The Market Perspective

Things Are Not What They Seem

Friday 2/28/2025

Things Are Not What They Seem

Thursday the Dow Industrials fell .5% or 193.62 points.

Wall Street Journal today

In fact the total intra-day range for the Industrials was a whopping 660 points, from the high to low.  The tech heavy NASD 100 and SPX also had larger intra-day ranges than the day-to-day difference would indicate.  All the Magnificent Seven tech stocks are off their highs. Nvidia dropped 8.5%. The bloom appears to be off the AI rose.

Markets dislike uncertainty. Trump continues to act like the one kid on the block who owns the only football. The kid threatens the others to abide by his rule or he takes the only ball and goes home. In a similar vein, Trump now threatens the EU with tariffs, Mexico and Canada to follow next Tuesday with 25%.  Oh, China, apparently our buddy, comes in for 10%.  He did kick Chevron out of Venezuela. But where are the tariffs for Nicaragua and other autocratic Central American countries?

As mentioned here before all this was tried with the Smoot Hawley Tariff of 1930. Then as now economists warned against it. Now as then, the President enacts them anyway. The large swing in stock prices is not surprising given the swings in tariff on, tariff off via social media of all things. Coffee prices are soaring as well as egg prices the latter more bird flu influenced.

Industrials double topped in early December and late January.  The SPX topped a week ago, dropping three hundred points since. The NDX NASD 100 has followed the SPX lead.

Interest rates have pulled a bit lower.  As stocks sell off, money is parked in Treasury bills. In fact, Warren Buffett has parked some $320 B in T Bills.   This seems a wise move.

Crude oil failed to follow through on a January rally. It is testing the $70 area once again, trading at $69.67, down 68 cents form yesterday. Exxon and Chevron shareholders are unchanged but energy service has taken a hit.

Crude oil is priced in dollars and the US Dollar looks toppy here. A drop in the U S Dollar would be supportive to oil prices.

Trump seems to think Putin wants peace. He might inquire about the growing number of dead who have opposed Putin in the recent past. And Putin did invade Ukraine, not the other way around. This is eerily similar to1938. Germany took neutral Sudetenland. Soon Czechoslovakia was literally off the map. Perhaps VP Vance should revisit his Yale history classes.

The Stair Step Down Pattern Begins

2/21/2025

Today the DJIA/IINDU had a huge 660 point intra day swing from high to low

I rarely show charts this short  in time but this shows how what looked like a rally this morning, quicklyfaded

Here is the monthly chart, in a bear market we have declines followed by sharp rallies, this makes the foolish bulls think the bull is back but it is not, each high is a lower high.

The trendlines below make the point of a stair step down, down then up to a lower high and then down again get prepared for a year or two of this

An Insider Suggests Tesla is Over Priced

2/23/2025

Four Reasons Tesla is Over Priced

Mag 7 Drawdown

2/21/2025

hTom McClellan notes the Mag 7 are trending lower

The Party Is Nearing Its End

Friday 2/21/2025

The NYSE Advance Decline line is our most reliable indicator, it has topped out

Major market stock indexes fell hard today, DJIA taking out 43,879

With fewer tech stocks than the SPX or certainly the NDX, INDU leads the way down. 717 points down

NDX  See our article posted this morning about the Mag 7, the party is over

After two bit down days a snap back rally early next week seems reasonable, we will examine bear strategies at that time and show you some charts this weekend.

Markets Getting Nervous

2/21/2025

Markets Getting Nervous

Thursday 2/20/2025 shares of Target lost 2$, Costco fell 2.6%, and Walmart 6.5%. Walmart’s fprecast for  slower sales growth raised another red flag as tensions drove up the cost of goods.

Wall Street Journal Today

This column has warned of of overvaluations in the stock market since last summer. Indeed Walmart is trading at a  35x price earnings ration, above that of Amazon. The overall market  trades about 23 which is still above a long term average of 18.

The Magnificent Seven have lost the Mag part.  OF the Seven, only Apple is rallying . But at $247 it is well below the December high of $250. It has introduced a ‘lower priced ‘ phone 16e for a bargain price of $599. I paid $350 or so for a 12 and it suits me just fine.

What could go wrong?  Let’s skim the headlines.

• WMT warns of slower growth
• IRS cuts 6,000 jobs, gee great timing, IRS needs Amazon and UPS to re-organize the service function not cut staff
• Allies Fear US Tilt t Russia
• Trump slaps 25% and reciprocal tariffs, this column has warned of a repeat of the disastrous 1930 Smoot Hawley tariffs
• Tariffs Stand to Shock U S Power System
• Leading Indicators Pare Back Gains
• Philadelphia FED Pares Back Gains Amid Uncertainties
• German Economy Sinks amid Mercedes Layoffs

Americans are betting more money than ever on stock market options (translation gambling) which is not likely to end well. The gambling fever has spilled into sports and even political outcomes. This is not Graham and Dodd investing.  The Industrials need a weekly close under 42,000 to really turn the trend down.

Two weeks ago it appeared that crude oil was breaking out. It did for a few days. But today it has dripped $1.57 to $70.91. This keeps it above support at $70. But is not encouraging. My  picks of Transocean RIG, Patterson PTEN, and Newpark NPKI are not faring well and probably should be sold. The better idea is to again start gathering bear ETFs such as SH or PSQ.

Three Month Treasury Bill rates are slowly creeping up from the low of 4.28%, now at 4.31%. Mortgages are 6% slowing housing sales. Musk is correct that unless the US reigns in its $36 T debt, the country could join so many former leaders, think England, as has beens.

On the social mood front, Emilia Perez has garnered 13 Academy Award nominations, the most so far. It is a Spanish language, Frendh musical crime film. A Mexican cartel leader enlists a lawyer to help him transition into a woman. Amid other awards, in Mexico it was panned by audiences and critics.  What is Hollywood thinking?

High Anxiety in the Markets

Thursday 2/20/2025

Qualitative Concerns

AMarkets Extend

Wed 2/19/2025

The January 31 low of 43,879 will need to go before the trend can be pronounced as down.  DJIA moves siddeways while NDX and SPX aim for a new and final high.

Bonds lack a trend but eventually bond prices fall and interest rates rise.

A DOW THEORY NON CONFIRMATION

wed 2/19/2025

The DJIA has double topped seems to be selling off. It is unconfirmed by the Transports bottom which have not made a new high.

NDX and SPX are making new highs. The Magnificent Seven are not making new highs.

Looks like some sort of correction in DJIA and Transports is brewing.

Ten Year Note Yield has completed five waves up and an A B C correction. Expect rates to resume the march higher in short order.

Everything You Need to Know About Interest Rates in One Picture