U.S. Midterm Elections and The Great Silent Majority

Who is the great silent majority and how will they vote on Tuesday, November 6th?

Some have called this year's midterm elections the most important U.S. election in the history of our Republic. You can include me in that group!

Let's talk about the American voter immediately ahead of Tuesday's elections. Extraordinary recent research by RealClearPolitics.com may offer meaningful clues to accurately forecasting this critical U.S. national election. After surveying 2,463 registered voters, Real Clear Politics concluded that there are five separate "tribes" in America right now as follows:

1. The Resistance (rabid anti-Trump Democrats)       26%

2. Independent Blues (lean Democrat)                        24%

3. Detached (indifferent, least likely to vote)              24%

4. Mainline GOP (lean Republican)                            14%

5. MAGA (rabid Trumpsters)                                      12%

From this analysis, what's immediately obvious to me is that the Democrats outnumber the Republicans by almost 2 to 1 !! Could this be right? Is there ANY other research which may support this conclusion?

YES, THERE IS!

As incredible as it sounds, there was only one major polling organization that actually got it right in 2016 when it predicted Trump would win the Presidential Election against Hillary Clinton. That organization is still active in this election cycle and it just published what may be THE MOST controversial survey of any reputable pollster as it relates to the generic ballot.

The latest poll of 3,922 adults by the USC Dornsife/LA Times, conducted Oct. 21-27, found that 57 percent of likely voters said they plan to cast their ballots for Democrats in the Nov. 6 midterm elections, compared with only 40 percent who plan to vote for Republican candidates. THIS IS AN INCREDIBLE 17% SPREAD IN FAVOR OF THE DEMOCRATS !! IS THE GREAT SILENT MAJORITY ABOUT TO SPEAK? For perspective, most mainstream polling organizations are indicating that the Democrats may hold "just" an 8% advantage in the generic ballot.

Quite frankly, I can't believe main street media isn't talking about this. And Wall Street pundits have clearly missed this news and the monumental implications it has on financial asset prices over the near term AND longer term investment horizons!

BOTTOM LINE: The above research points to ONE obvious conclusion: The Democrats will win EVERY race that is now considered a "toss-up" by mainstream pollsters, as last minute deciders break in favor of the Dems. This translates into a pickup of at least +44 seats in the House of Representatives and +2 seats in the Senate. YES, if the above research is correct, as I am inclined to believe, the Republican Party will lose its majority in BOTH Houses of Congress!!

Armed with the above research, in all the key Senate races, the easy "toss-up" races to forecast now are the following:

Nevada             Dems Win!

Indiana              Dems Win!

Arizona             Dems Win!

Florida              Dems Win!

Missouri            Dems Win!

In "Red" states Utah and West Virginia, Democrats will win easily!

In my view New Jersey was NEVER in doubt!  Dems Win!

So that leaves the really tough races in North Dakota, Tennessee, and TEXAS.

Yes, TEXAS is in "caps" for a reason!  While I don't think Heidi Heitkamp (D) can overcome her 8-point deficit in North Dakota (GOP will probably win that seat), and in Tennessee former Democratic Governor Bredesen has a decent shot at winning Bob Corker's Republican-controlled seat (but he may lose to Congresswoman Blackburn in a close final vote), the most important Senate race in the country right now is in Texas.

I think the outcome here is obvious, but I am clearly in the minority. I strongly believe that Beto O'Rourke (Democrat) will upset (and unseat) Senator Ted Cruz (Republican) to become the next Junior Senator from the Great State of Texas!

If Beto wins, then by my count, that means the Dems will control 51 seats in the Senate against 49 for the GOP when the new term begins in January 2019! This assumes that Independent Senator Sanders from Vermont and Independent Senator Angus from Maine will caucus with the Democrats. 

Nate Silver and his extraordinary team of pollsters (and statisticians) at FiveThirtyEight.com are indicating ONLY a 16% chance that the Democratic Party will win majority control of the Senate this coming Tuesday, November 6th. In my view, Mr. Silver and his team have grossly "under-weighted" and under-appreciated the key research quoted in this column. Momentum and turnout potential are variables that are clearly favoring the Democrats right now, and majority control of the Senate is NOT out of reach for the Democratic Party. Early voting is already up by more than 50% from 2014 (the last midterm election). And more importantly, early voting among voters under the age of 30 has more than tripled over the pace of 2014! It's not a stretch to speculate that these young voters are favoring the Democrats in this election cycle!

