MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue #416 dated January 15, 2017 with Raymond Dirks of RAYDIRKS Research and his team of securities analysts and money managers, along with the international Web Sites : www.CorporateProfile.com and www.CPreports.com, where Fashion meets Finance, and where Stocks meet Blonds.
Well… – ‘Twas a mixed stock market last week in the United States as two of the three major indexes went down slightly, while the Nasdaq advanced. Rumblings’ Ten Favorite Stocks for 2017 did OK, and we’ll add a new stock later -first – let’s quote from tomorrow’s “The Trader” column in Barron’s, The Dow Jones Business and Financial Weekly, where the headline reads : “Stocks Grow Weary of the Trump Trade”.
The column goes on to say : “No one likes making a call and being placed on hold. Unfortunately, that’s exactly where the market is just about now.
This is not what was supposed to happen. The new year began with high hopes, with the bulls expecting the rally that began with Donald J. Trump’s election victory to continue into 2017, while the bears salivated at the opportunity presented by a market that had gotten way ahead of itself. Instead, the market has failed to break up or down.
Last week, the Standard & Poor’s 500 index dipped 0.1% to 2275m while the Dow Jones Industrial Average declined 78 points, or 0.4%, to 19,886. The Nasdaq Composite bucked the trend by gaining 1% to 5,575, a record high.
“It has taken longer than people had hoped” for the market to find direction, says Frank Cappelleri, executive director at Instinet. “It’s frustrating for both sides.”
What makes it particularly frustrating was that President-elect Trump had the opportunity to get the market going again, but elected not to. At his press conference last week, Trump covered a lot of ground – everything from the media in manufacturing to the sky-high price of pharmaceuticals (more on that later). But he didn’t cover the three subjects investors especially wanted to hear about – namely taxes, fiscal policy, and infrastructure. As a result, some of the primary beneficiaries of the Trump trade stalled. The S&P 500 Financials index declined 0.1%, while the energy sector dropped 1.0%
The bright side. While investors might be reluctant to place further bets on the Trump trade, they’ve been more than willing ti dive into areas that had lagged. Consumer discretionary and tech stocks, in particular, got a boost, with Facebook (FB) and Amazon.com (AMZN) gaining 4% and 2,7% respectively. That suggests investors haven’t given up hope for more market upside, they’re just seeking less elevated opportunities. “Everyone’s looking for value where it resides,” says Todd Lowenstein, director of research at High Mark Capital Management. “That’s a healthy sign.”
Expect such back and forth to continue for a while longer. Deutsche Bank strategist Alan Ruskin argues that there are five stages to the Trump trade (distinct from the five stages of grief) and that the market has only just moved past the first stage. That would be hope – hope that Trump’s pro-growth policies would finally kick the U.S. economy into overdrive. Now we’re settling into the second, deal-making stage, and it’s likely to be long and arduous as politicians try to get deals done. Expect markets to be more volatile and less trending, Ruskin says. “The phase of deal-making may then prove much more frustrating for markets,” Ruskin says. (Stay tuned for the enactment, impact, and payback stages.)
The good news: As long as progress toward the ultimate goals is being made, the Trump trade should remain in place, if dormant. But until then, let frustration reign.
And now, as we said earlier in this article, we’re adding another stock to our list of Favorite Stocks for 2017 – it’s now 11 Favorite Stocks – OTI (OTIV) at $1.51, which specializes in providing cashless project financing for businesses in the United States, Jerusalem, North America, etc. Rumblings thinks OTIV could rise 400-600% over the next 12-18 months.
Rumblings suggests that readers/investors do their due diligence, check with their investment advisers, and then purchase shares in OTIV and other companies on our list of 11 Favorite Stocks for 2017.
Rumblings also suggests to our readers/investors that you place no more than 1% of the funds you devote to common stocks in the securities of any one company…It pays to diversify…!
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