Market Indecision

- The market could go up or down.

- Wisdom of nonsense

Market Direction

We saw heavier volume to the downside. This has been our call since 2022 because we see our economy in stagflation. The media under the influence of the power in office, says the economy is fine with job growth and low unemployment. The government does not worry about making ends meet. This is why we need a balance budget amendment.

Of course, we need a lot of changes, but the central point that the market is evaluating is the political outcome. The winner will effect certain industries. We could care less. We have stated many times that both of our political parties are corrupt. Whoever wins will spend or tax cut until the nation wakes up one day to see the world no longer trusts us to be the world's reserve currency. The day of reckoning will have us all feel pain for a long time. Anyway, market signs are being digested. We saw the VIX rise to 65. This has only happened three times since the financial crisis of 2008. Consider all the events in the timeline from then to today - presidential changes, wars in Europe and the Middle East, COVID, bank failures and interest rates that moved from zero to over 5%. The IWM gives us a clue of stock rotation. The index has fallen big time. The Bulls have not given up. They gave the market a big bounce. The question is this, is it only a bounce because the Bears have strength when the elevator goes down? This tells us that we will probably be in a large trading range or consolidation until something happens that changes the outlook.

Meanwhile

The CEO of Nvidia, J. Huang sold $323 million of his shares just before the companies stock fell 29%. We told you last week that one analyst says an 80% drop could happen. When JFL looked at the chart of the chipmaker, he noticed many gaps. They have a tendency to be filled. Stops in the down elevator are at $96 with heavy volume. There is another at $75 and another at $68. If you purchased the stock split, put in your stop. 

Speaking of stops, beware Coke Cola. They lost a tax case that the IRS says the firm owes them $6 billion. Ouch! I don't feel sorry because the company sought to avoid paying their tax liability by putting the revenue overseas. We predict that government will crack down on firms that seek loopholes to avoid taxes as our government will become desparate for revenues.

Billionaire

Barry Sternlicht expects a bank failure at the rate of one per week due to real estate loans. In a related aspect, regional banks, PNC, Truist, Regions and Webster have decided to take their losses in low yielding bonds and use the proceeds to purchase the present higher notes.

Retail Death...

continues as Outback announced the closing of 41 locations and Appelbee's is dropping 35 units. Each week more and more firms reveal failure in their model and the catagion is extending into other industries. This is not a strong economy and the unemployment figures cannot be trusted as well as job growth numbers.

Inflation 

The second wave could arrive as the dollar broke below the confluencial point of 103.5 last week. It tried to bounce, but it could not hold price. Any fall in the dollar will help the stock market, but the inflation will hurt everyone.

In the meantime, try to enjoy the Olympics. There are many good stories like the French swimmer, Leon, Shari Richardson's marvelous effort to come from behind to win gold and the persistence of Rai Benjamin in the 400 hurdles. Gold for the Bronx/Mt Vernon athelete. Maybe the best is a poster of the great Spanish painter, Francisco Goya. His work, Two Old Men was used in reference to James and Curry of the USA basketball team. Is their an artist out there who can update the work to three old  men and add Durant?   Peace.