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S&P 500 Weekly Update: The 'Feast' Or 'Famine' Market Rolls On

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Includes: DDM, DIA, DOG, DXD, EEH, EPS, EQL, FEX, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWM, RYARX, RYRSX, SCHX, SDOW, SDS, SH, SMLL, SPDN, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, UWM, VFINX, VOO, VTWO, VV
by: Fear & Greed Trader
Summary

The rally has "Gone Too Far" - only if you missed it.

Despite the “opening” concerns, the economic recovery marches on with improved data being reported.

Investors weigh the evidence on the recovery and for the time being, have reached a "no decision" verdict.

The present "valuation" situation should be viewed as a "market of stocks" and not as a "stock market".

“Hey, here is where I am, and I’m here because I steered my horse here” ... Chris Gardner, author of “The Pursuit of Happyness”

The Covid “fear event” combined with the newly added civil unrest scene presents a very unsettling picture these days. 2020 has presented unprecedented challenges to market participants causing everyone to be extra careful in how they attempted to navigate the shutdown event. Despite what investors have already gone through, what we are about to see unfold in the next few months will present some of the biggest challenges an investor can face in such a short period.

That investment portrait that will soon have more color added to the canvas in the form of a Presidential election. We have already seen how important it was to use ALL of the data available to increase the chances of assessing the situation correctly, then assigning a probability to each anticipated outcome.

Plenty of investors struggle because they fail to completely understand how the stock market works. They simply avoid embracing the notion that human behavior impacts their decisions. Staying with a closed mind, trapped within their world, and rarely allowing anything to change that opinion has become even more common during the COVID dialogue. Despite other information being presented, alternatives are summarily dismissed, and not allowed to change the outlook. From where I sit, Cognitive Dissonance Bias is at an extreme level. A level that I haven’t seen for 20+ years.

2020 has been the textbook example of this. People see what they want to see.

Investors have many choices that they can either embrace or toss aside on many topics that involve their strategies. They have to constantly choose between either acting per their true beliefs, or rationalizing inconsistent actions.

In 2000 the majority convinced themselves that it simply didn’t matter if a company had "earnings”. They “believed” the price of stocks “had” to be determined by what someone else was going to pay for it. Nothing else like fundamentals mattered and they talked themselves into believing that to be true. They KNEW earnings were important yet they chose to rationalize their inconsistent actions. That held for a while until the crowd figured out that what they were going to pay was a lot less after they peeled back the cover to see there was little to nothing in the way of profits.

Today it’s more of the same. Investors are so rigid in their beliefs they have talked themselves into their irrational, and at times, very inconsistent actions. The non-stop Covid information overwhelms the emotional thought process of anyone, never mind an investor, along with the rioting in the streets of U.S. cities, and the political backdrop we live with today.

That brings us to another issue that so many get themselves wrapped up in. Obsessing, then overreacting to a situation that is totally out of their control. This year no investor had a say in the decision to close the economy nor was any investor privy to the conversations that swirled around the Fed when they decided to provide the kind of stimulus we are seeing today. Yet so many investors go about the business of investing obsessing over details that cannot control.

A flexible approach, keeping balanced, and never getting stretched in any one direction has been a key to success for all investors here in 2020. Staying rigid, relying on headlines, and using preconceived notions has been a losing strategy that has been exacerbated with this unprecedented lockdown.

Coming off the worst week in the last 3 months, stocks continued their slide on Monday. After a brief test of the 1% level on the 10-year Treasury, yields backed up again with the 10 year T Bill starting the week at 0.67%. Crude oil was also a victim of the selling pressure as the entire global recovery was in question over COVID fears. That was the narrative used to describe the "morning” trading session.

However, Monday afternoon saw a complete reversal leaving many investors scratching their heads. The S&P hit a low of 2965 in the morning then at the closing bell investors were staring at S&P 3066.

Monday’s “reversal mood” continued on Tuesday. Global equities remained in rally mode again as economic news was filled with positive surprises. After a large gap up of 2.77%, the S&P 500 traded higher all day to finish with a gain of 1.92%. Breadth was very strong with only 35 stocks in the index lower on the day. Pharmaceuticals, Retailers, and infrastructure-related names were some of the most notable top performers.

The brief three-day winning streak for the major indices ended on Wednesday with a modest move to the downside in what was relatively speaking, a rather quiet session. Indecision on the part of investors was evident again on Thursday as the S&P 500 fluctuated between gains and losses for most of the day. The index remained in a tight 20 point trading range for the entire session.

