Tuesday, November 7, 2017

Party Like It's 1929

"At the end they elected a sociopathic liar to 'Make America Great Again', because no one else could get the job done..."

"...as the imperial end-game approaches, it becomes a matter of imperial self-preservation to breed a special-purpose ruling class—one that is incapable of understanding that the end-game is approaching" - Dmitry Orlov

One year since the election and the start of the Trump meltup to meltdown rally. So far, he's eviscerated the EPA, eviscerated the SEC, robbed working people of healthcare, all while talking up stocks to record over-valuations, and consumer confidence to record delusion. It's what he does, he's good at it. As always, don't take my word for it:

"That’s what I do. And I’ve done it well, I’ve done it really well"

In the absence of any real Trump accomplishments, the Fed hiked rates three times and started shrinking their balance sheet. For the masses who apparently enjoy mega hurricanes, wildfires, mass shootings, interest rate hikes and the constant threat of World War III, it's been a banner year for sniffing glue.

Any questions?

Yesterday we learned that imploding IPOs at the end of the cycle are a buying opportunity. And today we learned that stocks blowing off like 1999, is also good:

Jonathan Krinsky of MKM Partners compared the MSCI Momentum index, which tracks stocks with the best performance over the prior year, with the S&P 500.

"The spread between the two is 15 percent for the year right now. That's the biggest spread in favor of momentum since 1999, so it's not surprising that we're getting people thinking that we've gone too far."

The only stocks anyone ever has to own

"But if investors are looking for more of a catch-up trade, Krinsky also believes energy stocks are looking more attractive. "

While the market's sustained momentum has some investors nervous, Krinsky said it isn't showing hints of two key indicators that show the trade is going too far. The first is when momentum stocks stop outperforming and start breaking down below their moving averages.

Non cap-weighted momentum:

The second is when they extend even higher from their moving averages, creating what the technical analyst calls a "blowoff scenario," where essentially the stock runs up too far and "exhausts all the buyers."

Cap-weighted momentum

The last seven recessions were preceded by the yield curve, as measured by the yield spread between the yield on the 2-year and 10-year Treasury notes"