Take me to the Circus – I feel the need to get Circufied!
Even before the third-grade theatrics begin to unravel before the Fools on the Hill, we have already drawn the one conclusion that matters-greatly.
The market is in a potential “bottom falling out” scenario. Even if you don’t subscribe to our Peoplenomics newsletter – where grown-ups consider ways to make money and stay a step ahead of the herd – I think you’ll find the daily position of our Aggregate Index useful.
Some explanatory notes:
- There are two price channels roughed-in. The blue channel is longer-term while the black channel is from about July 1st, or thereabouts.
- The blue squiggly is our Peoplenomics Aggregate Index.
- The red line is a 9-day moving average.
- The green line only matters to subscribers, lol.
Now we put on our algorithmic thinking cap and jot down some “soft rules” of materials and see what – if anything – is being shown us:
- We are at the bottom of the shortest-term channel.
- Market’s don’t crash from “tops of channels” – they break through bottoms.
- Markets also act to take the most money from the most people.
Wednesday, the Federal Reserve raised rates a quarter-point. This should begin to weigh on the market, but there’s something of an investor “con” underway.
Money from the Trump tax breaks has been pouring into stock buy-backs. This makes it appear that the Trump economy is booming. But, not so fast, bubba. Yes, the earnings per share are going up but here’s the slick:
The actual earnings *(the top number or numerator representing earnings) can remain flat and still show a big increase in earnings-per-share (EPS) by making the denominator smaller.
Let’s say we have a company with $1-million in earnings and 1-million shares.
Obviously this company is reporting $1 per share of earnings.
Now, let’s say earnings go down…so the top number if $900,000 of earnings, but thanks to the magic of buy-backs, there are only 450,000 shares trading. See what happened?
Earnings doubled even though the company performance went down. I laugh my self to sleep at night running numbers like this. Elaine can’t stand it…because I wake up laughing so hard….
Yet, this is the world we’re in.
A few folks grok the BigPic…. a few other sites are saying it, too. Even CBS reports with a worried tone that big company execs are cashing in shares like crazy.
While we’ll admit to making a few short-side shekels earlier in the week, we’re sitting in cash right now. I’ve learned from experience to follow the data and that won’t be clear until next week. I expect the Jellyfish Party – formerly the republicrats – will fail to vote on Kavanaugh this week. And that would push things all the closer to the election.
Except, history says it’s not quite crash time by an important metric. Those metrics are 37, 55, and 73 days from all-time market highs. That means, based on historical data (which we will be tracking on the Peoplenomics side) we have a date just a week before the election and the earliest possible “real” crash data. And 55-days gets us past the election basis the all-time high of the Dow September 21.
We presently prefer the Grand Fake-Out of Bears which would infer some well-choreographed riots and disruptions if Kavanaugh is confirmed, but then (based on buy-back cooked books) we return to the rally until next spring.
We continue to be shocked at how people will join a cause – any cause – rather than bother with facts. Evidence? Whatzzat? ‘We Believe Survivors.’ 1,600 Men Sign a Full-Page Ad Supporting Christine Blasey Ford.
All this, in turn, leaves me scratching my “solar panel” wondering if the Jellyfish party might actually confirm Kavanaugh this week…bets in place?
Dollops of Daily Data
How about we start with revisions to GDP?
Real gross domestic income (GDI) increased 1.6 percent in the second quarter, compared with an increase of 3.9 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.9 percent in the second quarter, compared with an increase of 3.1 percent in the first quarter
Then there’s international trade and such:
And since that was such a spine-tingling adventure, dare we even get into Durable Goods? I mean can you stand the drama of it all?
All these are positives. But, fortunately for the Trump-bashers, they won’t have to address a healthy economy…not with disruptive nomination tactics to sell…
With this, the market futures are solidly boring with the Dow waiting for the Senate Soap to begin…
Quippable and Not
Apple and Amazon ecosystems may have trouble ahead with their music revenues as Tencent Music, bound for U.S. IPO, profits from social savvy.
A short column with lots of pictures today…and as usual, moron the morrow. Now, let’s see how stupid America can act, shall we?
(What do you mean “It’s not an Act?”)