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The Trend

The DOW 30

The SPREAD

2017 vs 2016

The Current Market

Market Comment



Monday - August 7, 2017


The Current Market

Closing prices week ending 8/4/17 vs week ending 7/28/17

Index plus or minus on the year


None of the indices finished the week in negative territory for the year


 
There were 5 new 52 week index highs this past week vs 9 the week before

The indices finished the week mixed  to higher with the DOW 30 turning in the best performance by closing up 1.20% followed by the Utilities, up 1.08%. None of the other indices were able to close over 1%. Not very deep in the bullish camp and with the RUT falling -1.19% we end up with more of a bearish ending.

Are the markets getting tired? I doubt it, but other factors such as North Korea could cause investor fear to heat up and this alone would bring the markets down, and once the ball is rolling it will be hard to stop it.

This is not a market to be buying in. That market was about a year to 18 months ago. This market is one for caution and the one thing we do not want to be is in the camp that waits too loooong to move out.

Yes, Consumer confidence is the driver and is still in control, but this could change if  people feel there will not be a new tax structure, or no fix for the Obama don't care, or a war with NOKO, although a war will not be as bad as the Republicans doing nothing for much longer.

This is a hard market to figure since the new highs on the DOW 30 are because of Apple & Boeing, while the other 28 do little. Yes, many stocks in the DOW 30 have reached new highs but that was several weeks back. Only a handful have reached a new high recently and they are the same ones over and over. Not good for the bull.

I hate to sound to gloom & doom but it is very hard to find a stock worth picking up in this market. Even the ones climbing are doing so a little bit at a time and this increases the risk/reward factor. Not enough reward for the risk.

The best bet is still to enter the markets with a bargain or a small stock. Either one will limit the downside, assuming we have done are homework and picked a strong bargain or small stock.

Big money can be made on small start up companies, but since most are scams we have to be very careful. Look for small companies trading over a quarter ($0.25) with fewer shares outstanding and decent volume. These 3 items would be a good start.

I am currently recommending Powin Energy, last trade $2.50, off from $2.25 last week, as a place to be. This is a stock with basically no sellers meaning its the one we want to own. Click here to read my recommendation on Powin Energy.

AMD’s new GPUs are going head to head with rival Nvidia Corporation’s (NASDAQ:NVDA) and winning in price and performance. Meanwhile, AMD is stealing market share from semiconductor giant Intel Corporation (NASDAQ:INTC) on multiple fronts, with Epyc outperforming Intel Broadwell server chips and Ryzen is grabbing market share from Intel’s Core PC lineup.

We want to buy AMD on pullbacks but a big correction will bring the stock down quickly. Still, the longer term is looking good.

Looking at precious metals, after watching gold having trouble climbing, with a total move of -$33.40 in June, due mostly to a stronger dollar and the recent increasing of interest rates, the bombing in Syria and a possibility of going to war with North Korea, we might want to watch the metals a bit closer. One thing about the metals would be they have been trading near the low end of the trading range and haven't been able to get over $1300 since September of 2016.

Gold closed out the week at $1,264.30 off -$4.70 on the week and off -$4.70 for August. The $1250 level for gold is a strong support/resistance level and closing over that level could mean higher ground ahead. Gold traded back over the $1200 level for 27 weeks after staying under it for 1 week. Gold was off -$123.60 for 2015 and up +$91.50 for 2016.

Oil closed out the week at $49.52, off -$0.27 and off -$4.70 for August. Oil was up +$91.50 in July. Oil started climbing recently because of the decision by Russia and Saudi Arabia to curtailed production and had closed over $50 for 14 weeks, but recent news tells us the stockpiles are quite large, which in turn will make it hard for OPEC to have much control over pricing.

Avoid oil companies as supply is great, oil stocks are overpriced and there are few signs that higher oil should stay with us that long. Oil has a support level at $35 and I believe there is a strong possibility we will see it.

The bottom line is, backed into a corner, once the markets do decide to correct there will be no way of knowing how far down. A much bigger downward move than 10% to 20% will be needed. 

Markets  do not go up forever and my SPREAD has been telling us the big OTC stocks have gotten so far ahead of the listed stocks the correction will have to be a decent one.

Fear of losing profits will be the driving force behind the coming correction and this fear will not going away soon. I have been telling all to take profits and not because I feel the markets are going to crash tomorrow, but because I believe the markets are going nowhere over the near term, making the risk of holding profits much bigger. Remember, we have to have a reason to hold a stock as well as a reason to buy one.

The table below shows how far the indices have moved
from the 52 week low
.

52 week indices low

The table above shows 0 indices with less than 10% away from the 52 week low compared to 0 the previous week.   



The below table shows how far each index is
  off from the 52 week high vs the week before


Discount to the 52 week high on the major indices


There were 5 indices that reached a new 52 week high this past week vs 9 the week before
. There is currently 0 indices in correction territory compared to 0 the week before.

