Russia Russia Russia

Be Careful What You Wish For

Wagner Group’s chief Yevgeny Prigozhin should stay away from windows. Russia’s crisis involving the Wagner Group’s aborted revoltagainst the Kremlin has exposed “real cracks” in President Vladimir Putin’s authority. China however says it supports Russia in “protecting national stability” in Beijing’s first official remarks on the short-lived armed uprising.

Wagner fighters are leaving Russia’s southern Voronezh region, after a deal brokered by Belarusian President Alexander Lukashenko, under which Yevgeny Prigozhin and his mercenary soldiers will avoid prosecution and Prigozhin will exile in Belarus.

Change is often a good thing but a country with nuclear capabilities where control is in play is not. There’s no reason for you to listen to me on events of this nature; pick your favorite source of “fake news”, in fact try to watch and listen to all of them just to observe what and how they actually report on.

A Major Market Pullback Is Underway

Damn it was good to take a few days off and recharge the batteries. The Trader EDU is well on its way to putting together the best educational program a person with 55+ years of hands on experience can. We’ll be in a position to begin testing everything in August. Due to the sheer number of hours it will take to do everything, chances are I’ll not be posting daily. I thank you all for your thoughts, consideration and commentary in the interim. Naturally if something of importance hits you’ll hear from me, as long as I can tag it with a song from 50+ years ago. If I may ask, does anyone love the “Big Band” era? That’s what I grew up listening to along side a “Ragtime” piano playing Grandpa and a licorice stick jazz playing Dad.

Here’s where I spent part of the weekend. The food was delicious, the view was simply pacifying but more so spending time with family was priceless.

Getting back to the daily grind, we’re heading lower, finally. Breadth remains thin and those who believe technological enhancements will provide the productivity impetus to improve earnings are a little premature. So every position I’m currently holding are in the green and about to get greener except for the Yen but that’s changing.

Investors should brace for fresh turmoil in the weeks ahead as the stock market faces a growing risk of a near-term pullback. Cracks are widening with the weeks ahead a bit more volatile than summer usually brings.

Fed Speak On Steroids

Fed Chairman Powell confirmed more interest rate hikes are in the pipeline. Inflation is just too high. His congressional testimony reiterated that the central bank remains strongly committed to bringing inflation back down to its 2% goal. Financial markets are pricing in a 25-basis point rate increase in July. What happens after July’s uptick is anyone’s guess but for certain, unless a “meteor” hits the esrth, decreasing rates are out of the question.

Q2 Earnings Are Up Next

The 2nd quarter earnings season begins next month and most are bracing for what may be the worst reporting season in three years. Earnings per share for the S&P 500 fell -2.0% in the first quarter of 2023 and are expected to drop -6.4% in the 2nd quarter as compared to the same period last year.

That would mark the largest year-over-year earnings decline since the second quarter of 2020. It will also be the third consecutive quarter where S&P 500 earnings declined year-over-year, meeting the technical definition of an “earnings recession”. Don’t tell Janet or she’ll change the definition.

Sales growth is expected to decrease -0.4% from the same quarter a year earlier. If that happens it would mark the first time the index’s reported a year-over-year decline in revenues since the third quarter of 2020. If I remember correctly, things were not good then thanks to COVID.

Forward guidance for the second half of the year, given the uncertain macroeconomic outlook, subject to mounting recession fears suggest a larger percentage of companies will lower their outlook for the months ahead as well.

Greed Hitting The Index

The market is becoming increasingly frothy, melting up with mega-cap tech stocks as investors erroneously chase the bull. The CNN Fear & Greed Index, a solid sentiment gauge has been flashing a ‘Greed’ signal for over a month. Sentiment even reached the ‘Extreme Greed' level recently. To me that means it’s time to sell so I did. I’m looking to short Apple (“AAPL”) as well tomorrow. How about you; what action did you take?

Meanwhile, individual investors are increasingly more bullish about the stock market, according to the latest American Association of Individual Investors (AAII) Sentiment Survey. Again the “masses” are usually wrong. The last time I observed indications of this nature was the end of October 2021 and I shorted the Russell 2000. I’m very short again, just shy of the 1,900 level, and expecting a drop similar to the 30%+ experienced back when the “bear” market we’re still in was just getting started.

Some agree with me; others do not. Top line prognosticators look for the S&P 500 to drop quickly by almost 6% before a more forceful plunge takes it back below the 4,000 level. I’m still hell bent on the 2,907 level. China has the potential to “copy” what the U.S. did during The Great Depression. China’s now large enough to actually “infect” the world when it “sneezes”. Russia is asunder. Spending still remains unbridled. It’s going to be a wild rest of the summer. Hold on tight and do your own due diligence. Make sure you take the time to enjoy good food, family and the view, not “The View” on ABC, the one your “eyes” give you when you open them.

I’m just a “young” 68 years old looking to help you become the best damn investor or trader you can possibly be. Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at david@thetickeredu.com so we can further help. Again, let me know what you want to learn, I’m all ears.

I never saw Freddie Mercury; wish I had. One of his songs “I’m Going Slightly Mad” fits today’s current worldwide situation. When it hits home I take action. That is what I did; got the “hell out of Dodge”. and did absolutely nothing Hope you did as well.