Check out this major zoomed out chart of the russell. Failed multiple times to break to a new high, and we are now seeing a bearish divergence via stochastics and MACD. Lot’s of support and nothing to panic about, but it looks like the trend may’ve changed.
First post in a while but I feel like such a special occasion where millions of Americans waste their time thinking their vote tomorrow actually counts warrants a quick hello.
Let me break down the two scenarios, from the top 10%s and bottom 47%s perspective, that can occur.
1) Obama wins
Top 10%: More Bernanke –> more QE –> POMO forever. Asset prices continue to be inflated, causing stock market values to rise, giving a false sense of confidence to Joe Schmoe. Meanwhile, the rich get richer while the “poor” and “middle class” get $2,200 checks in the mail.
Bottom 47%: More Bernanke –> more QE –> POMO forever. Asset prices continue to be inflated, causing commodity prices to continue to soar, effectively devastating the middle class’ and poor’s expendable incomes. The rich get richer while the poor use that $2200 tax rebate to buy all time high priced gas and $7 bags of Doritos.
2) Romney wins
Top 10%: Taxes for rich continue to stay at their current “depressed” rates whereby 40% of income vanishes into some fat bureaucratic piker’s pocket. Capital gains tax won’t be hiked, thereby preventing a large shift in risk sentiment and asset allocation policies. Consumer confidence and business confidence returns to normalcy, causing business owners who did in fact build it themselves to thrive, helping to restimulate the, let’s be honest, completely lifeless economy.
Bottom 47%: Don’t receive there $2200 tax cuts, but see their expendable incomes become more valuable, as the dollar marches higher and asset prices consequently relax. Jobs should theoretically improve, as confidence returns.
At the end of the day, does it even matter? Things change, but do they ever actually become different?
As I start work in the next few weeks on the sell side, I’m no longer going to be able to trade. However, I am putting together a list of stocks, preferably with dividends, that I hope to create a foundation off which to grow for my future. I’d love some feedback and further suggestions.
I find myself very attracted to the energy sector, as it is (and has been for a few years now), the cheapest sector out there. Maybe it is because of 0bama – who knows. However, I will look to buy some names in the next few weeks. Ideally, I’d love an MLP and a producer. Names that are at the top of my list are ETP (mlp), APC (producer – Cain is actually a fan and pointed it out in one of his posts), and BP (producer). I haven’t done much research into ETP, but some people a lot smarter than I am love it. Regarding APC and BP, they have been hammered with the recent oil sell off. APC is a well run company, and I believe BP is still fighting a negative stigma. BP is DIRT cheap as well, trading at an forward P/E of just over 6. It also pays a 5% dividend. I love other names like COP and many of the refiners also.
I’m also attracted to McDonalds… After spending some time in Thailand, I am excited to see MCD continue to grow and pay some nice dividends. People there love it. Friends tell me it is the same in other parts of Asia. Pink slime is also beloved here in America. Coke (KO) is also in demand in Asia, a lot more than Pepsi is. My gut is telling me not to buy KO at these levels, though.
For diversification and dividend purposes, I am also looking into a healthcare name and some utilities. The best looking healthcare name seems to be Merck (MRK), based off of P/E’s and divvies. I think LLY is a bit too expensive here. BMY looks attractive to me also. Utilities as a sector are also obviously very attractive. The sector is currently at a 52 week high. I think it can go a lot higher for various reasons, primarily because they are still attractive to old man investors by effectively being a more rewarding bond. Anyone have any favorites here?
REITs are also pretty attractive. Retailers such as TGT and COST also look good. Sin stocks like MO, PM, and liquor companies like BF are also favorites. Surprisingly, regional banks have held up really well. They tend to offer solid dividends too, so keep an eye out for some of those. I’m also long F since 11 and change – I think it should be upwards of 14. Fundamentally, the stock has improved drastically and I’m expecting some dividend hikes over the next few years. I’d love to buy a name like T or VZ, but I need a pullback in them before I take a stab.
If anyone has any other companies, I’d love to hear some and why you like them. Specifically in tech names, as I struggle to pick good names in the sector.
Tuesday, I am leaving on a 3 week trip to Laos and Thailand, my last hurrah of sorts, before I begin work on the private side in the end of June.
To my faithful 35 readers, I’ll see you in a two years (maybe). I’ll still be reading the excellent stuff posted on here, so make sure to keep things interesting and funny as I seek reprieve from being chained to my desk.
Regarding markets, there, as I’m sure many of you know, a pretty hideous head and shoulders on the russell. Treasuries are being stubborn. The best move seems to be avoiding high beta fliers and momo names. But who knows – every time the market has made a big move in either way, it has reversed. So best of luck, and, as always, watch out for murder holes.
Not sure if this sell off has much more downside. Markets, in the short term, have corrected. We aren’t stupid overbought at this point, and many names under the surface have corrected in healthy uptrends. Take a look at quality names like COST. It has pulled back ~5% and now looks to be forming a base here in a strong, longer term uptrend. Apple has corrected about 8% from its all time highs in a few short days. Meanwhile, while the market has struggled during that time, there hasn’t been the flash crash / sharp sell off that bears have been looking for. Also, many names are looking to put in a hammer on the daily charts. Financials and small caps are also showing strong positive divergence.
It looks like we are having another buy the f***ing dip day. We are also finding support from a rising trendline dating back to October of last year. Stochastics have pulled back as well. I wouldn’t be a seller here.
I’ve been watching TLT for signs of weakness and to hint of another move higher in equities. It looks like we are getting a breakdown from a possible bear flag today in the name. Watch for the 200 day to provide support, as well as the 110 area, as it has bounced there previously. Note, however, that the more times this 110 support is probed, the more vulnerable it becomes. The first time in this area, it bounced hard. The second time, a weak, 4 day process. I don’t think it will hold up this time.
Watch bonds to see where equities are heading. TLT looks to be in danger here of creating a runaway gap — From March 13- 14, the name gapped down. Today, it has been trying to fill that gap. However, look how long the wick of the candle is. If bonds are sold at today’s close, that gap won’t be filled. Additionally, TLT looks like it’s putting in a bear flag. So, watch for TLT on Monday. It could be pointing to continued upward market moves.
Today has been a slow grind higher. Watch for a break above or below.
I love the way F is setting up. I am looking for a break above the falling resistance after consolidating since January. Also, stochs are well setup and MACD is poised for a cross. Mid-high 13s are very possible very quickly, IMO. From a story perspective, hiring and consumer spending should be beneficial for car buying, while other automotive related companies such as WPRT, AZO, and more have been on a tear. I expect Ford to follow.