Quick Pre-Holiday Update

The stock market keeps on rolling; although not quite recapturing the trend line it dipped below last week. That said, I think we can make the dashed line below (see chart) the new uptrend line for now. The negative momentum divergence (panel 2), and present overboughtness (panel 3) make this a still dangerous-looking short-term setup:

Bonus Quote of the Day

Many times over the years, herein and in video commentaries, we've touched on the signals inherent in overall volume (total shares trading hands) relative to price action. 

Quotes of the Day: Timeless -- And Very Timely -- Wisdom!

The following excerpts from the greatest investing book ever written, Reminiscences of a Stock Operator, speaks volumes about where we find ourselves today. Clients will know exactly what I mean:

This Week's Message: Carefully Rising To The Challenge

I gotta hand it to the bulls, the equity market (on the surface* [see supplemental charts below]) remains the definition of resilient! Of course, as we've been stating from the moment we became guarded, it would/will be positive trade news that keeps the market afloat.

How To Crunch The Jobs Data

As we've stated herein, we're paying very close attention to the U.S. employment picture, as it's our view that a rolling over of the labor market will be the straw that ultimately breaks the back of the economic/stock market bull camel; now on its longest-ever journey.

A Contrarian's Dream!

I totally get why traders are bullish right here, but man it's getting awfully crowded on the bull's side of the boat!

One of our weekly to-dos is to track futures speculators' positioning among various currencies, commodities and stock indices.

Headline of the Day: The Fed Sees Trouble Brewing

In a review meeting yesterday my astute client stated that he agreed with our assessment of conditions and was happy to play defense for the time being, but struggled with why the market continues to hold up.

Quote of the Day: Watching the Labor Market

Macro strategist Julian Brigden's summation below jibes with what I've been expressing herein of late: That once the labor market begins to buckle (whenever that occurs), this longest-ever ball game (expansion/bull market) is likely over:   emphasis mine...

Myopic traders on edge!

Here's our 1-minute S&P 500 chart this morning:

This Week's Message: Uneasy...

I'm going to let you off easy with this week's message; I mean in terms of length, the actual message itself is not what I'd call "easy" -- I'd actually call it a somewhat "uneasy" message.

Bonus Chart of the Day: Like It's 1999

While articulating my #2 reason why it might be dumb to own stocks if you have a one-year time horizon in this morning's video I suggested that "valuations are not justified by present fundamentals."

Charts of the Day: Labor Market Warning Signs

I've been mentioning in client meetings and on video commentaries herein that we expect to develop a firmer conviction as to the direction of the next 'big' market move over the next few months; our eyes being firmly focused on the labor market.

Stuff Impacting Stocks; Now and Further Out (video)

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Latest Log Entry: Why To Own Stocks Right Here, And Why Not To

The pros and cons below for the "right this minute" scenario favor the bulls. As for over the course of the next year, well -- at this juncture -- not as much...

11/17/19 Sunday

List of reasons why it is smart to own stocks right this minute:

The Fed On What Lies Beneath -- OR-- Who Hires Whom?

Last month I devoted several blog posts to the recently released International Monetary Fund's (IMF) Global Financial Stability Report. As I expressed, the report confirmed virtually all of my concerns over what lies beneath; i.e., what will surface during the next economic contraction.

Chart of the Day: No Explaining Away The Latest Weakness!

While we've previously addressed the Q1ish anomaly in the GDP numbers, that vividly displays (white circles) in the Atlanta Fed's GDP Nowcast graph below, per the red circles (all empty except the last [today]), a 0.31% reading at this time of year is something that we absolutely cannot explain away as some glitch in the seasonal adjustments:   

click to enlarge...


This, folks, is what we're talking about, and it's what's showing up in our own macro index!

Question of the Day: Has the monetary tsunami restarted?

I share Citigroup's concerns:

We've been here before, and it didn't end well...

Yesterday's Log Entry: Acute FOMO

11/14/19 Thursday

The S&P continues to move further into all time high territory while sentiment has turned exceedingly bullish over the past month; our fear and greed index currently scores 100 (highest greed level). While this denotes very strong odds of a near-term pullback, seasonality, the belief that the U.S. and China are on the verge of striking a “phase one” deal, today’s news that the USMCA is likely to be ratified soon, the Fed’s accommodative stance and, way below the radar, the potential for the Fed to roll back banking regs to fix the present overnight funding issue could absolutely spark an immediate rally.

This Week's Message: The Jury's Still Out, But...

