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Overbought Stock Market Sets Up A Pause Here, But Not A Dump – Mike Swanson (11/21/2019)

Yesterday the stock market fell in the morning as Reuters did a story that cast doubt on any possibility of a trade deal happening before the end of the year. Despite all of the excitement over a potential deal early last month that was portrayed as if it were a done deal there is no real sign that the two sides are getting closer to making one. A November meeting between Trump and Xi got canceled and now there is a new mid-December deadline upon us – and if no deal is passed then more promised Trump tariffs will hit.

But around 2PM someone named Judd Deere in the Trump administration made a statement to the press that “progress was being made on the text of the phase one agreement” and so the stock market took back half of the losses it made in the morning.

More important for the US economy though corporate earnings in this round of reports have a posted a 1.2% year over year decline, while analysts are projecting them to fall by 3% once all of the reporting for the year is over.

Despite this uncertainty over trade and the economy don’t look for the stock market to just dump here as it typically holds up into the end of the year with the week of Thanksgiving almost always being an up one.

In the end the market is once again overbought on its daily stochastics on all three major market averages, but overbought conditions can be worked off with sideways action.

So the market is setup now to simply drift for the rest of this week and next week. The real action has been in individual stocks. This week has brought a waterfall decline in dope stocks, with ACB and CGC going in for a crash landing.

At the same time big cap mining stocks have ticked up this week and my top pick Aftermath Silver has drawn attention after the big news that Eric Sprott took a position in the company hit the newswires last week.

And this week the folk at oilprice.com have zeroed in on a mining play in Africa that has gone up almost 50% in three days. This is the type of action now happening in select small cap mining stocks.

New podcast. I posted up an interesting interview I did with Carmine Savastano, who is the author of Two Princes and A King and the forthcoming book Human Time Bomb: The Violence Within Our Nature. To listen to our discussion go here:



Disclosure: Mike Swanson owns a position in Aftermath Silver. Because it is a small cap stock with less than $100 million in market cap he is placing himself on a voluntary 30-day trading restriction period from the date of this post (11/18/2019) in which he will not buy or sell shares of it.