The mid-week Feast gave way to a short-lived Famine as COVID fears sparked a mild selloff Friday afternoon. The S&P however, still finished the week up 2%. The Nasdaq Composite made it six consecutive days of positive sessions, closing up 3.7% for the week and has now gained 10.8% for the year. No surprise as many of the stocks that make up that index have some immunity to the effects of the COVID lockdowns. Unlike the major indices, many of then never fell into their own BEAR markets.

The message is pretty clear, investors who suffer from Cognitive Dissonance Disorder will continue to wonder why they have been left behind.

Similar to the major U.S. indices, every single major global index was overbought with some of them more than one standard deviation above its 50-day moving average and another large grouping that traded more than two standard deviations above the mean a week ago. That level of extreme overbought conditions unwound pretty dramatically, and it shouldn’t come as a major surprise.

Asian Pacific stocks remain the closest to recent highs, with large-cap stocks traded onshore within 7% of 52-week highs; other notable major indices close to highs include Taiwanese and Korean stocks in the TWSE and KOSPI.

Stocks in Asia remain the cheapest versus both earnings and sales, with Singapore, Hong Kong traded Chinese names, and Hong Kong-listed stocks all the cheapest in the world.

From a technical perspective, many major Global markets have followed the lead of the U.S. and tested their downside support recently.

The good news is that they also followed the U.S "reversal" and subsequent rally this week.

Economy

Over the past few months, we've seen record drops and now record bounces for many of the most widely followed economic indicators. The Citi Economic Surprise indices, which track how economic data is coming in relative to forecasts, have been a prime example of the moves in economic data. Back at the end of April, the index for the US had fallen to a record low of -144.6, but that has since turned around.

Even before the addition of this week's blockbuster U.S. Retail Sales report, the Citi Economic Surprise index had reached a new all-time high the day before. With a further boost from more positive releases, the all-time high is now even higher. That means that economic data in the United States has been coming in far stronger than economists have had penciled in.

A June Empire State Manufacturing surge left a barely negative -0.2 reading, from -48.5 in May, an all-time low of -78.2 in April, and -21.5 in March. The measure is still below the 12.9 reading of February, but well above the -34.3 prior all-time low in February of 2009. This was the largest month over month increase on record. Gains were broad-based, and the ISM-adjusted Empire State rose to 49.6 from 39.7 in May and an all-time low of 30.8 in April, leaving that measure near the 50-mark, and well above the prior all-time low of 35.6 in March of 2009. The forward-looking 6-month measures in this report were particularly strong. Analysts expect all the sentiment indicators to continue to climb in June as factories and retail businesses reopen.

Philly Fed manufacturing index bounced 70.6 points to 27.5 in June, much better than expected and back in positive territory, after rising 13.5 points to -43.1 in May. The index is recovering from the record -49.4 point plunge in March to -12.7, and the -43.9 point drop to a 40-year low of -56.6 in April. Most all the components rallied. The employment component improved to -4.3 from May's -15.3 and April's -46.7, with the workweek at -6.5 from -7.1. New orders surged to 16.7 from -25.7 and compares to the record low of -70.9 in April.

Retail sales bounced a record 17.7% in May, with sales excluding autos jumping 12.4%, nearly double expectations. Those follow declines of -14.7% and -15.2%, respectively. Compared to last year, the contraction rate has slowed to -7.7%, with the ex-auto rate at -8.1%, versus double-digit rates of declines previously. Sales excluding autos, gas, and building materials, were 12.9% higher, recovering most of the prior -15.4% decline. Gains were broad-based.

Industrial production rebounded 1.4% in May, shy of expectations, following a downwardly revised -12.5% in April, which is a record decline (data go back to 1919). This broke a string of two monthly declines and brought capacity utilization up to 64.8% from 64.0%. Manufacturing production rose 3.8% versus -15.5% thanks to a 120.8% pop in vehicles and parts following a record -76.5% April plunge. Excluding vehicles and parts, manufacturing was up 2.0% from -11.9% (was -10.3%).

The May Conference Board Leading index bounced 2.8% to 99.8 after April's -6.1% drop to 97.1, and versus the -7.5% decline in March to 103.4. This is the first monthly increase since January and brings the index back near triple digits. April's figure was the lowest since November 2014. The index was at a record high of 112.0 last July (data goes back to 1959). The diffusion index climbed to 70 from 20. Seven of the ten indicators were made positive contributions, led by jobless claims at 1.90%, followed by building permits at 0.39%. The largest negative contribution was from ISM new orders at -0.48, followed by consumer expectations at -0.09%.

