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January 2018
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Where will the stock market go?

                This week, it is all about the economic data.  On Monday August 17 we have the empire manufacturing and Net Long term TIC flows.   Both numbers are expected to be positive Net Long term TIC flowsthanks to government stimulus and cash for clunkers.   On Tuesday we have Building permits, housing starts, CORE PPI and PPI.  Believe it or not, data heads are expecting inflation and improving housing numbers.  On Wednesday, we have crude supply.  Thursday we have the big one, the initial claims (550K more folks expected to be unemployed this month), leading indicators and the Philadelphia Fed.  We end the week with existing home sales on Friday.

                If the market traded on data along, I would expect a positive open on Monday.  Positive momentum should last until late Wednesday.  The real story is Thursday, 550K is much higher than most people are expecting.  Obama just had a speech 1 week ago how unemployment rate was half of what it was when he took charge in January.

                We have rallied for 6 months now, based on government and Fed printing money and economic data that is decelerating at a slower speed.  At some point, the market will demand returns from their investment.  The new paradigm of “profit” from cutting heads and cost won’t cut it anymore.  I just cant see this year ending on a positive note, but then again, I always remind myself not to underestimate the ignorance of most investors.

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