- I'm not afraid of storms, for I am learning to sail my own ship.
- Mary Louise Alcott
Second Thoughts
I am developing some doubts about my call for a market pullback. All the indexes have hit new record highs. This is in harmony to Dow Theory. It indicates that the market will rise higher. The only blimp on the chart came from the transports. On the day that it hit a new record high, it pulled back to form a bearish engulfing pattern. Then, it dropped all the way to resistance at 19,950. This is worth watching.
We maintain our belief that the market no longer corresponds to the economy. The break happened a while back, but it is clearly evident in our present state. Inflation is crushing the poor. It is shrinking the already shrunken middle class. They have given this a new label, the E-economy. They love labels. Anyway, homes sales are down. This effects labor and construction. Car sales are down. This effects many providers to make a vehicle. The recent surge in EVs hit a roadblock. The money starved government is looking for revenues. Word abounds about a yearly tax to EV owners. Why, you ask? Because combustion cars pay two taxes with gasoline on fillups. There is a state and federal tax. President Trump was talking about giving a tax holiday as we mentioned previously. We also stated that we do not like this idea as the US Department of Highways needs the revenue for roads.
Then, President Trump, seeking to keep his already depressed voter's approval rating, has given Russia another 30-day waiver to sell petro. Very, very bad. He asks us to be patient with inflation due to the Iran conflict and quietly, shows he lacks conviction. Again, very, very bad.
With that said, King $Dollar is staying strong and the charts show a bullish rising pennant pattern. This puts a cieling on inflation. California needs that. Gasoline is $6.95 a gallon in San Diego and over $6 bucks all over the state. This could be our future?
Title Translation
There are certain dates on the calandar that for one reason or another, the market responds favorably. We just past a big one, Memorial Day. The market popped! This coincides with lull in the conflict. President Trump would like nothing better for the conflict to end before the next one. It is very big. This Fourth of July will mark the 250 anniversary of our independence. President Trump is a lot like Fernando who was famous for saying, "It is better to look good than feel good."
There are a few other calandar dates that the market watches. The January Barometer, which came in positive, the Santa Claus Rally and Thanksgiving Day. However, this years Independence Day is special. The market could consolidate and then, rise for the holiday.
Related
The new Fed Chair, Kevin Warsh takes the seat with Iran conflict, inflation and a divided FOMC. His first meeting is June 16-17. What does he do? We'll see says the blind man.
Bottom line: We feel that the market should temper its gains until we get closer to the big event. Then, a blow-off rally that is followed by razor cuts by the market as it finally pulls back. If we are wrong, all that $650 billion that is being spent by big teck for data centers and AI will rally the market even higher. We see Fernando's lifestyle in these CEOs. They are laying off people like Meta just did last week (10%) to balance out the money invested into AI. This approach makes the stock evaluations look better, but it is only magic misdirection. If you don't produce and AI has not, a day of reckoning is coming...Peace.
