The Market Perspective

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Tuesday 12/31/2024

From CNN today

“Inflation is waning, interest-rate cuts are in motion and earnings are trending higher, all which bolster sentiment and provide valuation support,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.

It’s an extraordinary event for the modern-day version of the index. (Precursors also racked up that kind of performance three other times, in 1927 and 1928, 1935 and 1936 and in 1954 and 1955, according to a Bank of America analysis.)

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The 1927-28 and 1935-36 dates make the point, the year following those gains the market peaked and then collapsed the following year.

Third Wave Underway

Monday 12/30/2024

The Trend is Down

Brokers never tell clients to sell, now they should and enter the safe harbor of T Bills or bear funds, they will not do so

More Mkt Weakness Emerges

Weekend 12/29/2024

the Christmas holidays are usually a time of year end tax loss selling, not much action. Not this year. The markets appear, again, to have peaked December 4 for the Industrials and later for the NDX.

NYSE Advance Decline Line

This is the most reliable stock market indicator.  It has turned down below all four moving average on the daily chart.

Industrials

OK not exactly parallel lines but the point is that price has fallen out of the uptrend channel It erallied, tried to break through to the upside and failed.

 

NDX

Same sort of thing here, a drop, an attempted rally, and failure.

Now compare the NDX above with  tech excluded NDXX

This chart excluding tech is much weaker and better reflects the much broader of ex tech stocks.

Remember the Transports lead and they are leading to the downside

Again price has fallen below all the moving averages

Utilities below are considered a defensive strategy. Looks like investors are giving up on Transports and Utilities.

 

 

Surprise, No Santa Claus Rally

Friday 12/27/2024

TECH SLUMP SLAYS SANTA RALLY
WALL STREET MOMENTUM FADES

Nosferatu Is Your Holdiay Ticket to Fear and Trembling

Friday 12/27/2024

Nosferatu is a re make of a 1922 German silent horror film concerning vampires.

Think Dracula.

The link is to an interview with the male and female talent in the film.  Interestingly the male describes this as a holiday film, really a vampire movie?

Indeed it opened in theaters Christmas Day, what next Santa  as a vampire?"

By the way the vampire hunter is Wlliam Dafoe one of my favorites I have not seen in some time.

Socionomic theory holds that negative mood identifies with horror and gangster films. This has its roots in the original Frankenstein and Dracula films of the  1930s.

Public Enemy was a popular gangster film of that era. Horror returns in 11973 with the Exorcist. Gangster films with  Godfather I and II at the same time.

the 1970s were so generally awful it saw the creation of the disaster movie like Poseidon Adventure, the Towering Inferno, and Earthquake.

I have been calling for a market top and considerable sell off, if so Nosferatu is coming in right no time.

 

2025 Expectations

Dennis Elam

Thursday 12/26/2024

Word Count 453

Will the Promise of 2025 Hold?

A landslide was Ronald Reagan winning 525 Electoral College votes in 1984. Or Nixon winning 520 votes in 1972, or Franklin Roosevelt getting 523 in 1936, or even Lyndon Johnson winning 486 votes in 1964. They were all landslides. 312 Electoral College votes is pretty average.

RTE News

Much has been said and written about Trump;s comeback victory. Still his popular vote was only ahead by 1.5%.  He has the Senate by less than six votes and the House barely at all. Harris took over 200 electors given the Democrat advantage in six states.

Already things are looking less rosy.  A minority of Republicans in some sort of caucus seem to vote against everything. This required Republican Speaker Johnson to obtain Democrat votes to pass whatever. Then Trump and his new buddy Musk object. This is Congress guys, not the Hogwarts School of Magic.  It will be quite the anniversary if certifying his election is held up over who is actually Speaker. Any chance of farming this out to Nancy Pelosi who seems to know a thing or two about the job?

Ovee the top statements suggest Trump wants the Panama Canal back as they charge too much money.  That’s rich. Trump International Hotel is NYC runs $622 a night. The initiation fee for a Mar a Lago Membership is $200,00 plus annual dues of $14,000 and a $2,000 minimum food charge.   Gee Donald, is that excessive?

