MANCHIN STANDS UP — TECH STOCKS GO LOWER

To gain an edge, this is what you need to know today.

Two New Reasons To Buy Stocks

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• Momo gurus are ecstatic.  Their job is to keep on finding ways to persuade the crowd to buy stocks. The Fed has just handed them two new reasons to buy stocks.
  • Previously Powell had admitted that he made multiple wrong calls most notably on the extent and length of inflation.  Now Powell has admitted another mistake — he underestimated the rapidness with which the labor market has progressed.  To momo gurus, this indicates near full employment and a reason to buy stocks.
  • Even though Powell postured hawkishness, the reality is that he plans to keep negative real interest rates throughout the next year.  This is not hawkish.  This is dovish.  In the long run, negative interest rates are not good for the economy. However, in the short term, they can pump more air into the stock market bubble.
• This morning momo gurus are renewing their calls to buy stocks.  Of course, they are very clever in their messages.  But the brutal truth behind their message is the reasons given above.
• The chart shows the market is at resistance. Expect traders to push the market higher to new highs.
• Bears contend that if the market rally fails again at this point, it will be negative from a technical perspective.
• RSI is overbought but there is room to run.
• The volume was heavy during the rally.  This is a positive.

Initial Claims

Initial Claims came at 206K vs. 195K consensus.

Housing Starts

Housing Starts came at 1.679M vs. 1.57M consensus.

Building Permits came at 1.712M vs. 1.67M consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒 .  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1786, silver futures are at $22.31, and oil futures are at $71.54.

S&P 500 futures resistance levels are 4770 and 4900: support levels are 4713, 4600, and 4460.

DJIA futures are up 175 points.

To gain an edge, this is what you need to know today.

Ignore At Your Own Peril

Please click here for a chart of market yield on U. S. 10-year Treasuries at constant maturity less Consumer Price Index ex food and energy.

Note the following:

• Start with Arora’s Second Law of Investing: Nobody knows with certainty what is going to happen next in the markets.
• Prudent investors analyze various potential scenarios in advance.
• The reckless money printing by the Fed and borrowing by Biden have created several realistic scenarios for the future.
• One of the scenarios is the present thinking by investors and our leaders that money printing and borrowing is a free lunch turns out to be wrong.
• Take a few minutes to study the chart.
• Compare the present to 1980.
• Ignore 1975 because that was due to an OPEC oil embargo.
• See from the chart how high interest rates went after 1980.
• At that time the Fed Chair Paul Volcker was able to raise interest rates significantly because the federal debt was nowhere near as high as it is now.
• In 1980 stock valuations were very low compared to where they are now.
• Serious investors should make a point of carefully listening to the podcast The Dirty Secret of the President and the Fed Chair That You Need to Know. Due to the importance of investors understanding the monetary and fiscal policies, we are planning a number of podcasts to help investors.
• If the Fed loses control, the stock market can easily lose one-half of its value.  Momo’s favorite stocks can easily lose 80 – 90% of their value.
• The Fed is about to change its posture.  We will find out soon if Powell has the spine to do what needs to be done.
• Consider paying close attention to the Morning and Afternoon Capsules when they discuss the Fed and monetary policy.
• The best course for investors is to not react now but pay close attention on a daily basis so that they stay in tune with what is going on based on real data and not on preconceived notions.
• The Fed will announce its policy at 2:00 pm ET.  Powell’s press conference will start at 2:30 pm.

Retail Sales

November Retail Sales ex-auto came at 0.3% vs. 0.9% consensus. This indicates that without Biden’s free money, spending by consumers is petering out. This is a red flag for a large number of momos’ favorite stocks.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

API showed inventory draw of 815K barrel vs. 2.6M barrels consensus. This data is bearish.

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1770, silver futures are at $21.82, and oil futures are at $70.23.

S&P 500 futures resistance levels are 4713, 4770, and 4900: support levels are 4600, 4460, and 4400.

DJIA futures are down 24 points.

To gain an edge, this is what you need to know today.

Producer Price Index (PPI)

Please click here for a chart of the Producer Price Index (PPI).

Note the following:

• The chart shows that PPI came at 0.8% vs. 0.5% consensus.
• Core Producer Price Index (CPI) came at 0.7% vs. 0.4% consensus.
• Year over year PPI rose 9.6% vs. 9.6% consensus.
• The PPI is at a record since it was reformulated back in 2010.
• Previously when hot CPI numbers were released, the momo crowd dismissed them and bought stocks aggressively.  Momo buying resulted in a rally.
• The initial reaction to hot PPI is a selloff.
• Momo is buying the dip as of this writing.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1772, silver futures are at $21.78, and oil futures are at $70.29.

S&P 500 futures resistance levels are 4713, 4770, and 4900: support levels are 4600, 4460, and 4400.

DJIA futures are down 115 points.

To gain an edge, this is what you need to know today.

Momo Gurus Advance A New Narrative

Please click here for a chart of  S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows the market is now higher than when the omicron news was announced.
• The chart shows that RSI is approaching overbought but has room to run to the upside.
• The chart shows that the market is at a resistance zone near an all-time high.
• We previously wrote:

Many investors make the mistake of thinking that the job of the momo gurus is to analyze the markets objectively and guide investors.  This could not be farther from the truth.  The sad reality is that the job of the momo gurus is to persuade investors to keep on buying no matter what the data is.

• Momo gurus have developed a new narrative to push the market above the resistance zone.
• Momo gurus need a new narrative because the Fed has changed its colors.  The prior momo narrative was that the Fed was printing money and some of that money was going into the stock market.   This was the main reason to buy stocks.  Now the Fed is turning from dovish to hawkish.
• The Fed is meeting tomorrow and Wednesday.  The policy decision will be announced on Wednesday at 2:00 pm ET.
• Historically the momo bought ahead of the Fed meeting in anticipation of a dovish Fed.
• Here is the new narrative from momo gurus to persuade the momo crowd to buy stocks and ignore the risks.
  • The Fed will be accelerating taper but will still be printing money for a few months.
  • When the taper is done, the Fed’s balance sheet will stand at $9 trillion due to all the money printing the Fed has done.   Prior to the financial crisis, the Fed’s balance sheet was under $1 trillion.
  • Historically, a large Fed balance sheet has been negative. However, now the momo gurus are claiming this is positive without any evidence.
  • Even when the Fed starts raising rates, the stock market should go up.  This has been true in some prior cycles, but in those cycles, valuations were nowhere near as high as they are now.
  • The Fed’s decision on Wednesday will be a clearing event and that is the main reason to buy stocks now.
• Will momo gurus succeed as the Fed now has a different posture and Biden is having difficulty borrowing more money?

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.   Smart money is 🔒.

Gold

The momo crowd is 🔒.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1784, silver futures are at $22.26, and oil futures are at $71.45.

S&P 500 futures resistance levels are 4713, 4770, and 4900: support levels are 4600, 4460, and 4400.

DJIA futures are down 62 points.