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Record High Wednesday – Dow 30,000 in Sight

Next Stop, Dow 30,000 | Barron'sDow 30,000.

Barron's predicted this back in 2017, assuming the Trump tax cuts would boost Corporate Earnings and all went well with China Trade and nothing bad happened – Barron's saw the possibility of the Dow hitting 30,000 by 2025.  While that's all very nice, I will point out that it's only 2020 yet here we are already – the very definition of getting WAY ahead of ourselves.  

What's even more interesting is that we're doing it with 10% unemployment and a virus ravaging our economy and GDP down about 10% for the year – this is some truly insane market action – we're not taking reality into account at all….

Historically, the average Price/Earnings Ratio for the Dow Jones is about 16 times earnings.  Currently the P/E Ratio for the Dow Components is 39.45 and I'm being generous because BA, CVX, DIS and DOW are losing money and I'm only counting their P/Es as 100 and not infinity.  

Company Name Symbol  Last Price  P/E Ratio
Apple Inc. AAPL  $     116 35.37
Amgen Inc. AMGN  $     242 19.49
American Express Company AXP  $     116 28.55
The Boeing Company BA  $     189 100
Caterpillar Inc. CAT  $     172 28.56
salesforce.com, inc. CRM  $     248 95.58
Cisco Systems, Inc. CSCO  $      39 14.67
Chevron Corporation CVX  $      83 100
The Walt Disney Company DIS  $     142 100
Dow Inc. DOW  $      53 100
The Goldman Sachs Group, Inc. GS  $     217 12.54
The Home Depot, Inc. HD  $     276 25.24
Honeywell International Inc. HON  $     202 28.95
International Business Machines Corporation IBM  $     118 13.36
Intel Corporation INTC  $      45 8.89
Johnson & Johnson JNJ  $     148 23.31
JPMorgan Chase & Co. JPM  $     117 15.19
The Coca-Cola Company KO  $      54 27.97
McDonald's Corporation MCD  $     213 33.72
3M Company MMM  $     169 19.84
Merck & Co., Inc. MRK  $      81 17.91
Microsoft Corporation MSFT  $     211 34.04
NIKE, Inc. NKE  $     128 75.61
The Procter & Gamble Company PG  $     140 26.8
The Travelers Companies, Inc. TRV  $     136 15.54
UnitedHealth Group Incorporated UNH  $     354 20.32
Visa Inc. V  $     213 43.62
Verizon Communications Inc. VZ  $      61 13.82
Walgreens Boots Alliance, Inc. WBA  $      42 81.6
Walmart Inc. WMT  $     146 23.22

Clearly we expect those 100s to turn around but its will be a long, hard road to get back to normal as these vaccines won't be ready until spring in large quantities and that means Q1 will be bad and probably Q2 of 2021 as well, so how are these companies going to bounce back?

Of course, the answer to that is stimulus, Stimulus and MORE STIMULUS but we already have that and that means that even these Price/EARNINGS ratios are fake, Fake, FAKE!!!   

Reality check people, 12.6M people are unemployed, 10M more than usual and the workforce is 160M people so 6.25% less people than usual are getting paychecks – how are you going to have a robust economy when that is happening?  

That is no way takes into account how many middle-class business owners are suffering or how many waiters, nail salon workers, hairdressers, salespeople, etc may be working – but are making far less money than they usually do.  The "technically employed" crowd is large enough that we all know people who fall into that category – yes they are working, but they are struggling financially, nonetheless.  

Oil, for example, is at $42.50 this morning and that's just ridiculous.  We were at $35 to start the month so up 20% in 10 days is spectacular, but also FAKE!!!  Did 20% more people start driving since November 1st?  Did 20% more planes leap into the sky?  We tested $43 overnight and that's a no-brainer to short but if the $42.50 line fails, we can short /CL with tight stop above that line and then go again at $43 or again if it goes below $42.50.  

The Oil Inventory Report is delayed until tomorrow due to Veteran's Day.  The API Report last night showed a 5Mb draw and oil popped 5% from $41 to $43 – that's ridiculous.  The short has a great risk/reward profile as our 5% Rule™ would play off $37.50 (long-term support) and that makes $41.25 the 10% line and $43.125 is the 15% line, which is where we were just rejected.  That's a $5.62 run so we expect 20% retraces and call that $1 back from $43 to $42 (weak) and $41 (strong) so those are the lines we'll be watching today, in our Live Member Chat Room.

Happy Veteran's Day!

