• November 17, 2019

ELAM: Markets slide as negative mood intensifies - Odessa American: Business

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ELAM: Markets slide as negative mood intensifies

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Posted: Sunday, October 6, 2019 5:00 am

Thursday Oct. 3, 2019 9:30 AM CST

DJIA finishes 500 points lower. US Crude Oil prices slid for the seventh consecutive session.

Wall Street Journal today

While the talking heads on business television have been wildly optimistic, this column has urged caution for weeks and months. The reason for that warning is now evident.

Technically the lack of breadth took the stock markets down. The peak in new highs for the NASD and NYSE was in June. The number has fallen to near zero for both now. World stock markets have been in decline for the last year with only the US gaining. That could not last. Netflix has lost half its value in the last few months.

From the standpoint of fundamentals, little is positive. A manufacturing index dropped to its 2009 low in the latest report, an incredible event given what is supposed to be a robust economy. Dealers are unable to fix automobiles due to a lack of China made parts. More tariffs are piling on imports from Europe. Again this column warned a year ago a trade war would not be easy to win. Sure enough, it is a negative sum game, all countries are losing.

Bernie Sanders, 78, received a stent this week, Elizabeth Warren looks more probable as the nominee. And she does not like business, period.

I follow many different observers on the markets. I do not see anyone other than myself drawing parallels to the impeachment of Trump now and Nixon 46 years ago. No doubt most of the market observers today did not live through that era as adults. The result then was a 50% market collapse in two years. The parallels are clear. New highs in the markets, a Democrat party and media which dislikes the President, now a falling oil price versus then a rising oil price. That is not a prediction but this is certainly not how bull markets begin.

Crude oil is about to retest the June and August lows at $51. I suspect a retest of the December low at $42.50 is likely. Natural gas is falling, headed for a re test of its August low at $2.10. The Energy Service XES ETF just hit a new low at $6.67. Energy led stocks up and is now leading them down.

In another dramatic move, a couple of discount brokers now offer free trading for listed shares. Hmm, is that a panic reaction hoping to retain more trading?

Finally a new peak in negative mood was surely registered by Democrat Maxine Waters this week. She declared that Trump should be jailed in solitary confinement without specifying a sentence. Gee, with 13 months to go to the election, imagine how negative mood will be by then.

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