We’re All Gonna Die! (XLK,GM,F)

We’re All Gonna Die! (XLK,GM,F)   Just a moment to recap exactly where we are and how we got here.   To begin, our bull market began in March, 2009 and, despite the odd shimmy and shake, it continues apace, spurred ever higher by the machinations of a giddy central bank that refuses to take bear for an answer. This past fall, with the election of Snidely Whiplash, the market kicked into overdrive, beginning what we believe is the final blowoff top to the bull that began in either 2009, 1981 or 1933, depending upon how cataclysmic your worldview.   But that’s for another time.   Today, we find ourselves at a crossroads.  Not a difficult or impassable one, in the least.  Rather, a point at which a pause is necessary before the next phase of the bull unfolds.   The Story of a President   When the latest phase of the bull was launched in November/December, it was the financials that assumed the leadership mantle.  All the banks and brokerages saw double digit gains, at least, within just a few weeks.  And after a few months, additional profits of 40% to 60% were booked.   And then the financials…

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Dancing in Detroit (F,GM,HYG)

Dancing in Detroit (F,GM,HYG) What’s more American than a monster truck hoedown that pits a Ford F-150 against a Chevy Silverado.  (Apologies to Ram fans, of course.)   American carmakers are still a force to be reckoned with 100 years after Mr. Ford’s assembly line thrust Detroit into the center of the industrial world.   And though we may be at the dawning of the electric age for vehicles, Ford and GM still have market caps that come close to $50 billion.   Why?   Because they sell a whale of cars.   A look at the chart below offers an idea of the types of numbers on offer from both companies. A company that sells more than $150 billion in product is a force to be reckoned with, even if the stock is waggling and the competition looks slicker and sexier.   So which one is better?   The question often arises in our monthly, inner-sanctum bourbon and billiard gatherings – for which Normandy is gaining notoriety from the White House’s West Wing to the Financial District’s White Horse Tavern – ‘which is the better buy: Ford or GM’.   And we have an answer to the question.  …

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WAR! GOLD! DICTATOR! TRUTH! (SLV,GLD,F)

As we approach election day, the question of how the market will react to the ‘will of the people’ takes on new significance.   As of today, equities are moving in a muted, sideways fashion, uncertain of both the outcome of the contest and exactly what should play out beyond.   There are four distinct possibilities, of course, that could be triggered once the results are known.   A Republican win, and a breakout higher, or lower.   A Democrat win, and a breakout higher or lower.   Whatever happens, though, it’s almost certain the market will not continue its sideways grind much more than a day beyond the polls’ closing.   It’s also looking increasingly probable that the ensuing move will be sharp – higher or lower – should a clear winner be pronounced the day after. If the Hilarious one wins, we’re betting on a burst of Wall Street enthusiasm.  Should the Trump card get played, a steep move lower.   Now, we offer these prognostications not in any way to influence your vote, and with the additional caveat that it’s more than likely that in both cases we’ll see some swings to and fro before the market…

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The Road to Hell is Paved with a Ford (F)

Market direction for the next few days is uppermost on traders’ minds, as the action of last week, and particularly Friday, began pushing the technical calculus toward the bears.   To that end, we’re going to take a look now at a few charts to see where we stand in the macro realm.  After that, we’ll attempt to drill down into a few sectors that offer what we believe is a choice trade into the next sixty or so days.   We’ll begin with the Dow and S&P 500, both of whose charts are developing similar bearish patterns.  Have a look.   This is the Dow. A few things to be aware of here.   First is the descending triangle (in red) that began forming six trading sessions back. A descending triangle is always a bearish pattern, indicative of constant selling and a diminishing number of bulls over time.  When support at the lower red line (18,000) is finally broken, capitulation will be signalled, and traders can expect a strong wave of selling to ensue. The appearance of over twice the daily average trade volume (in black) here and on the S&P 500, indicate that the selling wave may already…

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New home sales up, Ford (NYSE:F) reports drop in profits and Microsoft (MSFT) announces strong quarter

