Episode 164: The stock market is sitting on a razor’s edge…will it recover and rally up or is it doomed for a bear market? It’s likely to have a relief rally briefly before it drops to new lows. BUT NO ONE KNOWS FOR CERTAIN.
The market is at an inflection point, full of uncertainly and there is no safe place to hide:
- GOLD: The fear index is up but Gold can’t get much above $1100.
- OIL: There’s trouble in the Middle East with the Saudis and Iran but Oil is below $32.
- COMMODITIES: In general, I believe we’ll see commodities regress back to the mean of pre-Housing Boom prices, ie average prices prior to 2005.
- US DOLLAR: Countries throughout the world are devaluing their currency and yet the Dollar index can’t break above 100.
- TREASURES: Despite Fed tightening, the 10yr yield is under 2.15% but if you buy TLT you’re in effect “fighting the Fed”.
- EARNINGS: Corporate earnings and GDP growth continue to be revised down but the market continues to trade at high valuations.
- SENTIMENT: The Bears have a slight edge on the Bulls but professional buying of the “dip” seems to be waning.
- VALUE: Defensive value stocks are trading at extremely high valuations- MO 21PE; PG 19PE.
- LEADERSHIP: Google, Facebook, Disney, Tesla…are fading.
- SMALL CAP: The Russell 2000 has fallen below the August flash crash and is testing the lows from the Oct 2014 correction.
- FOREIGN: Europe, Japan, and Emerging markets are all reeling.
Keep watch on GROWTH in China…not their stock market. Oil is likely to drop well below $30 before stabilizing at around $45 once the Chinese economy is steady.
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