By Gary Kaltbaum
May 1, 2016
In the 50 years ended 2010, a $10,000 investment in the S&P 500, including dividends reinvested, did a little more than a double to $22,659 from the May 1st period through October 31st. That same $10,000 when invested from November 1st through April 30th, turned into $438,967. Since, except for the QE3-induced 2013, the same story continued. The other part of the equation is that very often, swoons occurred starting in the May/June period…so pay attention.
We have no idea why this over-the-top, seasonal bias occurs. We just know it has had a great record. And oh yeah, we are now entering May with the market acting a little iffy here. Speaking of the iffy market:
After calling for a low on February 11-12, we think there is a darn good chance that last week’s action marks the high for now. We are seeing a lot of tops in place…simple as that. As far as sectors:
Biotechs never really got going and are now rolling over badly with a bunch of names near lows.
Retail never really got going and are also rolling over badly with many names near lows.
Restaurants gross. Disk drives yonked. Airlines heading south. Hospitals and HMOs not happening. Housing breaking down. Gaming topping. Cruise lines never got going. Defensive areas like consumer staples, utilities and real estate put in little tops.
There has been more than a share of blow-ups including big growth names in Apple, Netflix, Google and others.
And the SEMICONDUCTORS. This vital group failed to break above resistance, sold off hard on Thursday and broke badly on Friday. Readers of this report know how important this group is. It had better be watched.
Time to watch some levels:
Dow 17,400…S&P 2033…NASDAQ 4740. The NASDAQ is definitely acting worst this second as a few big names hurting it badly. A break below…no good! We will leave it at that.
We continue to favor all the areas that were leading the market down until February…and that is just about everything commodity, materials and industrials…but except for gold, we think most of these areas are starting to pull in also. Gold (the metal) broke out late in the week while gold stocks have simply been en fuego. Silver has also gone for the ride!
We expect central banks to continue to interfere on a daily basis. They simply do not shut up. And of course, it is all about what they are going to do next. Markets drop…just ramp things up. Japan, which has been more maniacal than most throughout the years, decides for one second not to add to their ridiculous amounts of easing…and their market dumps badly. It’s getting that bad.
In an interview with the German newspaper Bild released on Thursday, ECB head Mario Draghi admitted that the ECB was “well aware of the situation for savers” and pointed out that it was not only Germany that faced low rates. He explained that raising rates now would damage the economy and unleash deflation, unemployment and recession.
“The interest on savings comes from growth, so it is in the interests of savers that inflation stabilizes and growth becomes more robust,” he said. “Besides, many people benefit from low interest rates as they are also homebuyers, taxpayers, entrepreneurs and workers whose companies are benefiting,” Draghi pointed out. As far as affecting retirement funds, Draghi responded that it was important to consider earnings on savings in real terms, defined as interest minus inflation. He added that there were alternatives to savings for all citizens and pointed to the United States who had to face seven years of zero interest rates. “They don’t just have to keep the money in savings accounts but can invest in other ways,” Draghi suggested.
Ladies and gentlemen, we are stunned by this man’s words. This is the words of a man that does not have the foggiest idea of what he is doing. Imagine telling savers who in a normal world, should be able to put their money into riskless income investments. The only reason they can’t is because the decisions of a select few who have distorted the world of money. This man has the nerve to tell those same people to just take their money and put it into the also rigged and manipulated stock markets…those same stock markets that will eventually dislocate because of the same people that are rigging and manipulating them. In this interview, this man even admits that if they now stopped, all hell would break loose.