)
At this juncture the stock market continues to perform exactly as anticipated.
Once again, we expect this most recent move higher to continue into our XXX TIME turning point. At that time the stock market should……The best upside completion target we have is on the Russell 2000. The index suggests it will top out at XXX. If you would like to find out what the stock market will do next, in both price and time, please Click Here
So, who the f&#* is buying this stock market?
The answer shouldn’t surprise you.
Stock Buybacks Hit Record $680 Billion In The First Half
From a purely financial point, companies in the S&P 500 that have repurchased shares are expected to see a return on investment of about 6.4% this year, a percentage that falls below the past six rolling five-year periods as measured by Fortuna Advisors, a financial consulting firm that has examined buyback trends going back to 2007.
CEOs, CFOs and Treasurers know all of this, of course, but to them the real goal is simpler: to cash out as soon as possible, while using the company’s balance sheet to soak up any insider sales. If the stock goes up in the process, so much the better.
Gregory Milano, Fortuna’s CEO, summarized it best: “The majority of capital deployed is going right back to shareholders and not reinvestment in businesses. If that’s the only thing you’re relying on, it’s going to end badly.”
Of course it will, but as we approach an absolutely ridiculous $1 trillion in buybacks – actually the annualized first half buyback total of $678 billion would imply over $1.35 trillion in 2018 buybacks – at least it will end with a bang.
Indeed.
We have discussed this before. It is a well known fact that corporates behave in the exact same fashion as retail investors do. That is, they buy at the top and sell at the bottom.
So, it shouldn’t come as a surprise that they are blowing their debt driven cash stock piles on stock buybacks in the market that is selling at the highest valuation level in its history. In other words, just another red flag that something terrible is just around the corner.
If you would like to find out what happens next in the stock market, in both price and time, based on our mathematical and timing work, please Click Here