Since the SPREAD  is a leading index that has recently been reaching new all-time highs, and should be cause for concern. It's always bullish to see a new 52-week/all-time high, but what it really is telling us is the markets are very overvalued.When the VL falls faster in this index, it is a giant cautious sign for the near term markets as it is a sign of an overbought market that is ready to turn down. Please keep in mind the SPREAD is a broad market and teaches us much.

Looking Forward

The
indices finished the week mostly higher but the bad news on the week was the Russell 2000 & SPREAD lost over 1% on the week. This is a negative because both lean heavily toward the OTC market and it is my belief that the markets cannot rally without the big OTC stocks. On the other hand, the Dow 30 continue to set new highs but it's doing so I'm just a small basket of stock and again this is more bearish than bullish. Now if we add going to war with North Korea the markets are starting to look more like a correction is in the works. I do know the markets are oversold and I do know that it's impossible to predict a correction but I feel like we should take a safer stance and possibly lighten up on profitable positions. We may even want to wait to buy the bargain but this is an ideal time to look at the small stock because they tend to move on their own no matter what the world economy does. Find one with a good story and not not too many shares buy it. If we want to get into this market we have to look for bargains in the small caps and special situations in the low-priced arena.

LOOK FOR  
- VALUE - PRODUCT - OPPORTUNITY!
- Remember -
It is not what is "going" to happen that moves the markets,
but what investors "
believe" is going to happen!
 

 
This is the kind of market where the smaller companies and the newer companies may be the better place to be. Small stocks tend to move on their own and not so much with current events. A choice small stock is a great place to be in such confusing markets. If the move is a good one, the smaller stock will climb at a greater percentage, allowing a stronger return on fewer dollars.

The
concept does work, but the problem is finding the best and the correct stock to move into. Look for a stock with a great story, because with small stocks the story is what makes the difference.

Continue to look for stocks near the lower end of the trading range with strong daily volume, and growing revenue, for the best bargains. Avoid stocks that seldom have news and have stayed down too long.
 
Two Very Important Rules To Follow
"BUY LOW"
"HAVE PATIENCE"

 
Be sure to visit "The Past Week" for a look at additional
information, stats and tables covering last week's markets.

Clicking on "
Market Comment" will take you there!

Be sure to visit
"Monthly Gains & Losses" for a look at the
past "monthly" performance on the indices going back to 1994.

Clicking on the "Index Gains & Losses" will take you there!

Be sure to visit our
"Spotlight Futures" for a look at
metals, oil and currency futures updated weekly.
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Spotlight Futures" will take you there!

Be sure to visit our weekly
"Stocks to Watch" section
for brief of updated opinions on several
Spotlight favorite's from the past.
Clicking on the "
Stocks To Watch" will take you there!
 


"If in the right stock, at the right price,
the market direction will mean little!"

 
There are still many negatives with the economy, and the markets, so continue to use caution and stick with value stocks for safety. Choose wisely!

I'm J.R. Budke and this is my opinion!
 

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The recommendations and updates in this week ahead may include "forward- looking" statements as that term is defined in the Private Security Reform Act of 1995, & therefore are subject to various risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, and local & foreign factors will not differ materially from those suggested in the "forward-looking" statements as a result of various factors, including market conditions, competition, advances in technology, acquisitions, potential litigation, personnel changes, capital availability, and all sorts of other factors. Do not make investments based on the material provided in this article. Investors should not make decisions based on any of the material featured here without first consulting with their brokers and/or financial advisors.

J.R. Budke was a stock broker from 1981 to 2000, an options principle since 1982 and a branch office manager since 1987. JR became inactive as a stockbroker on 12/31/99. J.R. writes most of the articles and opinions for the Stocks in the Spotlight. The stories and stocks found on this site, or any "Stocks in the Spotlight" written material, are the opinions of J.R. Budke, unless other wise stated, and should not be considered as advice. You should not purchase any stocks solely on the opinions found on the "Stocks in the Spotlight's" web site or in any of its written material. You should also be aware that options are not for everybody and carry a high degree of risk.

The "Stocks in the Spotlight" provides information only, this is not meant to be a recommendation to buy or sell the profiled security, nor is this an offer to buy or sell the security.
The publishers of "Stocks in the Spotlight" are not investment advisors and are not acting in any way to influence the purchase or sale of the security. Before purchasing or selling any security profiled, it is encouraged and recommended that you consult a stockbroker or your registered financial advisor. The reader must understand that the companies we select may involve a high degree of investment risk. Potential investors must understand that they may lose all or a portion of their investment due to the risk involved. Some of the stocks covered on this page may be sponsors to the Stocks in the Spotlight and may have contributed money, or stock, for advertising programs. Some of the companies mentioned may be companies we consult with and have paid an ongoing consulting fee, in cash or stock.You should be aware that the Stocks in the Spotlight could make money on some of these sponsor, or consulting companies, if the stock climbs in price.



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