Whipsaw Wednesday – Wild Market Swings Continue

Notice we're not playing the Futures this week.

Last week, we were racking up $5,000 gains almost daily with our Futures calls but this week the market is just as wild but nowhere near as predictable due to Fed interference against the still MASSIVE UNCERTAINTY surrounding the virus.  As I often say to our Members: 

"We only like to play when we feel there's an 80% chance we will win – that way, we're only wrong about half the time and good money-management techniques can take care of the rest."  

So far, the S&P and the other indexes are simply consolidating under the Strong Bounce Lines (see yesterday morning's PSW Report for official levels) and, if they make a move over, it will be good proof of a bottom but, if they make a move back below last week's lows then, in retrospect, it will be very obvious that they were only consolidating for another 10% move down.  

Is the Fed's 0.5% rate cut enough to save us?  Well it wasn't when they had emergency rate cuts in August of 2007 (Dow 13,000 to 14,000) or in January of 2008 (Dow 12,000 to 13,000) or in October of 2008 + $800Bn TARP (Dow 8,000 to 9,000) – after which we fell from 9,000 back to 6,666 so forgive me if I don't get too excited about a 1,000-point, stimulus-driven bounce this week…

Another thing I discussed with our Members yesterday was how the Dow Jones has been manipulated since 2008 when Rupert Murdoch took over the company and made a series of changes that drastically boosted the index.  Bearing in mind that each Dow Component is price-weighted, not market-cap weighted, and adds 8.5 Dow points per $1 in share price – these are the substitutions that have been made under Murdoch:

  • AAPL (now $295) replaced T (now $37) 
  • CSCO ($41) replaced C ($66) 
  • TRV ($127) replaced GM ($31) 
  • UNH ($268) replaced KHC ($26
  • GS ($206) replaced AA ($13) 
  • NKE ($93) replaced BAC ($28)
  • V $190 replaced HPQ ($20)
  • WBA ($47) replaced GE ($11)

That's net +$1,035 in substitutions and,
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Super Tuesday – G7 Fails to Guarantee Free Money

What the Hell were people expecting?

The markets rallied insanely yesterday on expectations of a 50-point rate cut along with coordinated cuts around the World and tax cuts and Santa Clause, etc., etc. – total idiocy.  This morning the futures are turning down already as the G7 "Emergency Meeting" has not actually come up with any actual emergency measures – it's more like one of those "hopes and prayers" messages after a school shooting – good luck guys!  

 Of course the G7 doesn't have the power to do much – only to suggest and, as Trump pointed out, the Australian Central Bank lowered their rates by another 0.5% but keep in mind that Australia was on fire a few weeks ago and NOW they have the virus AND their primary trading partners are China and Japan - that's a little worse off than we are.

Image result for mnuchin g7 cartoonKeep in mind the lunacy that is going on here – we are having emergency G7 meetings led by Steve Mnuchin (a Goldman Sachs Bankster) who is telling the Global Finance Leaders that they must lower rates to prop up the markets BECAUSE THEY ARE 8% below their all-time record highs.  Propping up the markets is very expensive and it adds to government debt and it only helps the Top 1%, who own 90% of the stocks – what is the real agenda here?

Remember that Steve Mnuchin's primary experience after leaving Goldman Sachs in 2002 was overseeing the complete collapse of Sears as a Board Member from 2005 until 2016 when Trump decided he was the perfect guy to supervise the collapse of the United States of America as well…

Going more into debt can't be the answer for every problem – especially when it's "Let's go more into debt by giving more money to rich people."  The money doesn't trickle down – it's been 40 years of this BS and it has NEVER trickled down – it's a ridiculous strategy that used to be called "Voodoo Economics" until the Republicans realized they could win elections and, more importantly, win campaign contributions by making it the cornerstone of their economic platform.


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Mitigation Monday – Coming to Grips with a Global Pandemic

The Futures are all over the place.  

On Friday, we mitigated much of the damage as rumors spread that the Fed was going to save us but the Federal Reserve can't stop the economy from grinding to a halt as people avoid movies, restaurants, crowded workplaces and even supermarkets that don't have face masks – which is now the hottest selling item in the World (even though they don't really help).

The global death toll jumped from 2,871 Friday afternoon to 3,048 with 89,197 now infected (up 5,000) with 4,335 in South Korea (up 85%), 1,694 in Italy (up 90%), 978 in Iran (up 152%) and now 130 in France, 130 in Germany and 86 in the US.  And we are still NOT testing people.  There simply aren't any kits so we have NO IDEA how many cases there are in the US.

All in all, there are now 9,000 cases outside of China, where the virus is somewhat contained though it is possible the Chinese Government is lying in order to get the people back to work and, frankly, it's a very tough choice the Government has to make since it's planting season and, if they fail to plant crops, then people will starve in the Fall in much greater numbers than they would be likely to die of the virus – so it is better for the people to go back to work and risk getting sick – China just doesn't trust them enough to tell the people the truth of the situation.  

Dale Fisher, a professor at National University of Singapore who specializes in infectious diseases, said the outbreak will continue globally unless more countries take a stricter approach to finding all the individuals who had contact with infected people. In places with a large number of cases, they may have to take extreme measures and quarantine large areas, he added.

“If you do nothing you’ll get another Wuhan,” said Dr. Fisher, who also heads the World Health Organization’s global outbreak alert and response network.

You're not hearning about this because your own leaders don't trust you with the truth either.  The message from the Trump Administration is that this is "no big deal" and you should get back into the market because the Fed will
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