Now that we have accurately forecast Tuesday's election, what does all this mean for U.S. stocks, U.S. bonds, the U.S. Dollar, and Gold prices immediately ahead for investors. (And please read my previous column for what this election may mean for President Trump if majority control of both the House and the Senate flips to the Democrats!)

Even with perfect vision of Tuesday's upcoming election, winners and losers on Wall Street are not obvious. I remember when Bill Clinton won the presidency in both 1992 and 1996. Most traders and investors thought the U.S. stock market would crash. Of course, just the opposite happened! We had the best 8 years in stock market history! Who would have guessed!

Seeing as I am probably the only one in America who thinks the Dems will win majority control in the Senate this coming Tuesday, November 6th, here is my best assessment of winners and losers on November 7th and beyond:

1. U.S. stocks will lose at least 20% after the November election over the next 6 months

2. U.S. bond prices may drop initially after the Dems dominate on Tuesday, but then "flight to quality" forces will begin to prevail which will support Treasury securities prices (but not corporate bond prices) over the intermediate term

3. The U.S. Dollar will fall as a direct result of uncertainty in U.S. politics and a subtle change in monetary policy by the Federal Reserve (rate hike threats from the Fed will halt, and the financial markets will begin to see a possible easing in monetary policy as the U.S. economy slips into Recession in Q-1 2019)

4. Gold, Silver, and precious metals stocks will soar!

Here is the monthly chart for the S&P 100 Index, formerly know as the OEX Index. As you can see, a rare sell signal was triggered by my computer trading algorithm at the end of October 2018.

S&P 100 Index Monthly Chart with Computer-generated Buy & Sell Signals

Daily & Weekly Chart Sell Signals in the Nasdaq Composite and Russell 2000 Growth Indexes !!

Several major U.S. stock indexes posted record all-time highs last week before retreating sharply on Friday, July 27th.

Daily and Weekly Chart sell signals were triggered by my computer trading algorithm in the following indices (charts shown below):

Nasdaq Composite Index  (Daily and Weekly Charts)

Nasdaq 100 Index (NDX) (Weekly Chart)

Nasdaq 100 Index ETF (QQQ) (Weekly Chart)

Russell 2000 Growth ETF (IWO) (Daily and Weekly Charts)

Daily and Weekly Chart sell signals were triggered last week in the following key FAANG stocks:

FaceBook (FB)  (Weekly Chart)

Apple (AAPL) (Weekly Chart)

Google (GOOG) (Daily Chart)

NetFlix (NFLX -16%) and Tesla (TSLA -21%) are now down sharply from their mid-June highs, and Intel (INTC) is now down about 17% from its early June high.

Outstanding leadership from the technology sector has been the single most important positive contribution to investment returns in the overall market this year so far. As this leadership clearly begins to fade, will the broader market suffer a major correction or will positive rotation into other sectors keep any potential selloffs minor? Of course, the answer to this question will dictate the direction for U.S. stock prices over the rest of this year and beyond.

Is it too early to begin thinking about the possibility that the Executive Branch of the U.S. Government may soon be led by Vice President Mike Pence? Last week's news that President Trump's long-time attorney Michael Cohen appears willing to testify against Mr. Trump on critical legal issues may soon turn the tide of public opinion in favor of possible impeachment. While Cohen's apparent "flip" against Mr. Trump is important, what's more significant and interesting to me is the subpoena of Allen Weisselberg, the Trump Organization's chief financial officer, to testify before the grand jury empaneled in the Michael Cohen investigation by the Southern District of New York, as first reported last week by the Wall Street Journal. Mr. Weisselberg clearly knows most, if not all, of the financial dealings of the Trump Organization over the last 40 years at least!

If the Democratic Party wins back both Houses of Congress in the upcoming November elections,  impeachment proceedings are likely to begin in January 2019. The Special Prosecutor's report (from Robert Mueller's Office) to Congress on Russia's intervention into the 2016 U.S. elections is likely to be extremely damning for President Trump. Potential charges include conspiracy with a foreign power to influence our elections (felony), multiple campaign finance violations (felony), money laundering (felony), tax fraud (felony), abuse of power (impeachable offense), and obstruction of justice (felony). If the Democratic Party wins both the House and the Senate in the upcoming November elections, the heat on President Trump may become too much! His presidential power will be greatly diminished and potential criminal probes against him may become overwhelming!! In my view, Mr. Trump will only have one move left to save himself and his family from impeachment and possible criminal prosecution. Between November 6th, 2018 when the Dems win both Houses of Congress, and January 15th, 2019 when the Dems take control of both Houses of Congress, I believe that there is a strong probability that Mr. Trump will resign from office with a full pardon from President Pence. I don't think it's too early to begin thinking about the ramifications of a Pence Presidency on the U.S. and global financial markets.

