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Friday, August 4, 2017

Daily update 8/4 Unlucky (Year) Number 7?

More nothing.

The better then expected employment data brought out a few more buyers, but still resistance held.  Breadth was +54%.  New highs were stable at 141.  New lows slipped a bit to 49, but remain elevated this close to the highs.

The futures attempted to get above 2475 a couple of times today, but failed to stay there.  They ended the day just above the 20 SMA.  This resistance is a tough nut to crack.

Both counts dropped a bit today.  Talk about a  non committal market.

I guess we wait some more.  R2000 continues to weaken while SPX sits just below the highs.  The market still looks like it is in need of a pullback, but so far people are hesitant to sell.  Have all the big boys already left the building for vacation?

Today's employment data greatly helped the dollar index and hurt bonds and gold.  Given the deep oversold nature of the dollar index a continued bounce in the days ahead seems likely.  How much that ends up affecting bonds and gold remains to be seen.  I have been a bit surprised gold didn't do a little better then it has during the dollar meltdown.  Not sure what happens to it now.

I heard a couple of interesting things today. 

The stock market "has an awful good gig going," with the economic recovery reaching all corners of the globe and U.S. inflation and interest rates still at historic lows, Leuthold Chief Investment Strategist Jim Paulsen told CNBC on Friday.

"We've got a fully employed economy, rising real wages. We restarted the corporate earnings cycle. We've got strong confidence among business and consumers," he said on "Squawk Box."

"The kick is we can do all of this without aggravating inflation and interest rates," he said. "If that's going to continue, I think the bull market could continue to forever."

Emphasis is mine.  That sounds a lot like Yale economist Irving Fisher's 1929 comment “Stock prices have reached what looks like a permanently high plateau” 

Another interesting comment came from one of the noon time show regulars (sorry I can't remember his name).  He is a value based money manager and he said he was all in on stocks.  A value guy not keeping some cash reserves at this point!  Maybe this is nothing.  However, this is the kind of stuff said before at prior bull market tops.  One thing to remember about stock bubbles is they tend to top well before the economy goes down the tank.  I would not be surprised to see SPX down 15-20% before we have any idea we are in a recession.  A sell off of that magnitude would probably send the economy into recession at this point. 

This is an interesting look at what has happened in the second half of years ending in 7.  Unlucky (Year) Number 7?

The second half of years ending in 7 average sizable drawdowns and negative returns.  That seems to fit with the apparent toppy looking action we are seeing.

Do you see anything odd about these hurricane preparations by Texas A&M university.

Maybe things are just different in Texas.  Here in Fla. we hang plywood on the outside of windows to protect them.

Have a great weekend.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.