U.S. initial jobless claims fell -58k to 1,508k in the week ended June 13 following a 331k drop to 1,566k in the June 6 week. That's an 11th consecutive weekly decline since the record surge to an all-time high of 6,867k in the March 27 week. The 4-week moving average slipped further to 1,773.5k from 2,008k (was 2,002k). Continuing claims declined -62k to 20,544k in the June 6 week after falling -662k to 20,606k (was 20,929k).

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If the Burn Baby Burn and the lawlessness mentality is allowed to continue in the inner cities, combined with the Work From Home concept gaining momentum, the shift to rural America will be well underway. That bodes well for homebuilders and their underlying stocks. Select builders concentrating on the growing areas of the country could be HUGE winners in the sea change that could well be underway. Perhaps homebuilder executives also see the handwriting on the wall and are feeling pretty good these days.

NAHB Homebuilder Sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. In April, it plunged a record 42 points to 30. Of the index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43.

NAHB Chairman Dean Mon:

As the nation reopens, housing is well-positioned to lead the economy forward. Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.

Mortgage Bankers Association reported mortgage applications climbed another 8.0% in the week ended June 12 following the 9.3% surge the week before. Refis continued to pace the strength with the index rising 10.3% after the prior 11.4% gain. The purchase index increased by 3.5% following 5.3% gains over the prior two weeks. The purchasing index hit its highest level since the beginning of 2009. The 30-year mortgage rate fell to 3.30%, a new record low to help support the housing market, especially as the economy is starting to reopen. The 5-year ARM edged up to 3.07% from 3.02%.

Who would have thought during a global pandemic YTD mortgage purchase applications would only be down 2% from last year?

Global Economy

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ZEW data surveys showed French, Japanese, and Italian economic expectations from analysts the highest since 2004, with German expectations the highest since 2006. In general, analysts polled by ZEW see a very large bounce in the activity and small marginal improvements in actual economic data through June.

This is the typical pattern exiting downturns, but it goes to show how important expectations and confidence about the outlook are for right now; almost all of the global improvement remains assumed rather than realized.

Chinese consumers are bouncing back much slower than the rest of the economy. Changing consumer spending patterns, rather than an outright inability to spend, are the biggest driver of COVID19 declines. Although China is striving to be more consumer-based, its economy is currently imbalanced away from consumer spending; this latest slowdown in spending is only going to make that problem worse, and further reduce potential growth.

The Bank of England raised its asset purchase target by 100 billion GBP to 745 billion GBP total, as well as guiding its program would end around the end of 2020, but that QE can be restarted if necessary.

The Monetary Policy Committee argues that Q2 GDP is going to be “less severe than thought”, a rare bit of optimism from a central bank. Chief Economist Andy Haldane voted against more QE because he thinks the rebound may be quicker than expected.

Earnings Observations & Valuation

Refinitiv Research

It appears the earnings picture is becoming more stable. Downward revisions are dropping while we are seeing upward revision to the outlook increasing.

No analyst, market technician, money manager, market pundit, or investor can come up with a true valuation of S&P earnings going forward due to the unknowns of the post COVID recovery. Anyone that is shouting that the stock market is overvalued, undervalued, or fairly valued is kidding themselves and all of those that are listening to them.

However, when a company tells us they are seeing their revenues maintained or growing and perhaps raising guidance in this uncertain period, we can then make a logical decision on what that particular company may be worth, and how it should be valued based on that outlook.

The present "valuation" situation should be viewed as a market of stocks and not as a stock market.

The Political Scene

The Trump administration is again floating the idea of an infrastructure spending program amounting to up to $1 trillion. No details have been worked out. With the political wrangling in D.C. today, it would appear this has no chance of ever getting approved.

Investors who decided to rush into the “infrastructure” stocks may want to reconsider. The chances of any infrastructure bill getting approved in the house are just about nil. There will be no "wins" given to this president before the election.

If they haven’t already, the markets will soon start to focus on the presidential election. Since 1990, declining effective tax rates have accounted for half of the increase in corporate net profit margins and nearly a quarter of total S&P earnings growth. The presumptive Democratic nominee is calling for a $2 trillion tax increase on corporations, raising the headline rate from 21% to 28%.

While the market has shifted to considering a greater likelihood of a full Democratic sweep of the White House, Senate, and House, I do not believe it has fully priced in the possible resulting policy shifts in 2021.

