This past weekend, Donald Trump, the leading Republican candidate for the Presidency of the United States, predicted in a Washington Post interview that we are headed for "a very massive recession." His prognostication goes against what most analysts are forecasting and the fact that the stock market is within 500 points of its all-time high.
Now, Donald Trump is many things. But, he is not stupid and we should not rule out anything in today's marketplace. You don't become a billionaire by doing stupid things and certainly I think he has an interesting take on the current economic environment. Just as he has tapped into the anger of the average American citizen and his unlikely rise to the top of the Republican Party, don't dismiss what he is saying because you may or may not like him personally.
What has been fueling this market to the upside is free money from the Fed. It certainly hasn't been corporate profits. Most corporations have wrung out the last few vestiges of efficiency in their companies expenses.
Having said all that, I'm not totally convinced the market is going to go a lot higher. At the moment, the major indices are giving mixed signals, the Dow and the S&P 500 are positive while the NASDAQ is in a broad trading range. All three indices are very overbought and are due for some form of correction, in my opinion.
NEVER BUY STOCKS ON A MONDAY...
Normally buying stocks on Monday is not the best time of the week to do so. The exception to that would be if a stock were breaking out of an important technical formation or if the Trade Triangle technology triggered a buy signal. Generally speaking, midweek tends to be a good time to buy stocks. Notice I said generally, of course, there are always exceptions to every rule.
Gold (FORX:XAUUSDO): For the past two months, gold has been trapped in a broad trading range between $1280 and $1200. Here is what to look for in this market right now:
1. The major trend is positive.
2. Watch the RSI indicator for signs of a move over 50. (see lesson below)
3. Keep an eye on both the weekly and daily Trade Triangles. I still feel that this market has a lot more potential to the upside longer-term.
Crude Oil (NYMEX:CL.K16.E): The price of crude oil is within a dollar of my downside target around $35.50 a barrel. A completed Fibonacci retracement of 61.8% takes the market down to $35.24. I expect to see some support coming in around those levels. If you are an aggressive trader, you could take a stab at buying at those levels. However, you would be trading against the trend which puts the odds against you. I would like to see the market begin to consolidate around the $35.50 area and then begin to move back up to trigger Trade Triangle buy signals.
Today's Market Lesson: I'm going to show you the correct way to interpret and successfully use the RSI indicator. You have heard me talk many times about the RSI indicator and how useful it is in determining support and resistance areas, as well as trends. In this short video, you will quickly grasp the RSI concept and how you can successfully use it in your trading.
As we start a new week, I'm really looking forward to hearing from you with any questions or comments you may have about the markets.
Stay focused and disciplined.
Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub
Whatsoever Donald Trump told last weekend, is not surprising, at list for very few Analysts, having real and strong wisdom, instead of just short sighted Tom Dick and Harry, playing with either their Charts or blindly following Huge huge irrelevant Data.
Since long I am repeatedly giving warning about such massive rescission or just alike financial disaster, and if any one has even some doubt about such happening, they may check movement of Gold, Stocks, Commodities and Crude oil for a period of about last 3-4 years, which are constantly blowing warning alarm through it's Market trend.
I'm surprised hard-line nationalism hasn't erupted sooner. And the root of Trumps critiques, the fact the U.S. can no longer support an open market to absorb global overcapacity or afford to be global hegemon without exacting greater tribute, are accurate.
I once enjoyed living in a country where I could design and produce a product for my local market not having to compete with China's wages, realty taxes, environmental regulations, financing, insurance and legal fees.
Despite its goals for manufacturing, the administration lacks an explicit plan for achieving them.
Manufacturing's muscle helped make the United States a world power, but its contribution to national income is dwindling. Manufacturing as a share of GDP is declining in all developed countries, just more quickly in the United States. Wearing the Marxist hat, this is because the capitalist mode of production in the developed world is no longer capable of contributing as much productive growth to the world economy. The key contributor to the flattening decline of manufacturing as a % of GDP globally has been the introduction of China into the global marketplace. It is no surprise that living standards are rising most quickly in this area of the world, for it is here where the bulk of productive growth is occurring. Manufacturing is not just about nostalgia, it is closely associated with the rise of the capitalist mode of production and with it a dramatic, if bifurcated, initial rise in living standards. Marx wasn't exactly against capitalism in the sense liberals might portray. It is another mode of production in humanity's progression and will reach a point where it is no longer capable of driving a productive economy because the profits in those sectors just won't be there. Domestic wages will be 'too high' and domestic markets too saturated. Hence we get 'Wall Street' and the Great Casino.
Great analysis Mark!
Enjoyable Read.
YES, LOOKS LIKE BUT WE ARE DOING OUR BEST TO MITIGATE IT. FAVORING MEDICAL RESEARCH. WHY, THIS WHY. CNBC HONCHO WHO HAS A MEDICAL DEGREE MEETS LAB BOSS ON THE STREET. WHY AREN'T YOU IN THE LAB? COMPANY GOT COLD FEET BECAUSE OF THE ECONOMY AND CANCELLED THE PROJECT.
10 YEARS FROM NOW THAT CANCER PROJECT THAT YOU HELP SAVE MIGHT SAVE YOU? ED LEFEBER AKA CJ AKA SMOOTH OPERATOR FT.COM
Very good post for your readers! May they hear with their ears and see with their eyes, For your investors a position in WHOSX could be rewarding for non=traders.
Very wise Mark!