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Wednesday, February 13, 2019

Despite Higher Tax Revenue, The US Deficit Continued to Expand in December 2018

My table below shows a "Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government by Month Through December 2019."

The Monthly Treasury Statement summarizes the financial activities of the federal government and off-budget federal entities and conforms to the Budget of the U.S. Government.

You can never have too much data so I process the latest reports to see tax collections, spending and the official deficit behaves without "noise" from the obviously biased MSM "Main Stream Media."

From the data, you can clearly see:

  • Taxes collected in December 2018 were higher than taxes collected in December 2017 
  • Taxes collected in December 2017 were higher than taxes collected in December 2016

Thus, despite lower tax rates on individuals and corporations due to the "Tax Cuts and Jobs Act of 2017", the total tax revenue collected by the US Treasury rose.

  • Spending in December 2018 was higher than spending in December 2017
  • Spending in December 2017 was higher than spending in December 2016

So the deficit continues to grow (at an alarming rate) but the Stock Market doesn't seem to mind as long as interest rates remain relatively low.

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Interest Rates
S&P 500 Index

NOTE: Due to the lapse in appropriation, the dates for publication of the Monthly Treasury Statement (MTS) for December, January, and February have changed. Here are the revised dates:

  • December MTS – Publish on 2/13
  • January MTS – Publish on 3/5
  • February MTS – Publish on 3/22
  • March MTS – On normal schedule

Saturday, February 09, 2019

Is This a New Bull Market or Bear Market Rally?

The rally since the Christmas bear market lows has been large and fast.  
The question all want to know and that gets extensive debate on message board is: 
Is this a new bull market that will make new highs soon or are we in a bear market rally that will roll over soon and lead us to new lows?

While the major indexes are still down 6.4% to 13.5% from their 2018 record highs, they are up between 7.6% and 11.7% already this year.
All four hourly index charts above show that indexes rallied above an "inverted head and shoulder bottom pattern" then pulled back this week to test that breakout or neckline from above.  If that neckline holds and the indexes continue to rally higher, then the odds favor new highs for most of the indexes.  The green line with an arrow head on the Russell 2000 chart shows the target of the pattern is below its 2018 high while the Dow pattern has a target of a new high.

My Explore Portfolio made several record highs before pulling back slightly Friday.  It really helped to be taking profits last year when the market was at record highs then buying stocks near the Christmas Bear Market Lows.  The types of stocks in my Explore Portfolio usually lead out of bear market bottoms and now is no exception so this is also bullish.

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This "Andrew's Pitchfork" chart of the S&P 500 show two possible scenarios.

  1. The red "bearish pitchfork" suggests the rally is over or nearly over while 
  2. the green "bullish pitchfork" suggests the rally is only about half way to its peak.

Only time will tell since nobody knows for sure what the markets will do in the short term.  I've taken some profits on what I bought near the lows last year so I have plenty of cash to buy if the markets test their Christmas lows or even go lower.  Also, I have plenty in the market and will just take more profits if the markets continue high.  As my results from on the record for over 20 years show, I don't need to be "right" about the short term market direction as my method works best with some volatility.

To understand more, please read these KEY articles:
Discuss this article on my "Investing for the long term" Facebook group. 


Friday, January 25, 2019

Emerging Markets - Bullish VWO Charts

📈These VWO charts are very bullish and the fundamentals show below are better than those of the US markets:
VWO Daily Chart 
  1. VWO made a "W bottom"
  2. That "W bottom" has been tested from above.
  3. The downtrend is clearly broken.
  4. Most major VWO bottoms in the past were "W bottoms."
  5. The lower open gaps have filled while there are two very open gaps well above the current price.
  6. "The Low" was set in October 2018 with a "higher low" made in December 2018 when the US markets were making their bear market (down over 20%) intraday lows.
VWO Hourly Chart 
đŸ’ČI last added VWO to my Explore Portfolio at $38.50 with an auto buy so I am "talking my book." 

Excerpt from page 12 of my latest Investment Newsletter that shows all markets but the Dow had bear market declines last year... and the Dow just missed by 0.6%! 

Excerpt from page 29 of my Investment Newsletter show shows the PE ratio for VWO is much lower than that of the S&P500.  VWO deserves a discount to the US markets for many reasons, but 10.5 vs. 15.4 leaves much room for upside.
Of course now that I mention it here, VWO will pullback off the 200-day moving average and scare many out so don't buy if you don't hold for the long term or have my newsletter for guidance about when I add to positions then take profits when the price recovers.  (I have an "Auto Sell" to take profits for some of my shares purchased at $38.50, currently at a higher than today's price, in the newsletter.)

Updated after market closed on 1/25/19 
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January 2019 
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Updated after market closed on 1/25/19 


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