 


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  1. November 11th, 2020 at 8:55 am | Permalink Ignore this user


  2. November 11th, 2020 at 9:00 am | Permalink Ignore this user

    As much as I take pleasure in talking about a Biden boom (being sarcastic of course), these moves really don't make a lot of sense. Clearly, if we have a vaccine next year, there is a good chance that things could go back to semi-normal. And unless the GOP blocks absolutely everything (which is a real possibility – not 50/50), there could be some very good GDP growth next year. But it might take our GDP back to where it was in 2019 and markets seem to price a 2025 GDP number as pointed out by Phil!

    Of course, a significant correction while Trump is still in office would be a cherry on top of the cake!


  3. November 11th, 2020 at 9:20 am | Permalink Ignore this user

    Re Vaccines-Definately for them for protection. HOWEVER what I am hearing now from friends etc is you can get this more once. My friends son is a dentist and she said he has had the virus 3 times! After reflection it dawned on me that makes sense. His children are in day care, with a teacher Mom, so exposed constantly I suppose. And the virus adapts and mutates! That's why the regular flu shots are useless because by the time they are developed, the virus has changed and adapted to survive. MY two cents is this can go on much, MUCH longer than we think. If you don't get immunity from having it and surviving , of course, it just keeps going. Snow-any thoughts?? 


  4. November 11th, 2020 at 9:22 am | Permalink Ignore this user

    More than once it should say.


  5. November 11th, 2020 at 9:29 am | Permalink Ignore this user

    Good Morning.


  6. November 11th, 2020 at 9:38 am | Permalink Ignore this user

    Pirate/immunity – that story is a distortion of some early papers about people maybe having second bouts. And it can happen, but on a population basis is rare enough that a vaccine will control the epidemic. That Pfizer's vaccine is hitting over 90% efficacy shows that one does get solid immunity. Of course, how long it lasts we don't know yet, but the Pfizer trials have run long enough to show that the vaccine can stop the disease on the population level.

    As for mutations, yes, of course many viruses mutate – doesn't make flu vaccines "useless" – it does mean we sometimes guess wrong, and the vaccine is less effective. This year, by the way, we got it spot on right, so fer Pete's sake get the flu vaccine.

    Your anecdotal data, Pirate, is better addressed by your firend's clinical providers. I'm a population guy; I run from individual patients.

    One of the most horrifying experiences I had, by the way, was when I was very young and had to handle a pertussis outbreak. This was in southeastern Kentucky in the mid-70s. The county school superintendent was an elected position, and this guy got elected by promising to not enforce the vaccination requirements. Many adults carry pertussis in their throats without symptoms, so by early winter we had an outbreak of around 60 or more kids with pertussis. Kids were vomiting, cracking ribs, little kids were getting taken into the ICU and up to the university hospital in Lexington, and several very young children died. It was very frustrating, horrifying. The school superintendent lost his job and for a time the vaccine levels went up to normal.


  7. November 11th, 2020 at 9:55 am | Permalink Ignore this user

    Thanks Snow for the clarification. Very much appreciated. Yes, for children to get the vaccinations is of the utmost importance for their protection. When assessing the effects only the whole populations are extrapolated with a certain percent being anomalies. That makes sense. Appreciate the info on this flu shot that is out now. However, I have never got any flu shots ever! I'm one of those anomalies that is super sensitive and cannot tolerate most drugs of any kind. Some people have chemistry's that are unique and I'm one of them. I go in for my yearly physical and my Doc just shakes his head. He is a trained epidemiologist with his Internist degree. He kept me for an hour the last visit asking questions. 


  8. November 11th, 2020 at 10:01 am | Permalink Ignore this user

    Snow-Pertussis is the same as "whooping cough" right.? Once immunized it is life long protection?


  9. November 11th, 2020 at 10:06 am | Permalink Ignore this user

    Good morning, everyone. Here is the link to today's webinar. 

    https://attendee.gotowebinar.com/register/8579831590559779341


  11. November 11th, 2020 at 10:31 am | Permalink Ignore this user

    Pirate – pertussis is whooping cough, but immunization lasts for a couple of decades, tops. That's really all we public health types worry about, as the disease is a killer mostly of children.


  12. November 11th, 2020 at 10:36 am | Permalink Ignore this user

    "That's why the regular flu shots are useless because by the time they are developed, the virus has changed and adapted to survive."

    Good thing that the viruses can also mutate to be less deadly! It took around two years for the Spanish Flu to burn itself out. I'm not sure how much of its disappearance was due to herd immunity, the virus mutating, or social measures (masks!), but it eventually went away without a vaccine. 