Bottom line: Between now and November 6th, 2018, I strongly believe that the U.S. stock market will correct at least 20% from last week's intra-day highs in every major index. Besides the toxic political atmosphere, working against higher stock prices is the current U.S. monetary policy which can only be described as tight and getting tighter! Several more interest rate hikes are projected by and from the Federal Reserve, and the steady, ongoing reductions in its balance sheet are clearly starting to impact the financial markets and consumer behavior. Higher domestic interest rates are already negatively impacting the auto and housing markets, and the U.S. consumer is reeling under too much personal debt and sharply higher energy costs. Cash will be king for investors for at least the next several quarters!

Apple Weekly Chart

FaceBook Weekly Chart

Google Daily Chart

Nasdaq Composite Daily Chart

Nasdaq Composite Weekly Chart

Nasdaq-100 ETF (QQQ) Weekly Chart

 

Russell 2000 Growth ETF (IWO) Weekly Chart

Sell Signals In The Mighty Amazon

Daily and weekly chart sell signals have been triggered in Amazon shares by my computer system over the last two weeks.

Amazon's relentless strength this year so far has contributed greatly to the fact that the overall broader U.S. stock market has not demonstrated any significant weakness except in early February.

Amazon shares surged 23.9% in the 2nd quarter and are now up 45.4% year-to-date! This compares to a +2.9% gain in the S&P 500 Index in the 2nd quarter and a +1.7% gain for the S&P 500 Index year-to-date.

Amazon has a current market valuation of $806 billion and trades at 268 times trailing twelve month (TTM) actual earnings and 84 times estimated forward 12-month earnings.

Amazon is one of the five so-called FAANG technology stocks that have posted exceptional investment returns for investors over the last several years. While all the FAANG stocks are amazing companies, some would argue that they are now over-owned and ready for a potential correction. And if the FAANG stocks "catch a cold" and fall back a bit, perhaps the broader market "catches pneumonia" without this key leadership group!

Bottom line: A significant correction in the U.S. stock market is now underway. Investors can expect at least a 20% decline from recent highs posted over the last three weeks. The Nasdaq Composite Index and the Russell 2000 Index both posted all-time record highs on June 20th, 2018. My feeling is that both these indexes will sustain losses greater than the S&P 500 Index over the next several quarters!

Amazon Daily Chart with Computer-generated Buy & Sell Signals

Amazon Weekly Chart with Computer-generated Buy & Sell Signals

Is Intel Corp (INTC) Telegraphing The Next Big Move In U.S. Stocks?

Most major U.S. stock market averages did well last week, and several actually posted record highs (Nasdaq Composite Index & Russell 2000 Index).

The FAANG Composite Index by my calculation was up 1.17% last week as the Nasdaq Composite Index rose 1.20%. 

So why was Intel down 3.5% on the week after posting a 17-year high on Monday, June 4th at $57.59/share? At its intra-day high last Monday, Intel was up 73% over the last 11 months since posting an intra-day low at $33.22/share in mid-July 2017.

A weekly chart sell signal was triggered by my computer trading system at Friday's close (June 8th) for Intel's stock!

Later this year, when most major stock market averages are down 20% or more, we will look back at last week's all-time high in the Nasdaq Composite Index as a major trap for uninformed bullish investors who were over-committed to U.S equities and dangerously over-weighted in technology stocks!

Intel will then be seen as the "straw that broke the camel's back" and THE warning sign that U.S. stock prices are now vulnerable to a major correction!

FAANG Composite Index Weekly Chart

Intel Corp Weekly Chart

Nasdaq Composite Index Weekly Chart

New York Composite Index - Weekly Chart Sell Signal Has Been Triggered!

A weekly chart sell signal has been officially triggered by my computer trading system in the New York Composite Index at Friday's close, May 25th. This follows a daily chart sell signal that was triggered on Tuesday, May 22nd.

NY Composite Index Weekly Chart

New York Composite Index Daily Chart

Weekly chart sell signals were also triggered in almost every energy-related sector index and energy-related ETF at Friday's close.

AMEX Oil Index Weekly Chart

Daily Chart Sell Signals - Key Downside Reversal Day!

Just a quick note this evening...