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The Fed

The Federal Reserve announced it would begin buying corporate bonds on Tuesday. There is massive confusion on this point so there needs to be some clarification on what this announcement means. On March 23rd, the FOMC announced it would be purchasing corporate bonds via two facilities, the Primary Market Corporate Credit Facility, or PMCCF, and the Secondary Market Corporate Credit Facility, or SMCCF.

The PMCCF was designed for companies to issue directly to the Fed, disintermediating banks and letting the Fed lend directly to eligible borrowers; some terms and eligibility criteria have changed slightly since the March 23rd announcement, and the facility is not yet active, but it’s in the works.

The SMCCF was designed to involve purchases of both ETFs and whole corporate bonds from sellers via the financial markets, with ratings being the only major criteria. ETF purchases have been underway for some time, but setting up the logistics for purchases of actual bonds was a little bit trickier; there are going to be large numbers of individual CUSIPs, for instance, and settlement of corporate bonds is more involved than for equities, so it took a bit longer for the Federal Reserve staff and their contractor BlackRock to set up the infrastructure.

They have now done so and began purchasing individual corporate bonds roughly in-line with broad market indices this past Tuesday. To reiterate, the announcement today was not a new policy, but simply a notification to markets that the Fed is ready to do what it said it was going to do. The equity market responded positively and a 1% rally in corporate bond ETFs immediately following the announcement.

However, this information was not new, was not novel, and should not be treated as a signal about the path or evolution of policy.

In his semiannual monetary policy report to Congress, Federal Reserve Chair Jerome Powell commented:

Recently, some indicators have pointed to stabilization, and in some areas a modest rebound, in economic activity. With an easing of restrictions on mobility and commerce and the extension of federal loans and grants, some businesses are opening up, while stimulus checks and unemployment benefits are supporting household incomes and spending. As a result, employment moved higher in May. That said, the levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery. Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely.

The 10-year Treasury bottomed at 0.40% over the worldwide fears that are present. The 10-year note yield rallied off those lows to 1.18%. A trading range under 1% was then established. After making a run to the top of that range earlier in the month, the 10-year drifted back down and closed trading at 0.70%, falling 0.01% for the week.

The 3-month/10-year Treasury curve inverted on May 23rd, 2019, and remained inverted until mid-October. The renewed flight to safety inverted the 3-month/10-year yield curve once again on February 18th, and that inversion ended on March 3rd. The 2/10 Treasury curve is not inverted today.

Source: U.S. Dept. Of The Treasury

The 2-10 spread was 30 basis points at the start of 2020; it stands at 51 basis points today.

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Sentiment

Contrarians are cheering.

While the media is obsessed with reporting on the recent surge of what they call euphoric trading on trading sites like Robinhood, AAII's bullish reading fell 9.9% to 24.3% this week. That is the largest single weekly decline in bullish sentiment since the final week of February when it fell 10.1 percentage points from 40.6% to 30.4%. This week also marked the largest move in absolute terms since then. That leaves bullish sentiment at its lowest level since the May 14th low of 23.31%. That very same day saw the S&P take off and rally from 2766 to the recent high of 3232.

The loss in bullish sentiment has almost entirely been picked up by the bearish camp. Bearish sentiment rose 9.7% to 47.7%; the highest reading of the past month. This was the first time bearish sentiment has risen in six weeks.

Crude Oil

Oil looks like it could use a breather. WTI Crude Oil sits right between major resistance in the low $40s and major support around $35-36. After rocketing off its lows of a couple of months ago, it could probably use a period of consolidation, but right now only a break above resistance or below support will give us a hint about its next move.

Crude oil now finds itself at the upper end of the trading range as another EIA report sets a new record for crude oil inventories at 539.3 million barrels. That week also marked the 21st build of the 24 weeks this year. Domestic production has continued to cut back, falling another 0.6 million barrels/day this week down to 10.5 mm bbls/day. That is the lowest level of domestic production since March of 2018.

Meanwhile, refinery throughput was on the rise for a fifth straight week even as gasoline demand fell for just the second time in the past ten weeks.

The price of crude oil closed trading at $39.56, gaining $3.00 on the week.

The Technical Picture

Indecision is not unusual after a big rally that was then followed by an 8% pullback. Investors now weigh the evidence in front of them. With the uncertainty still present on many fronts, the tug of war rages on.

Not much difference in the picture of the daily chart of the S&P 500. There are pockets of resistance ahead and that is where the index stalled this week.

On the other hand, we see short term support just below where the index closed on Friday at 3097. The next breach of support or resistance will be the first clue where the S&P is headed next.

