#dowjonesupdate

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Last week senior bankers predicted another strong quarter for trading. This was especially true at JPMorgan Chase, whose investment bank boss Daniel Pinto said trading revenues in the second quarter could be up as much as 50% compared with a year earlier. Falco was more circumspect on the prospect of a wave of activist investment in the aftermath of the coronavirus crisis. Low asset prices can tempt activist investors to buy into companies on the cheap and then look for ways to make them more profitable, often by cutting costs and jobs, but mostly issuing more debt (although with corporate leverage now at even record-er levels than just 2 months ago it is unclear just who has the capacity for even more debt). "You gotta be careful though because an activist can become very quickly a focus of governments if they really step in too hard at a time when people, what they want is to protect employment and to actually get things going in the economy," Falco said. "We’ve got to be careful because in some cases . . . maybe those are at the wrong time and could create a lot of anger." We doubt that: in fact, if activist investors step up and end up causing millions more to be fired, it will simply mean that the government's free handouts will have to be extended even further, Congress will have to pass even more stimulus bills, and the Fed will have to monetize even more debt bringing us that much closer to the period of runaway inflation so eagerly sought by the Federal Reserve. In other words, more layoffs mean win, win, wins for everyone, except those who still believe in working hard and saving, of course. Read the full article

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His analysis agrees with our own: “While the technical picture of the market also suggests the recent “bear market” rally will likely fade sooner than later. Such an advance will ‘lure’ investors back into the market, thinking the ‘bear market’ is over. Importantly, despite the sizable rally, participation has remained extraordinarily weak. If the market was seeing strong buying, as suggested by the media, then we should see sizable upticks in the percent measures of advancing issues, issues at new highs, and a rising number of stocks above their 200-dma.” On a daily basis, these measures all have room to improve in the short-term. However, the market has now confirmed longer-term technical signals suggesting the “bear market” has only just started. There are reasons to be optimistic about the markets in the very short-term. We will get through this crisis. People will return to work. The economy will start moving forward again. However, it won’t immediately go right back to where we were previously. We are continuing to extend the amount of time the economy will be “shut down,” which exacerbates the decline in the employment, and personal consumption data. The feedback loop from that data into corporate profits, and earnings, is going to make valuations more problematic even with low interest rates currently.  This is NOT the time to try and “speculate” on a bottom of the market. You might get lucky, but there is very high risk you could wind up losing even more capital. For long-term investors like our Wealth Preserver Members, just remain patient and let the market dictate when the bottom has been formed. As you can see in the image below, the InterAnalyst Green Buy signal will come as it has every other time. But it only signals when the market is on solid footing.  Bear markets never end with optimism, but in despair. So remain patient, it the bear will end and you will capture the slingshot move back up once the markets are on solid footing. Although we continue to author opinion and analysis, please remember that our writings do not replace the green buy and red sell signals derived from over 140 years of market analytics. Use the Wealth Maximizer Pro to help give you daily charts and signals to help with daily market direction. Apply those to the Wealth Maximizer Weekly charts and signals to give you more confidence in the direction. When the Wealth Preserver Monthly signal confirms both the Wealth Maximizer and Wealth Maximizer Pro memberships, you are prepared for the slingshot.   Members Version of A Sharp Reflex Rally Members please login to view your market signals and read the balance of this post for entry and exit points.   Read the full article

Warren Buffett + Closing The Gap + 21% Retracement = The Buffett Retracement Gap In early 1987, Warren Buffett wrote to Berkshire Hathaway shareholders about what to do in the face of an epidemic. This was, of course, way before the outbreak of the novel coronavirus that's causing worldwide concerns today. It was even before the avian flu, Ebola, SARS, or MERS made the news. But more than 30 years ago, Buffett addressed two "super-contagious diseases." He told readers that there are "occasional outbreaks" of these diseases and that they will "forever occur." Buffett admitted, though, that "the timing of these epidemics will be unpredictable," cautioning to "never try to anticipate the arrival or departure of either disease." What were these two diseases? "Fear and greed" among investors. Buffett stated that his goal to deal with these "epidemics" was "to be fearful when others are greedy and to be greedy only when others are fearful." There's no question that plenty of investors are fearful right now. The so-called fear index -- the CBOE Volatility Index (VIX) -- has skyrocketed over the past couple of weeks. When the VIX goes up a lot, it's a clear sign that many investors are scared. If you think that Warren Buffett was right in 1987, though, that means it's time to be greedy. Buffett Current Time: BE GREEDY  Closing The Gap As you can see in the chart below, we are near closing the final GAP before return of a new upward push. Once the gap closes (yellow chart markers), we can start a new bullish momentum cycle.  We are very close to closing the gap and when it does close, we have another notch in our belts for a new bullish trend to begin. 23% Golden Ratio Retracement Retracements are temporary price reversals that take place within a larger trend. The key here is that these price reversals are temporary and do not indicate a change in the larger trend. You may wonder where these numbers come from, though. They are based on something called the Golden Ratio. If you start a sequence of numbers with zero and one, and then keep adding the prior two numbers, you end up with a number string like this: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 ... with the string continuing on indefinitely. The Fibonacci retracement levels are all derived from this number string. Interestingly, the Golden Ratio of 0.618 or 1.618 is found in sunflowers, galaxy formations, shells, historical artifacts, architecture, and the growth of the stock market. Final Thoughts Once the Gap is closed and the Fibonacci level is reached you should be looking closely at your Daily trade signal charts. If you want to be a little more patient and lower your risk level, then wait for the Weekly trade signal charts match the Daily.  Ultimately, when the Monthly turns, your investments should be growing safely and rapidly after avoiding most of the decline.         Read the full article