It is my strong view that today represented a key downside reversal day in the U.S. stock market. Daily Chart Sell Signals were triggered by my computer trading system in the following major U.S. stock indices:

NY Composite Index

S&P 500 Index

S&P 100 Index

Russell 2000 Index

Dow Jones Transportation Index

And Daily Chart Sell Signals were triggered in the following sector ETF's:

IWM, IWN, IYT, DVY, OIH, RTH, XLE, XTN

And a Daily Chart Sell Signal was triggered in my own FAANG Composite Index.

Bottom line: A major decline in the U.S. stock market probably began today! Traders and Investors can probably expect the closely watched 200-day moving average line in most major benchmark indexes to be convincingly broken on the downside over the very near term as a correction of at least 20% unfolds over the next several months!

NY Composite Index with 200-day Moving Average Line

Russell 2000 Index with 200-Day Moving Average Line

S&P 500 Index with 200-Day Moving Average Line

Dow Jones Transportation Average with 200-Day Moving Average Line

Nasdaq Composite - Head & Shoulders Top Formation?

Old-school technical analysts might view the current Nasdaq Composite chart as a possible head & shoulders top formation. I am leaning in that direction.

Nasdaq Composite Index with 200-day Moving Average Line

I actually read a quote from one notable Wall Street analyst this past week who said that a major stock correction is unlikely to unfold with the Russell 2000 Small-cap Index posting record all-time highs as it is now.

However, what if the record high in the Russell 2000 Index is a red herring? What if the weaker current patterns in the New York Composite Index and the S&P 500 Index are really warning signs of meaningful weakness ahead? And what if the Nasdaq Composite Index is now actually completing the right shoulder in a perfect head & shoulders bearish formation?

The widely publicized gradual tightening in U.S. monetary policy from the Federal Reserve has been generally ignored by stock investors who appear to be more focused on solid corporate earnings and record corporate share buybacks. The obvious question is when (if ever) will the Fed's tighter monetary actions have an impact on stock prices? If the S&P 500 year-over-year earnings growth in 2018 is +21.5% and in 2019 the growth is +10.0%, as is now the consensus on Wall Street, then a major correction in U.S. stock market averages is unlikely. However, are these bullish estimates realistic? Not likely !!

I couldn't help but notice this interesting chart from an article on the ZeroHedge.com website. The Credit-card charge-off rate at smaller U.S. banks, of which there are about 4,800 in this category, was 8.0% in the 1st quarter of 2018 !! Looks to me like the U.S. Consumer is tapped out!

Mortgage origination and refinancing are down sharply given the steady rise of mortgage interest rates over the last several quarters. Sub-prime auto loans are a disaster now! And sharply higher gasoline prices are seriously cutting into discretionary income and more than offsetting the trivial Trump tax cuts for anyone making less than $75,000 per year.

Bottom Line: Another 10% slide in the average U.S. stock price, just like one experienced earlier this year, looks imminent to me! And if the average investor begins to realize that the "Powell Put" won't kick in until at least -20%, then downside price action could easily accelerate into a mini-crash!

Short Squeeze or New Up Leg in an Ongoing Bull Market?

Since the recent reaction lows of April 2nd, most major U.S. stock market indexes have posted solid gains. If we include today's intra-day highs, the S&P 500 notched a 6.41% gain while the Nasdaq Composite and the Russell 2000 saw advances of 7.23% and 7.36%, respectively over the last 13 trading days. Through any lens, these are spectacular investment returns considering the short period involved!

So what's the answer? Have we just witnessed a massive short squeeze within a NEW bear market (which began in late January 2018)? OR, should we categorize the dramatic declines in February and March as just natural "corrections" in an ongoing powerful bull market?

In the interest of full disclosure, I began shorting the U.S. stock market in the last hour of NY dealings today. Despite the fact that "after hours" U.S. stock market futures are higher this evening (Wednesday, April 18), I strongly believe that bearish forces will soon re-emerge that will quickly dominate the financial landscape (taking the obvious negative toll on investor capital).

For me, the bearish case is front and center as showcased in the banking sector. The under-performing Bank Stock Sector Index (symbol BKX) is weak and getting weaker despite supposedly bullish higher U.S. interest rates (and relatively strong recent earnings):

Bank Stock Index (BKX) Daily Chart with 200-day Moving Average Line

S&P 500 Index Daily Chart with 200-day Moving Average Line

Bottom Line: Higher U.S. interest rates, ongoing hawkish actions from the U.S. Federal Reserve, and relatively weak bank stocks will serve to castrate the overall U.S. market for equities on the immediate horizon. Lower stock prices are likely over the very near term, with a complete reversal of the recent advance and a probable violation of the key 200-day moving average line on the downside. And here is another negative chart in support for the bearish case: A sell signal was triggered today by my computer trading system in the Utilities Sector Index (symbol XLU).

