What Is Going On?
The world is a crazy place so nothing should take you by surprise, but this week probably has been nuttier than most. Before the Mueller report was released I took a position that no matter what he found it would turn into another circus in Washington, and I was right. The Republicans are claiming that it was a victory for President Trump. The Democrats are saying that they want more proof of what happened.
Attorney General Barr refuses to release a version of the events that happened surrounding the 2016 election. He claims that the report exonerates Mr. Trump. The Democrats are claiming the opposite. The say Mr. Trump is guilty and needs to be brought down by his actions. This is politics at its worst. We no longer have a government that represents the people’s needs. It is a government that only takes advantage of their own position. No matter which side you are on, this thing is a farce.
I am now going to predict what is going to happen with the mess. President Trump is going to continue to voice his opinion that the Democrats are using the power of the House to find him guilty of “obstruction of justice” What a great term, I believe that the 2016 election will eventually turn into the 2020 election. Mr. Trump may get reelected or the country will turn in another direction. As my mom always said “no one knows for sure”
On another issue the department of labor reported that employment had reached a 50-year high, but no one seemed to care. Minority businesses and hiring practices were also on highs. In other words, the county could not be in better shape finically. However, the Trump administration continues to call on the Fed to lower interest rates. What happens when the next recession hits? We are living in times that I think are impossible to comprehend. In the meantime, the equity markets continue to make new highs.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph which will cover the trading subject.
What is Beta?
Beta is the component of the market that allows investors to compare the volatility of an individual stock to the market in general. If a stock has a Beta of 1.0 and we are using the S&P 500 as the index, it means that for every 1% that the S&P 500 moves, the stock should move the same percentage amount. If the Beta for the stock is .8 it means that the stock should make a move which is 80% as much as the Index. If the stock has a Beta of 1.6, the stock should move 1.6% for a 1% move in the underlying index. One thing should be noted. If the market is breaking, the beta will tend to accelerate as volatility increases. As an example, if the Beta for a stock is 1.0 and the market breaks, there is a good chance that the stock will break more than the 1% move by the index.
The Wise Guy Report: The View From The Floor
Each week I talk about what I think the Wise Guys (floor traders) are up to with the Big Three commodity contracts: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). I also track the Market Edge (www.marketedge.com) ‘Market Posture’ which has a twenty-six year record of forecasting the intermediate-term direction of the stock market as measure by the DJIA with around 70% accuracy.
T-Notes
This market continues to look for a direction. Even with the Fed stating that it is not going to raise rates during the remainder of 2019 the ten-year has not broken out to the upside. This past week is typical of the price action we have been experiencing for the past two months despite rallying at the end of the week to finish on a high note.
Crude Oil
This market may have topped out. It made a lower high for the second straight week and we closed out our trade. We will continue to stay on the sidelines until we have a handle of where its next move will be.
Gold
The precious metal found some legs at long term support and had a reasonable rally last week. The key here is to see if it can continue to rally back up to the old highs. The lack of volatility in the equities market has something to do with the gold’s current price action. We will stay with this trade and hope that some event will cause gold to move higher.
| The Big Three Commodities Contracts
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| The Market Edge – ‘Market Posture’
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Market Timing Models Current Reading Prior Week Connotation
Cyclical Trend Index (CTI): 5 7 Positive
Momentum Index: 7 7 Positive
Sentiment Index: -1 -1 Negative
Strength Index – DJIA (DIA): 48.3 51.7 Negative
Strength Index – NASDAQ 100 (QQQ): 54.9 48.0 Positive
Strength Index – S&P 100 (OEX): 50.0 50.0 Positive
| Based on the status of the Market Edge, market timing models, the ‘Market Posture’ which has been Bullish since the week ending 4/18/2019 (DJIA – 26559.54) remains Bullish at this time. |
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