Friday Dec 27 2019
A Blaze of Glory
Let's go out in a blaze of glory
All good things must end
Like two heroes in a story
Let's go out like we came in
In a blaze of glory
Kenny Rogers, A Blaze of Glory
Social Mood is unconscious,, unremembered, and constantly fluctuating
Tenet Four of Socionomics
Our opening quotes refer to the wild swings in both stock and energy markets since Year 2000. In years 2000, 2008, and 2019 the NASD registered 5,000, 3,000 and now 9,000 (peak numbers are rounded). The aftermath of 5,000 and 3,000 did not end well. That is the reason for our second quote above. In the midst of all this excitement (see Dirty Harry, bank robber scene), investors fail to remember the past and are swept away by the present (CNBC, markets are at record highs!).
I suspect markets trend up into the November 2020 election. Whichever way the election goes, there are going to be a lot of disappointed people. Kim Strassel notes that Nancy Pelosi may well keep the impeachment papers bottled up into the election, choosing to win innuendo rather than a Senate vote. Either way, post-election, the pro-Trump or Trump-deniers will be furious. That will note make for a positive mood scene.
For now, my suspicion that energy markets would make a low in Fall 2019 was actually a bit late. The lows came in August. West Texas Intermediate broke the resistance at $60 to trade at $61..85 today. The long-suffering XES Energy Service ETF has catapulted from $6.50 to $8.13. Don’t laugh that is a 25% increase, coming amidst gloom and doom reports on the industry sector (which is always the way bottoms are formed). The XLE Energy ETF is knocking on resistance at $62.
Jerry Jones has invested a billion dollars in Comstock Resources, up 68% this year. Comstock is a natural gas provider. Again, like the energy service sector, the news is all negative for natural gas. But cold weather (it is literally snowing in San Bernardino, CA) jumped natural gas 4.48%j yesterday. That jump was from support at $2.20. Devon DVN is up from $20 to $26. Bet long not short on natural gas.
Amazon would need to tack on 450 points to match the advance in XES. And it may well do just that. But AMZN is at new highs while the XES is at decade lows.
After a 20% decline in Fall 2018, stocks regained that loss and then some, hence the record highs now. Real estate and high priced toys (autos and the Polaris slingshot) as second derivatives of the party are enjoying renewed purchases.
As with the last two peaks (2000 and 208) markets are likely to go out in a Blaze of Glory. Ten months from today, don’t stand too close to the Blaze.
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