Stock markets at historical highs

The bears headed for cover this week as all three U.S. indexes made new, all-time highs. That’s a good sign and augers well for even more upside ahead. Credit goes to President Trump and his tweets once again. This time, his promises to address tax reform within the next few weeks had the Algos (algorithmic computer software traders) hitting the “buy” buttons on their machines. Investors (if there is still such a thing) had been worried that Trump and the GOP would get bogged down in Obamacare repeal and immigration issues. If so, that would be a major distraction and might mean that tax reform and fiscal spending would be pushed back to next year or even later. The tweet seemed to put that story to bed, and the rest was history. Good quarterly earnings have been supporting the over-all market. Expectations have been for a 6% increase in corporate earnings, but that number proved low. Companies have been reporting better than that (7%-plus), but forward guidance has been better than expected. Whether it is Trump or the gathering strength of the economy, business executives are more optimistic about the U.S. economy and their fortunes than they have been in years. Technically speaking, the Dow and the S&P 500 Indexes have established a new trading floor at 20,000 and 2,300. Readers may recall that I am looking at 2,330 as a short-term top in the S&P 500 Index, with the other indexes following suit. The downside, if it occurs, could be in the 5-7% range. Be aware that tagging a short-term top or bottom is notoriously difficult, especially in...

Trump tweets tweak markets

Financial markets, under the new president, continue to react on an hour-by-hour basis to Donald Trump’s latest electronic missives. That’s no way to conduct business but it is what it is. At what point will traders begin to discount these tweets? It will take some time, in my opinion, because there has been nothing quite like this in the history of the world. What makes it worse, as it turns out, some of the new president’s statements have proven less than factual, while others have clarified the growing mountain of fake news that media outlets appear happy to broadcast. In the middle are the High Frequency Traders and the computer algorithm geeks who find themselves running from one end of the boat to the other as markets gyrate to the political tune of the day. I have no sympathy for these boys. They have controlled well over 70% of the volume in stock markets for years. It was a game they controlled thoroughly. I suspect that may change because Trump’s outbursts and actions are so unpredictable that programming computers to react to him is well-nigh impossible. Once enough money is lost in the attempt, traders will learn not to react to all these statements. In the meantime, readers, we have the advantage. Although this week was chock full of volatility, those who remained invested did okay. Markets held their own moving marginally higher or lower versus last week’s close. Part of the reason was better than expected non-farm payrolls, which came in at 227,000 jobs gained versus an expected 175,000. Overall, U.S. job growth accelerated in January by 1.64%....

All you need to know about Medicare

More of us are signing up for Medicare every day. And like social security, there are plenty of unanswered questions for those of us who are beginning the process. There are plenty of places to seek answers, but how to separate facts from sales pitches from health insurance brokers is part of the problem. Here is a primer that may help you navigate these muddy waters. Presidents as far back as Teddy Roosevelt in 1912 toyed with the idea of a government-sponsored health insurance program. Harry S. Truman and John F. Kennedy both tried and failed to get an act passed. But in 1965, under the administration of Lyndon B. Johnson, Medicare was finally passed. You qualify for Medicare at age 65, or older, if you are a citizen or permanent legal resident who has lived in the U.S. for at least five years. Here are the qualification rules: You (or your spouse) need to have worked long enough to qualify for Social Security or railroad retirement benefits, or worked as a government employee or retiree who may not have paid into Social Security, but has paid Medicare payroll taxes while working. In addition, you qualify for Medicare if you are disabled and have received Social Security benefits for at least two years. A disability pension from the Railroad Retirement Board or Lou Gehrig’s disease, permanent kidney failure, and a kidney transplant also counts toward Medicare benefits as long as you or your spouse have paid some Social Security taxes over a certain length of time. Last year, nearly 165 million American workers were contributing to Medicare through payroll...

The deals begin

This week’s on-going controversy between Mexico and our new president over trade and the construction of “the wall” has investors concerned, confused and apprehensive. And still the markets gained ground. I believe we are witnessing the opening gambits of President Trump’s “Art of the Deal” as it applies to global economics and politics. It will take some getting used to on the part of investors and all Americans. So far the markets, at least, are going along with it. We finally hit that elusive 20,000 mark on the Dow Jones Industrial Average. That’s no big deal and has little importance to technical analysts. New record highs, on the other hand, which were achieved by all three averages this week, are important. The S&P 500 Index is inching ever closer to my short-term target of 2,330. The high this week was only 30 points from that mark. Before you ask (because I know you will); there will most likely be a pullback once we hit my target. How much, let’s say 3-5%. If I know human nature, right now you are thinking; “if I am expecting a sell-off of that magnitude, why then don’t I liquidate my positions, step to the sidelines and get back in at the bottom?” Sounds easy enough but that’s a fool’s move for the following reasons: Number one: it might not occur. With Trump in the White House, anything can happen and probably will. We could receive some stupendous news on a new initiative that could send stocks skyrocketing. Number two: if I sell, when do I get back in? I said a possible 3-5%...

Quarterly earnings will dictate market’s direction next week

Fourth quarter earnings results for the nation’s corporations kicked-off this week. Investors will focus on those numbers as they wait for the really big show at the end of next week. Our president-to-be will be inaugurated next Friday with all the usual fanfare. Investors and the markets usually ignore these displays of pomp and ceremony, but not this time. Whether it is the mercurial nature of our new president, or the fact that a lot is riding on how successful he will be out of the gate, the stock market is hanging on every word (or tweet) he makes. Consider his press conference this week. To many, he did not say enough about his corporate tax cutting or spending plans. Traders sold the market down in a hissy fit. The pharmaceutical and biotech sector sold off hard when Trump reiterated that drug companies would be called on the carpet for their pricing behavior. Buyers, however, saw the market’s weakness as an opportunity. As a result, the damage was contained and markets have since recovered. This, I believe, will be what we can expect from the markets in the coming week. Trump’s first hundred days, according to his transition team, are chocked full of initiatives, some, truly revolutionary. I don’t see the markets taking a big fall unless it is clear that all of Trump’s efforts will amount to naught. In the meantime, earnings will drive the averages up (or down) depending on how robust the results actually are. Readers, by now, should know that the earnings game is a rigged casino where earnings estimates are deliberately low-balled so that...

Markets in good shape for now

As the equity markets continue to consolidate around record highs, investors wait for the presidential hand-off on January 20th. This could turn out to be the best thing that could happen for the bulls. Remember readers, there are two kinds of corrections; the kind we have been experiencing for the last three weeks, and the nasty kind that no one really wants to go through. The longer we back and fill, the greater the chances that the next move will be higher. The caveat, of course, is that investors’ expectations will be satisfied, once Donald Trump and Congress get down to work. That could be a big if. So far the only thing the press, the politicians and Donald Trump appear to be engaged in is a discussion on whether or not the Russians tried to hack the DNC and/or RNC. No one has said they got away with it. Come on people, why are we wasting time on this subject? Ask yourselves how many times the United States government has actively or surreptitiously interfered with another country’s election results? My God, American legislatures and presidents have actively condoned all sorts of black ops, bribery and election rigging in other countries for as long as I have been alive. In return, every other country does the same thing with varying success. It is what countries do. The repeal of Obamacare was the other, more substantial, topic of conversation this week. Note, I use the word conversation, as opposed to any action or concrete proposal, from those who want to trash the Affordable Care Act. As I have written in...