The World of Investing is Risky Today

The World of Investing is Risky Today

The World of Investing is Risky Today

$DIA, $SPY, $QQQ, $VXX

The biggest risk is an economy that is and has been barely expanding for the past 7+ years, and threatening to fall into a recession.

The US Census Bureau recently reported that the US economy grew at a 1.2% annualized pace in Q-2 of Y 2016. Plus, they adjusted the Q-1 GDP growth rate from 1.1% down to just 0.8%.

That means the US economy has grown at a rate of less than 2% for 2 Q’s running.

The US economy is stalled, below are 3 simple reasons, as follows:

  1. Business bankruptcies are accelerating: Business bankruptcies rose by 9% from Q-1 to Q-2 that is 23% in 1-H of 2016, and by 25% over the same frame last year. the “domino” effect affect other businesses.
  2.  Tax collections are shrinking: corporations and individuals do not like paying taxes, but a big tax bill is a sign of success. Conversely, small tax bills show that you are not make much money. The US Treasury Department reported a 27% Y-Y increase in the US budget deficit to $401-B, The reason for the deficit jump is an 11% decline in corporate tax revenues for 1-H of Y  2016.
  3. Evaporating corporate profits: We are in the middle of earnings season. If Wall Street is right, corporate earnings have dropped by another 3.7% in Q-2. That marks the 6th consecutive Quarter of falling profits. Example: Apple (NASDAQ:AAPL) recently reported its quarterly results. Its Y-Y profits shrank to $7.8%, that is a drop or 27% from the $10.7-B it earned in Q-2 of Y 2015.

The stock market is a forward indicator, so be worried about Q-3, there are no Green Shoots in here, no matter what you may be hearing or reading in the always optimistic financial media.

The consensus expectation for Q-3 earnings is -0.1%.

All 3 major U.S. stock indexes closed at record highs on Thursday for the 1st time since Y 1999

With the DJIA, S&P 500, and NAS Comp are marking an all-time highs, one should have a clear investing strategy in place to protect your portfolio when things turn ugly, and they will turn ugly.

I do not know when that will happen; next week, next month, or next year, but be prepared, as investing in here is risky.

Remember, Cash and Cash equivalents are assets.

Savvy participants have been taking positions in physical Gold and Silver and Gold mining stocks.

Thursday, the US major stock market indexes finished at: DJIA +117.86 at 18613.52, NAS Comp +23.81 at 5228.39, S&P 500+10.30 at 2185.79

Volume: Trade was light with 760.9-M/shares exchanged on the NYSE

HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.40) Bullish (0.35) Bullish (0.33) Very Bullish (0.50)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.35) Bullish (0.29) Very Bullish (0.50)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.11) Very Bullish (0.58) Neutral (0.22)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.27) Neutral (-0.11) Bearish (-0.41) Bearish (-0.29

Stay tuned…

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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