Utilities Sector Index (XLU) with 200-day Moving Average Line (& computer sell signal today)

U.S. Stock Market - Short Squeeze Immediately Ahead!

The March 13th sell signal in most major U.S. Stock Market indices that was triggered in my computer trading system was fortuitous, to say the least (see previous posting from the evening of March 13th). 

S&P 500 Index with 200-Day Moving Average Line

However, despite this past Friday's steep losses, it looks to me like downside momentum is waning and that a significant short squeeze may be about to unfold. 

How can the stock market rally in the face of negative news such as President Trump's threat to impose $100 billion of new tariffs on China or Federal Reserve Chairman Powell's pledge to continue to raise interest rates? And let's not ignore the bearish increasing probability that the Republican Party will lose both Houses of Congress in the upcoming November 2018 elections! 

Quite frankly, I can't explain why the average U.S. stock price is only down about 10% since the late January 2018 record high. Given the current news climate (Trump's trade war!) and the hawkish apparent path of Federal Reserve monetary policy, I would have thought that U.S. stock prices would have corrected at least 20% from record highs by now. While I am confident that the current bear market will eventually see a correction of at least 20%, right now I see the increasing potential for counter-trend rally (short squeeze?)!

Here is the chart that should scare the bears the most (Tesla!):

Tesla (TSLA) Weekly Chart with 200-Week Moving Average Line

Tesla's stock price was actually UP more than 10% last week!! For a company that is burning through $1.5 billion in cash per quarter, Tesla's valuation is nothing short of miraculous! While Elon Musk, Tesla's CEO and resident wizard, may have discovered the secret of turning lead into gold, Tesla's stock price action last week suggests the alternative strong possibility of a takeover attempt on the near-term horizon.

Bottom line: While I continue to believe that a major bear market is now underway in the U.S. stock market, I see a meaningful "counter trend" rally immediately ahead. Bearish traders and investors need to cover shorts and remain sidelined until the next favorable sell-side entry point!

U.S. Stock Market - Daily Chart Sell Signals Triggered Today March 13th!

Daily chart sell signals were triggered today by my computer trading system in the following major U.S. stock market indexes:

New York Composite Index

Nasdaq Composite Index

S&P 500 Stock Index

S&P 100 Stock Index

Russell 2000 Small Cap Index

After the historic melt-down of 11.8% in 10 trading days from January 26 to February 9, the U.S. stock market posted an equally historic rebound (melt-up) which now appears to have topped out in first-hour trading this morning March 13. 

In addition to the sell signals that were triggered in most major stock market indexes today, many key technology stocks like Apple and Amazon also reversed to the downside.

While any number of catalysts could be offered for today's key downside reversal, President Trump's executive order which halted a potential $117 billion merger between Broadcom and Qualcomm was monumental, in my view.

Bottom line: The next major swing in U.S. stock prices will be to the downside. Today's key reversal probably marked the beginning of a sustained sell-off that will test the intra-day lows established on February 9, 2018.

Apple Daily Chart

Nasdaq Composite Daily Chart

Russell 2000 Daily Chart

S&P 500 Daily Chart

Historic Meltdown Coming In U.S. Stock Market

(Excerpt from Jeremy Grantham's latest quarterly "ViewPoint" report. Mr. Grantham is a well recognized world-class value investor at GMO, a Boston-based investment advisory firm with more than $118 billion under management)

"I find myself in an interesting position for an investor from the value school. I recognize on one hand that this is one of the highest-priced markets in US history. On the other hand, as a historian of the great equity bubbles, I also recognize that we are currently showing signs of entering the blow-off or melt-up phase of this very long bull market." January 3rd, 2018 quote from Jeremy Grantham

And David Tepper, a well known hedge fund manager with $17 billion under management, gave an interview to CNBC last Thursday where he proclaimed that U.S. stocks are NOT overvalued and may, in fact, be cheap here!

With this kind of bullish support, every stock investor in the world should be piling into U.S. equities for the historic melt-up ahead. The only problem with this scenario is that most investors are already loaded up with stocks. In fact, many investors (and hedge fund managers) are actually leveraged to the long side!

If everyone is long, who's left to buy?