Markets were headed slightly higher on Friday after it was reported that new home sales in the U.S. hit a six-year high in September. The Commerce Department announced that home sales were up 0.2% to a seasonally adjusted rate of 467,000 units. A reading of this level has not been recorded since July 2008. They also reported that August’s data was downwardly revised to show 466,000 units from the previously reported 504,000 units. Despite the large gain, the reading still missed analysts’ expectations of 470,000 units. New home sales have an 8% affect on the overall housing market. When compared with sales from last year, September’s reading was up 17%. Gennadiy Goldberg, an economist at TD Securities, said, “We expect the housing market recovery to remain relatively gradual over the coming months.” Shares of Ford Motor Co. (NYSE:F) were sinking after the company announced a drop in profits. They reported a 34% decline in profits and a decline in revenue. Ford said that that revenue came in 3% lower to $34.9 billion. The drop was largely attributed to the planned shut down of an F-150 plant. They also added that there was a decline of 3% in wholesale volumes and…

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Consumer sentiment hits 14-month high, GDP comes in higher and Ford (F) announces new recall

Markets were heading higher on Friday after consumer sentiment reached a 14-month high in September. The Thomson Reuters/University of Michigan’s final reading for consumer sentiment this month came in at 84.6, up from August’s reading of 82.5. This is a level that has not been reached since July 2013. Economists had been projecting a reading of 84.7 for the month. The survey director, Richard Curtin, said, “The main factor promoting greater confidence in September was more favorable prospects for the domestic economy as well as more favorable personal income expectations.” The reading for the month reveals that people are predicting an increase in consumer spending over the next year as well. The section of the reading that measures current economic conditions came in at 98.9; this was slightly below last month’s reading of 99.8. In a separate report, gross domestic product grew during the second-quarter. The reading for the three months came in at 4.6%, which beat out the 4.2% expectation among economists. This blew past the first-quarter’s reading of a 2.1% decline. With the improving data, many analysts are wondering how much longer the Federal Reserve will leave interest rates near zero. Brittany Baumann, an economist with Credit Agricole CIB, said, “We…

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U.S. Consumer sentiment hits 14-month high, Darden (DRI) posts loss and Ford (F) announces recall

Markets were heading lower on Friday morning after U.S consumer sentiment levels hit a 14-month high. The Thomson Reuters/University of Michigan’s preliminary reading for September showed a rise to 84.6, which is the highest level recorded since July 2013. This was also up from the 82.5 reading last month. The data beat out analyst’s expectations of 83.3. The section of the report that shows consumer expectations made a jump from 71.3 to 75.6. There was a slight drop in the reading of current economic conditions, which fell to 98.5 from the 99.8 reading last month. Director of the survey, Richard Curtin, said, “All of the early September gain was in the Expectations Index, while consumers judged current economic conditions slightly less favorably than in August. Although consumers anticipated a slowdown in employment growth, (they) expected the highest rate of growth in their wages in six years.” Shares of Darden Restaurants, Inc. (DRI) were sinking after the company announced first-quarter earnings. The company said they had a net loss of $19.3 million, or 14 cents per share. This was down drastically from the profit of $42.2 million, or 32 cents per share the year prior. Revenue was up 4% to $1.59…

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U.S. PPI July reading inches up, Coca-Cola (KO) to take large stake in Monster (MNST) and Berkshire Hathaway invests in Charter (CHTR)

Markets were heading slightly higher on Friday after U.S. producer prices were up mildly in July. The Labor Department said that the drop in energy and goods offset rising food prices. The PPI reading came in 0.1% higher last month after a 0.4% rise in June. The gain was on par with analyst’s expectations. In the past 12-months, there has been a rise of 1.7% in producer prices. Shares of Monster Beverage Corporation (MNST) were skyrocketing after Coca-Cola (KO) announced that they would be paying $2.2 billion for a large stake in the company. The cash payment will give Cola a 16.7% stake in the Monster. Coke will then be able to have two members on Monsters board of directors. The deal will help Monster because it will help them gain a presence where they have none in markets like China and Russia and making a bigger presence in areas like Brazil. Rodney Sacks, chief executive officer at Monster, said, “We believe it’s a win-win strategy.” Shares of Charter Communications, Inc. (CHTR) were on the rise after news was released that Berkshire Hathaway Inc. invested a large stake in the cable provider. Berkshire Hathaway Inc. is lead by billionaire investor Warren Buffett….

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