Market Light Weekly Update November 28th, 2017: Up Yet Again

John Dupriest Market Light

At midday, the Dow Jones Industrials are up another 150 points. It is almost mystical … that there is no slowing (thus far) of the irrepressible bull market. The enthusiasm hinges on the ongoing expectation of a substantial tax redo. But behind the curtain, it seems more likely that the enthusiasm is for Washington to be gaining some cohesion on the big-tag items including tax reform and health care. Of course, there are no panaceas. Those problems are huge and not going away soon. The budget proposal currently being welcomed with open arms will add more than a trillion dollars ($1,000,000,000,000.00) to the budget deficit over the coming decade. But, hey, movement in any direction at this point may be preferred over stalemate. One of the interesting items proposed for the tax bill is a trigger “ that would raise taxes if the bill’s tax cuts fail to produce enough economic growth to avoid increasing federal deficits.”(Bloomberg News). Sounds like the trigger could end up with Congress shooting themselves in the foot.

 

And then there is Bitcoin. The cryptocurrency has gained more than 900% year-to-date. It has jumped 45% in just the last two weeks. A “cryptocurrency,” incidentally, is a way of settling transactions independent of any government specie. Bitcoin is not the kind of token you drop into a wash-a-mat machine. It doesn’t exist in the world of reality as we know reality. It is a system of multiple, independent computers keeping track of recorded values that can be exchanged without a middleman (i.e., the Federal Reserve processing and clearing checks). In an increasingly complex, globalized, skeptical world cryptocurrency transactions can occur without processing costs or revealing detail of the who/what/where/when/why of a transaction. Still, it is a much-to-be proved concept. Like a dollar bill, it works because everyone agrees that it works. What if all of a sudden someone says, “the computer ate my Bitcoin,” putting all other Bitcoin strongboxes and transactions into question. Perhaps it could be “the biggest bubble of our lifetimes” as cautioned by a large hedge fund manager, Mike Novogratz. Beware, be aware.

 

The Market Light remains Green.

 

Top relative strength ETFs this week: Home Construction (ITB), Rare Earth Metals (REMX), Semiconductors (SOXX), Internet (FDN), and Technology FXL.

 

ON the weak end were: Natural Gas Futures (UNG), Canadian Energy (ENY), Mexico (EWW), Biotechnology (IBB), and Oil & Gas Services (XES).

 

Technical Tea Leaves are silent on the matter: “No rules have fired.  This indicates that the prior signal and the current market will continue in this direction until the next signal is issued”.