T(rump)GIF – Markets Fiddle While Rates Burn

This is NOT good.

Not only are rates spiking 20% since the election but we just had the worst Treasury Auction since 2009 – indicating that investors are quickly losing faith in the US's long-term economic prospects.  And, keep in mind that's WITH expectations that the Fed will tighten in December and WITH a strong Dollar, which is usually a factor when deciding what currency you'l like to tie you money to for 5-30 years.  

We are, of course, shorting the markets again this morning.  Yesterday's watch levels didn't fail so today we raised them in my morning note to our Members and we're focusing on Russell (/TF) short below 1,250 and the S&P (/ES) below 2,160 confirmed by the dow failing 18,700 and Nasdaq (/NQ) below 4,700.  Trump may make America great again – but he doesn't get to change anything for 2 more months so I think the market is getting a bit ahead of itself.

While quite a lot of money poured into the market on Wednesday, the volume yesterday was still 70% over average but the S&P only went from 2,163.26 to 2,167.48 – up just 4.22 (0.2%).  If it takes 70% over average volume to buy us 0.2% – it seems to me that a lot of people must be heading for the exits.  

The Dow burst higher yesterday but 4 companies (GS, JPM, UNH and IBM) were 180 (75%) of the 240-point rally – that is NOT broad-based!  In fact, the entire rally of the past two days has been centered on Pharmaceuticals (no more Obamacare – charge whatever you want!), Oil, Gas & Coal (drill baby, drill), Defense (who hasn't he threatened?) and Financials (repeal regulations helps the little guy how?).   

Yesterday we got the first inkling of money going the other way as investors began to rethink their Tech Sector investments under an anti-science administration.  Alternative Energy stocks have been a cornerstone of investments in tech for most of the past decade and that's the kind of unwind that won't play out over just a couple of days.  

In fact, when you consider that the 5% run in the…
continue reading