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Eclipse Eclipses Expectations

Daily Rap 08-21-2017

The early going saw the indices slightly red, for no particular reason, which I always find more interesting than when the market moves on news. But over the course of the day the market just drifted sideways over a modest range in dull trading, as though even the computers were watching the eclipse. By day's end the indices had basically gone nowhere.

Away from stocks, green paper was weaker, oil lost 2%, and fixed income was slightly higher, as was silver, while gold gained 0.5%.

Tired and True? I realized over the weekend that I have changed my tone in discussing the market, but I perhaps haven't made it clear that I think it has finally achieved exhaustion. As I have said, I think the process started on the ninth of June when we had the...more


Last year's posts for Ask Fleck

Q: We got the "obligatory" dip bounce when nuclear war failed to break out. I wanted to see if the old FAANG leadership would participate. None of the FAANGs managed to show any strength and they have now caved into "fail" mode, suggesting that their leadership has ended. They could not make any sort of new high and they eagerly joined in to today's little dip. Meanwhile, the low profile "rest-of-the-market" is taking out the entire "Trump Rally". I think much of the "reason" behind recent weakness, besides the usual excuse of "seasonal factors" is what the really "Smart Money" fears - namely, that essentially none of Trump's ambitious program will ever see the light of day. Thus, the entire premise behind the rally is null and void and this premise has showed up in the technical "squiggles" for the past four weeks. Now we might know some of the "why" that illuminates the "what" (markets always "speak" their own language, long before the media figures out what's behind that market message.)

I caught wind of this sentiment a few weeks ago and wondered how long it might take for the "herd" to figure it out. I think the newly minted market players, devoid of ANY downside experience, will find it nearly impossible to learn "bear-market-skills". There continues to be a steady buildup in "selling pressure" while the "demand" side of the equation is dropping rapidly. This is not to say there won't be rallies, but I am convinced (until proved otherwise) that the up trend from November is finished. One of those "Smart Guys" I mentioned is now thinking that Trump might become the patsy for whatever disruption comes out of the Fed's policy moving forward. Historically, there has been a very strong tendency for newly elected Republican presidents to be tarred and feathered by the normal cyclical unwind from the previous Democratic expansion policies. Given the degree of "Trump Hatred" infecting the daily "narrative", it is not impossible to imagine a few left leaning Fed members eager to see a tightening policy derail his presidency (a far reaching, vast left-wing conspiracy, ripe for some kind of reality show nonsense). Sometimes, even paranoids have enemies

Fleck: Thanks to Mr. Skin for this update and for having been so accurate in his analysis. I am glad to hear that he thinks the party is finally over. I'm anxious to start trading ideas from the short side after such a long hiatus. Be prepared for lots of changes as the market weakens.
(posted: 8/18/2017)


Q: P.s.
Do you think it is wrong that the press constantly calls Trump on the fact that he constantly and compulsively lies?
Do you thing it is wrong the Trump is hounded for trying to stir of yet more hatred and fear in a country that is already overflowing with hatred and fear?
Do you think it wrong that the continuous criticism (from the press) of blatantly self serving attempts to gain favour with bills that do more harm than good is wrong?
Do you think that labeling the above a "witch hunt" somehow negates their legitimacy?

Fleck: Do you have a real question that pertains to investing? These questions have no merit.
(posted: 8/18/2017)


Q: No, question. Just a comment on the gold action.

Boy do they hate gold and miners. You'd think gold has to hit $1500 before hedge funds decide to own miners.

Me I think above $1300 is coming this year.

Fleck: Gold sold off after it hit $1,300 and then some more when stocks rallied. Miners reacted to that action. The "all is well" trade was back in force (midday Friday), but it won't last.
(posted: 8/18/2017)


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