Weekend July 1, 2018
If the Federal Govt really wanted to do something worthwhile, it would mandate all national holidays as three day weekends. That would be
Memorial Day, July 4, Labor Day, Christmas and New Year
This week is a perfect example, July 4 is on a Wednesday disrupting thing s and bifurcating the week.
I suggested this in a graduate class at UT. The Professor was horrified that I would move Christmas. Then a student from Peru spoke up saying that was they way Peru handled Christmas. If Peru can figure this out...
Social Mood
In my weekly newspaper column I observe that social mood is completely off the rails. Think how much time and energy is being wasted with hateful comments from the left and then there was Lock Her Up during the campaign. But that fell short of the four letter invective we have heard lately. Then there is the ejection of Sarah Sanders at the Red Hen. And Maxine Waters demanding all Republicans be at least verbally attacked in public. Finally that was too much even for Nancy and Chuck, calling for calm. Meanwhile Trump campaigns in the states he surprisingly carried just as Obama did.
And with a narrow majority in the Senate, and that Majority not following McConnell's lead on Obamacare, one cannot know how the November elections will turn.
Meanwhile on the other side of the world, the 1.4 billion in China cannot criticize their leader, now signed on for life. Ditto in Russia, well one can criticize but that usually turns out badly for the one complaining. So we have uncertainty in the West and Certainty in the East. China has been flashing lasers at US Pilots. And China continues to build a base on the so called Spratley Islands as well as in East Africa. The East has formed its own Central Bank, only Canada and the US are not members. And given Trump's comments to Canada lately would anyone be surprised if Canada joined that group.
Read about the Asian Infrastructure Investment Bank here.
My point being, if you were the proverbial man from Mars watching the two sides, which would you bet on? The one with two warring parties or the ones not frittering away their time and energy on hateful comments that just lead to more hateful comments?
It was an interesting news week. Allyssa Finley in a WSJ piece Thursday makes the case that California will be next GM, bankrupt because of pension promises. Today I see an article noting that a family of four making $117K in Marin County CA is in poverty. Karl Rove had quite a laundry list of tariffs about to go into effect in July, both ways. A liberal columnist lists HD, the US largest nail producer and others already affected, the WSJ adds Maine lobster fisherman who now face Chinese tariffs on what whould be a big seller in China. We have published numerous newspaper columns predicting this. And now the trade talks are referred to everywhere as a trade war.
BRKB
This past week I speculated that BRKB would move up to test the 190 resistance, noting that BRKB looks a good deal like the DJIA. BRKB moved up and failed well below the 190 level.
30 Minute Ten Day Chart
The 30 minute chart shows just how dramatic the failure was. Friday was the last day of the quarter.So funds typically buy whatever has been moving up to make it appear they owned the winners. That had prices up in the morning but the whole thing fell apart by late afternoon. High was 189.28, the low 186.65, two points below the open. And this is America's favorite stock! This does not bode well for the time ahead which is seasonally weak anyway. Notice On Balance Volume at top has stayed under the 50 day MA. Notice PMO at bottom is now rolling over. This may well set up a good buy in BRKB later this summer but not for now.
NYSE Advance Decline Line
Too early to say this indicator has topped but it could be the case.
Financials
XLF is bouncing along support but the overall averages need it to rise to help those very averages.
Last week we suggested these stocks were ready to advance.
FRAK, CRAK, CHK, XES, AXAS, VNOM
CHK was already moving up, but the list in total has done as expected. After running tech stocks up, looks like fund managers are turning to energy which was the big performer lately.
REITs are rallying as are Utilities. These are defensive issues which again suggests a stock market correction is in progress.
China
Let's start looking for a bottom in Chinese stocks. Yes just looking, China and the US both peaked in late January
China Daily
This could be the start of a bottom forming.
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