No need to guess what may occur; instead it will be important to concentrate on the short-term pivots that are meaningful. However, the Long Term view, the view from 30,000 feet, is the only way to make successful decisions. These details are available in my daily updates to subscribers.

Short term views are presented to give market participants a feel for the current situation. It should be noted that strategic investment decisions should NOT be based on any short term view. These views contain a lot of noise and will lead an investor into whipsaw action that tends to detract from the overall performance.

Buying insurance. Everyone wants to make sure their portfolio is “protected”. The cost of “portfolio insurance” just increased by fourfold. A contrarian view might say it is time to forget the insurance and start looking to add to “long” positions. It seems those obsessed with hedging may just need to protect their portfolios from themselves.

Gone are the days when investors watched stocks traded in "eighths". Today those eighths represent a tidy profit for the day trading crowd. Years ago it took quite a few eighths just to cover the commissions one had to pay. Times have changed. Many firms are striving to give the majority of people access to our capitalist platforms. The complaint for years has been it is a system designed for the wealthy, with commentary like "There isn’t parity", "Where is the equal opportunity for everyone", and "only the rich own stocks".

What we have seen now with “zero commissions” was only the first step in making it easier and perhaps more affordable for everyone. New platforms have also been born and they allow the purchase of fractional shares of a company (Stock Slices). For as low as $5 an individual can invest in corporate America. This is a perfect way for “anyone” to get started.

Investing is one of the building blocks that allow an individual to achieve financial stability. It's now available for EVERYONE.

These changes also come with a bit of "irony”. Now when “they” decide to raise taxes on capital gains and dividends, and/or decide to penalize Corporate America with some of the proposals heard recently, they will be hurting the “little guy” as well.

Some "officials" looked the other way when it came to allowing rioting, looting, and destruction of property recently when it came to expressing an opinion. However, we can all rest easy now. While violence is tolerated, bad words and opinions deemed unacceptable won't be. Facebook (FB), Twitter, (NYSE:TWTR) Google (GOOG), and others are under scrutiny again.

Unlike the violence that went without punishment, these companies will be asked to dole out hundreds of millions to appease the leaders that wish to now "protect" everyone. Investors have caught on to this ongoing "game" and realize these threats for what they really are. A way for "officials" to get their piece of the pie.

The shares of the likes of Facebook, Google, and others are at, or near all-time highs. Both of those companies can be classified as CORE holdings in any portfolio.

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Market Skeptics

The rolling 1 month beta of the HFRI equity hedge fund index to the S&P 500 overall remains extremely low as it has been for the past year.

In short, equity hedge funds are not participating in the rally.

This should not be surprising. Hedge funds have underperformed the overall market for 15 years. After surging 40% in the lead-up to the Financial crisis, equity hedge funds have sold off repeatedly and produced zero alpha in the last several years.

On June 10th Jeremy Grantham joined the likes of Buffet, Dalio, and Druckenmiller, when he issued a dire warning for U.S. investors. He announced that he cut his stock exposure in the flagship Benchmark-Free Allocation Strategy from 55% in March to just 25% by the end of April. (Another who sold at the lows)

It didn’t take long for him to then decide that his recently reduced equity allocation was still way too much in what he now describes as a “Real McCoy Bubble” in the stock market here in the U.S.

In a Wednesday afternoon interview on CNBC, he issued his latest advice. SELL the U.S., BUY emerging markets, then throw the key away for a few years. Among other “Macro Issues”, he believes the era of 3+% growth in the U.S. is gone for good.

Mr. Grantham is legendary and has made some great market calls. The “March 2020 call” doesn’t appear to be one of them. However, as we have seen, many other gurus are convinced the stock market will be trading much lower than when the March low of 2191 was posted.

Rest assured, an investor can always find plenty of diverse opinions on where the stock market is headed in the near term. There are extremes out there, the stock market is in a bubble, or the S&P 500 is headed for a retest of the lows with a target of about 1,600. In the near term, everyone wants to know whether they should be buying this dip.

Unless one has been extremely nimble, staying overly negative or becoming overly positive this year has been a tough road. Balance and Patience have been the hallmark of the strategy producing the best results since the economy was shutdown. Investors also have a myriad of opinions and they all seem to center around what has been done wrong with COVID-19, the economy, and the actions of the global central bankers. Opinions are what make a market, and they are like noses, everyone has one.

