By: Todd Wheatley

As an "outside" observer the ability to accurately predict the U.S. stock market has become a source of professional pride and like any good professional I seek to improve. Until recently it seemed like the "MONEY PEOPLE" followed the news and acted accordingly. Albeit with a tendency to get caught in the irrational exuberance and the panicked downside. Still, you could see CAUSE & EFFECT work its way through the market. Like the rise Home Depot stock following a hurricane landfall. Or the fall in price of transport stocks after a spike in the cost of oil.

Consider something like a bombings overseas, a coup d'etat, an industrial accident, a mega-merger, or any number of isolated events that make up human history; the "MONEY PEOPLE" always seem to understand the future economic effect. First the media transmits. Then the economists grind the numbers. Which allows investors to move capital. If all goes well the venture makes money. This kind of information system couples SUPPLY & DEMAND with CAUSE & EFFECT.

Unlike the system just described, Communism failed due to its inability to move capital rapidly and efficiently. The Soviets failed to meet the everyday needs of their people. Today we see the Chinese with some of the same problems, but obviously fast to respond to an emergency. Two years ago U.S. CAPITALISM confronted China's STATE RUN ECONOMY. As the TRADE WAR deepened the U.S. stock market gyrated with the news, but very quickly returned to its record setting pace. Perhaps with reason given the strong economic data.

Obviously U.S. economic strength helped balance the ill effects of a trade war. But then came renewed sanctions on Iran, a high level assassination, bombing of an American base, BREXIT and finally COVID-19. As a LEADING INDICATOR in the efficient movement of capital the stock market must make the necessary adjustments. Not simply act as a cheerleader.

A couple of weeks ago adding to the list of potential economic trouble a BLACK SWAN EVENT. Confirmation the COVID-19 coronavirus broke containment. Now we will never know the true measure of the tariffs, retaliatory tariffs, rising nationalism, and BREXIT. All of this news and for some reason the investor class refuses to acknowledge the facts. Much like the president and his cronies.

Historically 1% moves in the stock market (as a whole) tend to follow big news. Larger upside moves are typically followed by a PROFIT TAKING downward move. Large percentage drops, on the other hand, are generally followed by an upward move as speculators "BUY THE DIPS". These common trends are seen time after time. Year after year. For at least six months insanity has been the prevailing trend in stock prices and I have written as much. Now this insanity can be clearly seen by this weeks wildly alternating ups & downs.

These moves could be the result of "program trading" and/or "flash trading", but at moves above 3% each way. BASIC INSANITY. Whatever the case, it doesn't bode well for the small investor and really makes a poor case for retirement investment in general. As an underpaid "ditch digger" my 401k is in low risk, low yielding "money market" investments. I don't "skin in the game". Although as INFORMATION SPECIALIST looking to make a name, I've been making stock market predictions for more than 10 years .....

Long-term the market will trend downward as COVID-19 spreads. The speculative play favors PUT contracts on the hospitality sector; hotels & food chains. Also brick and mortar retailers. Exchange traded fund (ETFs) like Diamonds and Spiders should also trend lower in the long-term ... similarly, 401K investors will see their portfolios drop.

SHORT-TERM, the market is anyone's guess as EMOTIONAL INVESTORS let their mood swing wildly in the wind.

FRIDAY 3-6-20 ?????? If the insanity prevails you will see a 2% upswing. Otherwise it will range from 0.5% up to 1% down. Extended bad news could spark panic selling.

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