In his often colorful comments on the U.S. stock market, legendary investment newsletter writer Joe Granville like to use the word "bagholders" to describe uninformed investors who tend to buy at the tops and sell at the bottoms. I am a little surprised at Jeremy Grantham for introducing the possible "melt-up" scenario to regular investors now at a time when they should all be reducing their equity exposure in preparation for the bear market immediately ahead. Will they now be "bagholders" in the next bear market?

One of the greatest investment advisers of all time, Marty Zweig, was famous for saying "Don't fight the Fed!" when considering equity allocations within your portfolio. Maybe we should listen to this great advice now!!

The U.S. Federal Reserve is currently in the process of raising interest rates AND also reducing its bloated balance sheet of more than $4 trillion worth of Treasury securities and Mortgage Obligations. In fact, true to its promise, the Fed actually SOLD $25.38 billion worth of securities from its balance sheet in the 4th quarter of 2017. And through its regular public reports, it is now projecting the sale of $20 billion in securities each month in Q1, $30 billion each month in Q2, $40 billion each month in Q3, and $50 billion each month in Q4 this year. AND, the Fed is also forecasting at least three 1/4-point interest rate hikes this year! In addition to the sale of securities from the Fed's balance sheet, the U.S. Treasury needs to finance approximately $1 trillion in new debt from projected deficit spending over the next twelve months. This amounts to at least $80 billion per month in new Treasury debt offerings on top of the planned liquidations from the Fed's balance sheet. Who is going to buy all these expected offerings?

Wow! Sounds like a pretty significant tightening of monetary policy immediately ahead to me!!

And for the first time since 2012, incredibly, the Bank of Japan actually disclosed last week that total assets on its balance sheet actually declined by ¥444 billion ($3.9 billion) from the end of November to ¥521.416 trillion on December 31.

In fact, central bankers on a global basis are now reconsidering the prudence of extending the massive quantitative easing programs that have been their hallmark for the last 8 years since the great recession of 2008 and 2009.

Bottom line: All the potential bullish news for U.S. stocks is already discounted in record high current equity prices. There won't be a melt-up or even a meaningful advance from here. An unexpected and surprisingly severe liquidity crisis will soon unfold and trigger the next major move in the U.S. stock market to the downside, where a significant correction may very well turn into a melt-down in equity prices as margin calls and forced selling from uninformed leveraged investors exacerbate the decline. 

2017 Results - And A Look Ahead To The New Year In 2018

2017 results:

Dow Jones Industrial Average            24,719     +25.1%

Dow Jones Transportation Average   10,673     +18.0%

S&P 500 Index                                       2,674       +19.4%

Russell 2000 Index                                1,536       +13.2%

New York Composite Index                 12,808     +15.8%

Nasdaq Composite Index                      6,903      +28.2%

FAANG Stocks (Composite)                                +46.7%

If dividends are included, the U.S. stock market managed to advance every single month in 2017, an unprecedented achievement. And the S&P 500 Index is now up 14 months in a row!

The Dow Jones Industrial Average posted 71 record highs in 2017! Valuations are at or near record highs; volatility (as measured by the VIX Index) is near record lows; margin debt is at a record high; retail customer account cash reserves are at a record low, and bullish market sentiment among often-wrong investor groups is at or near record highs.

Wow! What's not to like here?

I think it may be noteworthy that almost every major benchmark U.S. stock market index posted a modest loss last week despite the fact that seasonal factors mostly favor an up week for this holiday-shortened 4-day session historically.

Friday's "significant" losses (on the last trading day of 2017) were especially noteworthy given the fact that daily chart sell signals were triggered in most major indexes by my computer trading system (see charts below).

Bottom line: A major correction in the U.S. stock market may have already begun with last week's minor losses. All the best possible news (involving corporate tax cuts and positive corporate earnings) is already discounted in U.S. stock prices, but key potential negative risk factors (like ongoing Fed tightening and the ongoing remarkable "shift" to the left politically in the U.S.) have generally been ignored by investors (to their ultimate peril).

P.S. Best Wishes and Happy New Year!

FAANG Stocks Composite (FaceBook, Amazon, Apple, NetFlix, Google) Daily Chart

Nasdaq Composite Index Daily Chart

Dow Jones Industrial Average Daily Chart with Computer-generated Buy & Sell Signals

 

NY Composite Index Daily Chart

Russell 2000 Index Daily Chart with Computer-generated Buy & Sell Signals

S&P 500 Index Daily Chart with Computer-generated Buy & Sell Signals