U.S. Congress: Focus on Economy NOT Political Obstruction

Economic data released today on the Chicago PMI (Purchasing Manager's Index) shows how much the U.S. economy is urgently in need of fiscal stimulation.

With barely a whimper above the 50 expansion level, the health of its economy is set to drop into contraction territory soon (as it did in 2009 following the depressed signals forecast by similar low numbers produced in 2007/08), unless Congress begins to cooperate and focus on real issues that support its claims of being number one in the world arena when it comes to economic (and military) might, instead of playing economically dangerous political games in unnecessarily obstructing the advancement of the new Trump administration, cabinet confirmations, and economic and security agendas.

In other words, Congress is attempting to discredit their own claims of world importance by playing silly games -- at the expense of its citizens who elected them to serve them and their interests and safety (what would you do if someone you hired to work for you refused to show up for work?) -- and end up looking transparently foolish, lazy, self-serving, and lacking creative win-win conflict resolution abilities in the process.

Source: Forex Factory

Source: Forex Factory

As a reminder (and as an adjunct to what I've mentioned above regarding Congressional shenanigans), the United States has yet to regain its Standard & Poor's AAA credit rating, which was downgraded to AA+ on August 5, 2011, in spite of gains made in the stock market since then. That was the first time ever that the government was downgraded below AAA.

We'll see if that's ever upgraded in the future and how hard Congress would work toward that end.

* UPDATE Feb. 7th: However, from the look of today's tweet and re-tweet below, it appears that, right from the outset of this new administration's four-year cycle, Democrats aren't interested in such a cooperative effort. It doesn't take a genius to conclude that the economy and security of the U.S. (and its citizens) will suffer, as a result.

Source: Wikipedia

Source: Wikipedia

SPX: Moving Averages May Hold Key To Short-Term Moves

The voluminous amount of executive orders, press releases and discussions with foreign leaders that has taken place in the White House since January 20th, as well as the extensive media coverage that has been generated, seem to hint that this pace may continue over the next four years.

Because of this, it may be warranted to scrutinize the price actions of the S&P 500 Index, for example, around its 5, 10 and 20-day moving averages, in order to get a sense of the degree to which day-to-day and end-of-month market sentiment may be influenced by political (and Federal Reserve) actions (on a shorter-term basis).

As at mid-day today, the SPX has declined and is currently retesting its 20-day moving average, after breaking out last week above its high-basing pattern from early December last year. The RSI is hinting of future strength, while the MACD and PMO indicators have yet to confirm that (watch for bullish crossovers of these two for such confirmation).

Today's pullback may also be in anticipation of the upcoming Fed rate announcement this Wednesday, as well as normal month-end profit-taking.

A drop and hold below, firstly, the 20-day moving average and then major support at 2250, together with bearish crossovers of all three moving averages and the MACD and PMO indicators, as well as a drop and hold below 50 on the RSI could signal further weakness ahead in the SPX.

Otherwise, price stability around 2250, along with the continuation of a fairly smooth uptrending 20-day moving average, should see prices move higher in the short-to-medium term.

SPX Daily

Charts vs Pundits & Dow 30 Index At 20,000

Despite some TV and media pundit and investor rhetoric about the imminent implosion of the U.S. markets under President Trump's economic agenda (in the months leading up to the November 8, 2016 Presidential election and, still, to date), we continue to see new market all-time highs being made, along with stabilization and advancement of world markets, in general, since the election.

The following charts illustrate that point. For example, the Dow 30 Index finally broke and closed above 20,000 today, while the S&P 500 Index remains on track to, potentially, achieve the 2400 level by the end of 2017 (as described in my post of December 1, 2016), and closed at an all-time high of 2298.37 today.

Dow 30 Index Daily

S&P 500 Index Monthly

As well, the SPX:VIX ratio also closed at an all-time high today, with the Momentum indicator confirming longer and short-term bullish sentiment in the SPX, as shown on the Monthly and Weekly timeframes (which I mentioned as something to monitor in my post of December 31, 2016).

SPX:VIX Ratio Monthly

SPX:VIX Ratio Weekly

The Nasdaq Composite Index and the Nasdaq 100 Index both closed at all-time highs today.

Nasdaq Composite Index Daily

Nasdaq 100 Index Daily

Even the World Market Index, after its latest and current rally produced another moving average Golden Cross formation in mid-January of this year, shows that foreign markets are also under such bullish influence.

World Market Index Daily

So, while a healthy divergence of pundit/investor viewpoints will, no doubt, continue, it may be wise to consider what the charts are portraying, as part of your "due diligence" trading/investing process. At the moment, momentum is favouring the bulls and will do so, until these charts prove otherwise.

U.S. National Debt: Will An Autopsy Be Done?

Then (January 19, 2008)...which was the beginning of the financial crisis, culminating in a catastrophic drop of the S&P 500 Index, along with other U.S. and foreign stock markets, to the lows of March 2009 (which was stemmed by U.S. government bailouts of the financial system)...

S&P 500 Index Monthly

Now (January 19, 2017)...

The question is...did the cost of the government bailout (including all attendant Federal Reserve monetary measures...and government fiscal policies/programs enacted, if any) produce the kind of economic results/benefits, to date, that it intended? In other words, did the U.S. get its due "bang for the buck?" 

It seems to me that it would be prudent for the new Trump administration to include such an analysis/autopsy so as to incorporate the conclusions and considerations when preparing forecasts as part of shaping new domestic and foreign economic policies and programs for the next four years. In other words, will the U.S. get its due "bang for the buck" by January 2021? How will elected Senate and Congressional officials be held accountable for those results and what kind of transparency will they allow with regard to those questions? And, what will the U.S. National Debt look like then?

Lots of questions, as we approach the U.S. Presidential Inauguration at noon tomorrow... 

The "Arts"

Actress, Ms. Meryl Streep, attacked football and mixed martial arts at the 2017 Golden Globes as not being an "art." Will she include fencing next...or what about learning how to walk on artificial legs for the first time, or learning to use one's damaged brain after a stroke? All of these, and much more, are, indeed, an "art."

She and others need to stop attacking and start providing solutions and support to those less fortunate, in need, struggling, and alone in their quest to make a better life so, hopefully, they can, in turn, become self-sufficient and maybe also help others in the future. And, perhaps, a mixed martial artist also needs help to get started or continue in his/her craft in order to make a living.

No one should be judged or demeaned for trying to look after him/herself...maybe he/she will grow up to be President one day, as well. So, please don't shatter their dreams by degrading their efforts...you may be pleasantly surprised by what you discover about yourself and others along the way.

Happy New Year 2017!

I'd like to say, "Thank you!" and to wish all of my readers, the hosts of all the websites who publish my articles, and those who generously provide a link from their trading Blog to mine, a very Happy New Year 2017!

2017: Canada Begins Its 150th Year!

Canada's 2016 New Year's Eve fireworks in Ottawa and across the country kicked off a year of celebrations to mark its 150th birthday in 2017 (its official birthday is July 1st).

Source: Wikipedia...