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MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue #433 dated May 21, 2017 – with Ray Dirks of RAYDIRKS Research, and his team of securities analysts and money managers, along with the internationally-followed Web Sites –, and, where Fashion meets Finance, and where Stocks meet Blonds.

Well, well, well… “Twas another exciting week on Wall Street in the week ended May 19, as the market suffered its largest losses since last September in the United States – long before the election in November.

Although all of the major stock indexes were down, Rumblings’ readers/investors did a bit better as our top financial stock – Aflac (AFL) – was actually up on the week, closing at $73.67, very close to its high for the last twelve months.

Now, let’s take a look at tomorrow’s “The Trader” column, where the headline reads : “Stocks Rebound From Washington’s Woes”. The column starts off: “The stock market finally – if only momentarily – took off its blinders last week to the drama in the nation’s capital.

The S&P 500 sank 1.8% on Wednesday, suffering its steepest decline since September 9, 2016, as phrases like obstruction of justice and impeachment moved from the fringes of liberal fantasies into mainstream discourse. But by week’s end, the focus returned to stronger-than-expected earnings and the market pared most of its losses.

The Dow Jones Industrial Average fell 0.44%, or 92 points, last week to end at 20,805, while the Standard and Poor’s 500 index lost 0.4%, or 9 points, to 2,382, erasing most of Wednesday’s tumble. The Nasdaq Composite slipped 0.6% to 6,084. The CBOE Volatility Index, or VIX, closed at 12.04, after sitting near multi-year lows in single digits.

For months, the market has shaken off legislative setbacks for President Donald Trump’s agenda, including multiple revisions to its health-care plan, and tuned out the turmoil in the White House. But reports that President Trump allegedly tried to get former FBI Director James Comey to drop a probe into a former aide’s ties to Russia and the swift appointment of former FBI Director Robert Mueller as special counsel to investigate the campaign links to Russia took the drama to a level the market couldn’t ignore.

“When this turned from legislative frustration into a possible ongoing investigation that could suck up the oxygen to get anything done in D.C., any residual optimism left for tax reform or other policies to stimulate economic growth fell perilously close to zero,” says Brian Nick, chief investment strategist for TIAA Investment, who now does not expect any major boost from tax reform or infrastructure until 2019.

Most strategists still expect the market to grind higher. Leuthold Group’s Chief Investment Officer Doug Ramsey notes that market breadth is too strong to suggest a top. And even the distant threat of impeachment isn’t enough to change Marketfield Asset Management’s market outlook. Marketfield noted that the S&P 500 kept rising on positive corporate and economic data amid the ugly partisan bitterness through the worst stages of the scandal created by Bill Clinton’s affair with White House intern Monica Lewinsky – the last time impeachment talk was in the air.

The weight of corporate and economic events prevailed again last week. Stronger-than-expected home-builder sentiment and rising oil prices lifted stocks at the beginning of the week, while strong earnings helped the market recoup midweek losses. Wal-Mart Stores (WMT) and GAP (GPS) bucked the recent trend among retailers with stronger-than-expected first-quarter results. Farm equipment maker Deere (DE) beat the high end of expectations. Shares of drug distributor McKesson (MCK) and design software maker Autodesk (ADSK)also surged on earnings beats.

As earnings season ends, the focus will turn to economics. Up next week are minutes from the Federal Open Market Committee, as well as a budget proposal from the Trump administration. Expect more volatility as investors tune in to congressional hearings and possible subpeonas, says Natixis Global Asset Management Chief Strategist David Lafferty. And with the president abroad, tweets may arrive at unusual times.

Rumblings suggests that readers/investors should be selling most or all of their fixed -income holdings, including municipal bonds. Those who are willing to consider this suggestion should, after consulting with their investment advisers and doing their due diligence, consider buying common stocks on Rumblings’ list of Favorite Stocks for 2017, including Aflac (AFL), Apple, Inc. (APPL), Hartford Financial Services (HIG), and Fusion (FSNN).

Rumblings also suggests that readers/investors place no more than 1% of the funds they invest in the securities of any one company. It pays to diversify…!  

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