Yesterday, I questioned whether the market reversal to the upside had started. The % of gain said yes, and the volume said no. But, what I added Wednesday morning about the overseas action in Asia, and then Europe, with the gains I could see in our futures before their U.S. open gave me reason to believe that we had indeed commenced to reverse to the upside, and I said this market could be bought today. Judging by the way it actually went, it appears that every one of my readers did just that! LOL!
A rally has commenced, and the reason was, I finally learned, that it is believed that in the light of the alleged economic harm “Brexit” is going to cause to the world economy… the central banks are likely to have to just lower their rates still further, and continue to print even more money! You read that right… more money! This is likely to begin to bring about a bubble in stocks at this point, as the fundamental numbers are not supportive of a large price rise in stocks, but that’s what appears to be starting to happen.
The technicals, though they did not bottom, and give a signal, did decline sufficiently to say that this rally could have legs, and result in a breakout to new all-time highs that might likely suck even more money in from the sidelines, and possibly launch a whole new leg up in this market. While many would welcome that… it would most surely be the beginning of a true bubble in stocks once again, as we saw back in ’99 and 2000, when valuations get all distorted.
In any event, we only want to be buyers of the very best of the safe-dividend growers, having rising EPS estimate lines, stair-step annual dividend payout patterns, and annual dividend increases typically in the low to mid teens, but frequently surprise with larger ones. They are these 23: JKHY, HRL, TJX, NKE, ROST, EFX, HD, UNH, AOS, LOW, NOC, SYK, TSCO, EL, STZ, COST, SBUX, FDS, RAI, LMT, CVS, NDAQ and DG.
We’ve so much technical price strength in all of these 12: JKHY, EFX, UNH, AOS, NOC, SYK, TSCO, STZ, COST, RAI, LMT and DG.
I’ll check overseas, and our futures Thursday morning…
Thursday morning, 6:48 am EST, and Asia traded higher, Europe is up, and so are our futures, by 1/4 to 1/3 of 1%. We’re presently looking to open higher. This would further confirm that we reversed already, and prior to technicals giving the signal by just a couple of days.
Now, at 8:00 am EST, Europe is actually down, and our futures are off slightly. IF it could happen, it would be sweet if Tuesday and Wednesday were only a post-Brexit bounce… as I said, the % of gain said it was not a bounce, while the volume would be saying it was. How sweet it would be, if we could resume the slide, and put the technical measures of market risk in place…. if such a thing should play out, I’ll jump all over that and call it right here!
Here’s to your successful investing!
Harold F Crowell