The problem with many of the opinions being tossed around is that they never seem to offer an alternative plan. Gripe and complain, but no sensible, feasible option is ever discussed. Another common issue with many opinions and this one hits home when it comes to the stock market and investing, they never offer actionable advice. Perhaps it is because many have zero conviction after they shout their "opinion". An empty can makes the most noise, and that has been been very evident this year.

The real fascinating opinions are the “There Is More To Come” crowd, meaning more downside pain is just around the corner. That one hasn't worked since late March. However, they still have the great virus debate that keeps surfacing to bolster their case. Just about everyone knew the re-opening would not be a smooth event. These "pockets" of increased infection will need to be dealt with using localized lockdowns, but a national lockdown now is a low probability event. However, that won't slow down the "fear" narrative.

Civil unrest in the last two weeks is causing concerns about flare-ups in the number of COVID-19 cases, along with other unsettling issues regarding the destruction of property that will hamper the reopening. Businesses are in no position to have to rebuild destroyed and burnt-out structures that were left behind.

Despite the setback from COVID, the future isn't as bleak as many are proclaiming. However, "investor expectations,” especially about the successful reopening of the U.S. economy and the eventual development of a vaccine, might be what hampers its near-term performance.

That was exhibited to all of us with the one-day selling tantrum on June 11th. We got through that bout of anxiety with no clear decision and now investors have entered into a ‘show me’ phase of the market, where both economic growth and earnings are going to have to meet, if not exceed estimates. The economy has begun to turn the corner, but there is still a lot of work to do. This will be a time when any disappointments regarding the strength or speed of the recovery will kick off interim periods of downside volatility.

Then there is the upcoming election which will be on our doorstep before you know it. Trump’s re-election odds are falling. President Trump’s poll numbers have plunged. The latest Gallup survey had his approval rating plummeting from a personal high of 49% to 39%, with even Republicans and Independents abandoning him. According to RealClearPolitics, Trump’s average approval rating of all surveys is now down to 42.3%, his lowest level since last November. So the odds of Vice President Joe Biden winning the contentious presidential election in November have risen, along with a potential Democratic sweep, as control of the Senate has presidential coattails.

We will now see if the general market decides if these regurgitated risks are worth worrying about again. If so, we could see selling pick up as fear re-enters the picture. As mentioned at the outset of the article there is little any investor can do about any of these issues. Therefore, I won't be in the crowd that is wringing their hands over every headline.

In reality, all we can do at the moment is watch for signs that will tell us what may be next for the markets. In keeping with the opening quote, here I am and this is where I am sitting. It is a comfortable spot after a 40+% rally with the S&P only 4+% from an all-time high, and its because I steered my horse to this location. I never bought into the;

“The rally has gone too far”.

If you missed it that is true, and you may have been suffering from what was discussed earlier Cognitive Dissonance.

Open your mind up to ALL possibilities. This "market of stocks" is loaded with opportunities.

Please allow me to take a moment and remind all of the readers of an important issue. I provide investment advice to clients and members of my marketplace service. Each week I strive to provide an investment backdrop that helps investors make their own decisions. In these types of forums, readers bring a host of situations and variables to the table when visiting these articles. Therefore it is impossible to pinpoint what may be right for each situation.

In different circumstances, I can determine each client’s situation/requirements and discuss issues with them when needed. That is impossible with readers of these articles. Therefore I will attempt to help form an opinion without crossing the line into specific advice. Please keep that in mind when forming your investment strategy.

Thank you #2.jpg to all of the readers that contribute to this forum to make these articles a better experience for everyone.

Best of Luck to Everyone!

Be well!

Disclosure: I am/we are long EVERY STOCK/ETF IN THE SAVVY PLAYBOOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My portfolios are ALL positioned to take advantage of the bull market with NO hedges in place.

This article contains my views of the equity market, it reflects the strategy and positioning that is comfortable for me.

IT IS NOT A BUY AND HOLD STRATEGY. Of course, it is not suited for everyone, as each individual situation is unique.

Hopefully, it sparks ideas, adds some common sense to the intricate investing process, and makes investors feel calmer, putting them in control.

The opinions rendered here, are just that – opinions – and along with positions can change at any time.

As always I encourage readers to use common sense when it comes to managing any ideas that I decide to share with the community. Nowhere is it implied that any stock should be bought and put away until you die.

Periodic reviews are mandatory to adjust to changes in the macro backdrop that will take place over time. The goal of this article is to help you with your thought process based on the lessons I have learned over the last 35+ years. Although it would be nice, we can't expect to capture each and every short-term move.