All of a sudden the near frozen island of Greenland is vital to US security. But Denmark is not selling.  Anyone want to appraise that purchase?

Trump’s choice of Matt Gatz was classic Trump ‘loyalty first’ but Gatz ethics investigation make ones wonder what he was thinking. Other candidates are under question like Tulsi Gabbard and RFK Jr.

My point is Trump looks a lot closer to Nixon 1973 than he realizes.

Stocks took a big dive last Wednesday losing over 1,000 points. As of today that loss has not been totally but mostly erased.  Momentum indicators allow for considerably more rally before  topping out again. Should the recent highs be taken out we will have to re-assess a bearish stance. My point here is that, as from the highs in early 1973, cd not discount the government’s ability to throw a wrench in all of this.

And as noted, Britain, France, Germany, Ukraine, China, and Middle East all have problems. Interest rates are not falling even after the  FED cut. Crude oil remains in low volatility around $70. Energy service sector limps at best.

I suspect we will need to be well into January to get a better feel for  2025.

Container Store Enters Chap 7 Bankruptcy

Monday 12/23/2024

Investors in The Container Store (TCSG) have been sent packing as the struggling home goods chain files for bankruptcy.

The retailer filed for Chapter 11 bankruptcy protection late Sunday, Yahoo Finance learned exclusively. The company said in a press release it is doing this in order to refinance its debt to "bolster its financial position, fuel growth initiatives, and drive enhanced long-term profitability."

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Again the 39 year interest rate cycle bottomed March 2020. Then the thirty year bond was yielding less than 1%, it is now about  4.5%. Companies gorged on cheap debt as the FED lowered rates to absurd 39 year lows. As that debt comes due, it does so at higher yields, cost. And many firms simply cannot make those payments.

30 Yr Bond Yield

Holiday Weeks

Weekend 2/22/2024

Seasonally trading slows around the Christmas holiday.  This year Christmas and NY fall on a Wed, the middle of the week. That should make things even more subdued.  One of my If Congress wanted to help us ideas is to make all Federal Holidays, three day weekends. When I mentioned this in a graduate course, the instructor, a minister exclaimed, you surely do not mean Christmas. Yes I do. A few guys from Peru were in the class and commented that is what s done there. The reason is that breaking things in mid week, the Post Office and banks and stock exhcanges all close which is a big loss of productivity, And how many people will be around Tuesday and Friday afternoon bot this  and next week?

Hedge

This might be a good two weeks to place orders in ladder fashion under the market. For HDGE say 17.28, 17.08, 16.88. Make the size of the order larger as we go down the ladder.

The same can be done for the bear bond fund TBF, it is extended as T Note prices have been beaten down. Longer term I expect much higher interest rates.

 

Social Mood Shift

Weekend 12/22/2024

A couple of weeks back everything looked rosy.  Trump tax cuts, a closed border, a demand for hostage returns, 2025 we were told looks bight, well not according to Democrats.

Now look at the headline on Drudge. The government nearly shut down, and really this is just a three month extension of time, conce again.

the DJIA drops over a thousand points and yes rebounds but it well below the high of early December. The FED cuts its rate but rates ont the 10 Year Treasury rise, not fall.

Markets move on mood, not the FED machinations.

As Kevin hassett has warned it's going to be 1973 all over again.

Higher interest rates, a falling stock market, inflation, crime, an uncertain world, yep it's all here.

Clint Eastwood was already a star after the Spaghetti Westerns, a couple of American Weterns, and Play Misty for Me, his first directorial debut.

But DIrty Harry vaulted him to super status.

Paul Newman suggested Eastwood for the role after rejecting it himself. Good judgement, Newman was jus not that kind of tough guy personna.

But a tough on crime c op movie found favor with the audience, then as now.

New Highs vs New Lows

12/21/2024

the previous post showed the various indexes making new highs over the last 45 days. Here is another wayto see that. The net new highs versus lows also  turns down n by Dec 12 and is now negative. Again these market internals are much more the story than the weighted averages making new highs.