Kirk's Market Thoughts: December 2018

Wednesday, December 26, 2018

Market Down 20%, Fear is Everywhere & President Trump Says a Great Opportunity to Buy

📉💰Currently the S&P 500, down 20.3% from its peak, is sitting on support while the Fear & Green index is at its second day at 2.0, a sign of massive fear. With all that, President Trump told reporters yesterday no Christmas, " So I think it's a tremendous opportunity to buy. Really a great opportunity to buy." Do you agree?

Chart showing the S&P 500 touching a very strong support line (in green) today:

There is certainly blood in the streets now, especially for the once high flying "FAANG" stocks:

Yesterday on Christmas, President Trump told reporters, " So I think it's a tremendous opportunity to buy. Really a great opportunity to buy."📈💲

We raised a lot of cash when the markets were much higher and other investors were "greedy" and now we have been buying while others are "fearful."

Is it "The Bottom?"

Nobody knows for sure but you can see from my long-term S&P 500 chart that the market has corrected 20.3% from its peak all the way down to this very strong support line.

Feb 18, 2019 Update: President Trump was correct. It WAS a great time to buy! I sure did some "Christmas Shopping" and now my Explore Portfolio is at a record high!

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I've taken some profits so if we test the lows or even retrace some, I have cash to pick up more bargains. But if the market continues higher, perhaps to make new record highs, then I'l just keep taking profits! There is an old saying "Bull and bears make money while pigs get slaughtered."

More S&P500 Charts

Discuss this article on my "Investing for the Long Term" Facebook Group here.

Tuesday, December 11, 2018

GE: Is $6.66 the Low Like 666 was the 2009 low for the S&P 500?

The market gods have a strange sense of humor. Note how GE's low today was $6.66, the number of the beast.

More GE Charts

Those who don't believe in market gods will say the market makers like to show their power in "devilish" ways....

Note how they used 666 to turn the very large S&P 500 market back in 2009 to make the bottom of the financial collapse.

Mythology has "666" as "The Number of the Beast" so it makes an attractive target for those with a sense of humor.

From Wikipedia

The S&P 500 and the Nasdaq are down double digits in "correction territory while the Dow is down 9.2% from its all-time high.

So,

does GE have a devil's chance of avoiding bankruptcy
or is it dead man walking?
did "666" mark the "stealth bear market" bottom again?

February 18, 2019 Update: It turns out $6.66 was the low last year!

More GE Charts

I bought GE (and some other stocks like AMAT) near that low last December which has helped my Explore Portfolio continue its great outperformance with "only" two thirds in the market so I have plenty of cash for buying opportunities such as GE last December.

More AMAT Charts

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Tuesday, December 04, 2018

US Treasury Yield Curves for 2018 by Kirk

Many blame the stock markets' huge decline today on worries the yield curve (Figure 1) will fully invert. Inverted yield curves often, but not always, precede recessions. Just today the markets fell between 3.1% and 4.4% as Figure 2 below shows.

Generally the larger the inversion the higher the odds of a recession in the next year.

Fig 1

Today's Market Action

Fig 2

You can see from the graph above and table below that short term rates are higher than on 9/28/18 while intermediate to long term rates have fallen which is what has to happen before the yield curve inverts.

Fig 3

A "healthy" yield curve has rates increasing with term from one month to thirty years which we do not have now.

The yield curve is reflecting fear the "Trump Trade War" will push the country into a recession.

Fig 4
Link to Tweet

The Stock markets, as this table shows, are down between 6.7% and 15.0% below their recent, all time peak values with the Russell 2000 small cap index down the most!