Just finished a long meeting with a good friend and client of, believe it or not, 32 years. I know, you're now thinking that I was like 7 years old when I started my career 😎. I have had the sincere pleasure, and honor, of working with my friend through the absolute litany of ups, downs, booms, busts, etc., over the past 3+ decades; an era when the market delivered just about anything one might imagine the market could, including the Greatest Recession Since the Great Depression.

On Market Timing

Just watched an interview with one of market history's most revered technicians, John Bollinger. His eponymous indicator, Bollinger Bands, is one of the most used technical tools across most (if not all) traded markets.

Video Commentary: Bear Markets, Timelines and General Conditions

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Headline and Quote of the Day

The S&P 500 is moving seriously further into all time high territory this morning -- thing is, nobody's seriously buying it (literally), at least not yet. Meaning there's virtually no volume; as I type about half the average number of shares have traded so far for this time of day.

Some Magical Thinking Going On In The Corporate Debt Market

In last Thursday's video I said the following, with regard to present under-the-surface risks compared to what we faced leading into the last "great recession":

Chart, and Quote, of the Day

This chart and accompanying stats, along with Friday's video commentary and last week's weekly message, adds to our presently defensive narrative:

Quote of the Day: It's What You Keep That Counts!

Respected author and currency expert Marc Chandler echoes much of what you've been reading herein the past few weeks:

Careful On The Slopes

IMA's CEO and Chief Investment Officer Vitaliy Katsenelson, in a recent Real Vision interview, offered up the perfect analogy for the market environment we in our view presently face:

Video Commentary: Quick Look At General Conditions

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Quote of the Day: Scariness In The Debt Market

In yesterday's video I mentioned the scariness of what we're seeing in the private equity space, in leveraged loans, and in collateralized loan obligations (CLOs).

This Week's Message: Greed In Markets Isn't Good If You're Bullish On Stocks -- Or -- Who's Swimming Naked?

Personal note: Chatting with Nick after the close this afternoon I found myself venting on behalf of anyone who might be exposed to this market on a short-term basis. I don't know that in my 35 years of doing what I do I've seen a more myopic, purely headline driven market. Of course the now-huge preponderance of algorithmic trading is (in terms of dimension and influence) a relatively (as in the past decade or so) new thing, and not to mention the social media platforms upon which traders become totally distracted -- and led through a veritable labyrinth of theories on everything from macro economics to day trading -- makes for utter short-term confusion in markets; particularly today, with its intense political and geopolitical backdrop.

Video Commentary: Legitimate Trade Optimism, What Lies Beneath, And How Our Hedge Plays Out

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Bonus Quote of the Day

This (from NY Fed President John Williams this morning) is precisely what I'm talking about (when I'm talking about bubbles):

Quote of the Day: The Sooner the Better!

I wrote the following on October 30th:

Quote of the Day: China Now Playing Hardball

All of the promising trade rhetoric coming from President Trump and company of late appears to have given Xi the green light to go for the jugular:  emphasis mine...

This Morning's Log Entry

11/5/19 Tuesday

As I suggested in Sunday's blog post, given the latest momentum, historical precedent (past years like 2019), seasonality, odds of soft Brexit and huge incentive to ink a “Phase 1” U.S./China trade deal, the year-end (return, as opposed to risk/return) setup looks good for equities. Potential problem being, sentiment is ramping up notably, and — given the abysmal predictive track record of the short-term consensus — that’s a contrarian indicator. 

Bonus Quote of the Day

I mentioned the prospects for the following in this morning's video commentary. If I'm right about the White House's present stock market-centricity (a no-deal "phase 1" would play pure havoc with markets), China may very well get what it's after; despite the political push back the Administration is bound to receive from both sides of the aisle:

Quote of the Day: Feels Familiar

The following reply to hedge fund consultant Thomas Thornton's blurb this morning (about the market rallying on trade rhetoric) echoes our latest video message:

Video Commentary: Wind Machines Set On High

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Quote of the Day: Insiders Fading Recent Rallies

Considering seasonality (November and December tend to be very good months for stocks), Friday's better than expected jobs number, the Fed's recent rate cut and its dovish cooing, and the market's propensity to trade higher on anything suggesting trade war(s) are not due to escalate (the White House -- as the latest tweets, etc., suggest -- clearly gets that message), a strong year-end for stocks is making a lot of sense. Although, I have to say, considering the consensus pessimism coming into what turned out to be a very good October (markets love to disappoint the consensus), perhaps a strong year-end makes a little too much sense.

Quote of the Day

Here's a bit more from the IMF's latest Global Financial Stability Report that speaks to our concerns over the present level of stock and bond prices relative to the underlying fundamentals (i.e., valuations):

Market Commentary (video)

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