  13. November 11th, 2020 at 10:38 am | Permalink Ignore this user

    Snow-thank you for the info. I got it about 5 years ago and survived by sitting in the sun in the Caribbean for a week. Didn't know what it was and found out later that there was outbreak up in No Wisc. Hopefully I have the immunity now.


  14. November 11th, 2020 at 10:42 am | Permalink Ignore this user

    Good morning!  

    Virus

    PHILADELPHIA — Election officials in dozens of states representing both political parties said that there was no evidence that fraud or other irregularities played a role in the outcome of the presidential race, amounting to a forceful rebuke of President Trump’s portrait of a fraudulent election.

    How N.Y.C.’s Conservative Bastion Became a Virus Hot Spot
    Staten Island has bristled at coronavirus restrictions, but now has the highest positive test rate in the city.

    Standoff is preventing president-elect from accessing key resources

    Covid-19 Surge Strains Hospitals

    A Vaccine Would Boost the Global Economy, But Not All at Once

    Latest Updates: U.S. Cases Hit Fresh High

    Hong Kong Opposition Resigns Over Latest Crackdown

    Banks in Europe Face Potential $1.7 Trillion Covid-19 Cliff

    European banks say they are doing just fine during the coronavirus pandemic. But regulators and bank executives are concerned about the elephant in the room: a wave of bad loans that could overwhelm lenders when government rescue packages end.6

    Of course, that last item can't possibly apply to the US. Like the President, our Financial System is immune to the virus and its effects, despite being overweight and out of shape…


  15. November 11th, 2020 at 11:08 am | Permalink Ignore this user

    Here's some news they'll never share with you in the US as it would upset the Conservative Snowflakes:

    Taiwan has not reported a single coronavirus case for more than 200 days now.

    Friday marks the 201st day without any local infection reported in the island nation.

    The last case was reported on April 12, daily Taiwan News reported.

    Taiwan’s fight against COVID-19 has won international acclaim.

    US Senator Bernie Sanders said in a tweet: “Taiwan has been coronavirus-free for 200 days. It has had only 550 COVID-19 cases and 7 deaths. How'd they do it? They believe in science. Testing, contact tracing, quarantining, distributing masks and guaranteeing health care to all. We should do the same.”

    Earlier, other countries including Vietnam, Thailand, and New Zealand had set records of no local infections for 100, 101, and 102 days.

    Taiwan did not impose lockdown in the country, but, encouraged public to wear masks.

    It also enforced travel restrictions, quarantine and led targeted testing and contact tracing.

    These countries are more crowded than ours by miles and poorer than ours by miles.  This has been a shameful failure of our Government – nothing else.

    Florida/1020 – F*ck Yeah!  

    Possibly the greatest video ever made…

    Spanish Flu/Ati – That flu went from 1918 – 1920 and infected about 1/3 of the World's 1.8Bn people, killing roughly 50M of them (10% of those infected).  Essentially, that is the same as Covid without modern medicine to prevent the spread and treat people.  We're only 1/4 of the way into this and we haven't wiped anything out – we've barely slowed it.  In the US, we may as well be in 1918 the way we are handing it.  


  16. November 11th, 2020 at 11:10 am | Permalink Ignore this user

    Nice drop on /CL, of course we bounce off the weak retrace at $42 so now we see if it's a strong or weak bounce (0.10 or 0.20) so $42.25 is the stop to take profits and we reload at $42.50 again or a cross back below $42.25.


  17. November 11th, 2020 at 11:54 am | Permalink Ignore this user

    1918/Phil – In fact, the public health tactics (such as they are) are the same the US used in 1918. The only change is that we're better at clinical medicine. Which is ridiculous, as you point out, because there are plenty of example of competent public health programs in other countries.


  18. November 11th, 2020 at 12:15 pm | Permalink Ignore this user

  19. November 11th, 2020 at 12:15 pm | Permalink Ignore this user

  20. November 11th, 2020 at 12:16 pm | Permalink Ignore this user

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  22. November 11th, 2020 at 12:16 pm | Permalink Ignore this user

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  24. November 11th, 2020 at 12:16 pm | Permalink Ignore this user

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  26. November 11th, 2020 at 12:16 pm | Permalink Ignore this user

  27. November 11th, 2020 at 12:17 pm | Permalink Ignore this user

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  32. November 11th, 2020 at 12:18 pm | Permalink Ignore this user

  33. November 11th, 2020 at 12:19 pm | Permalink Ignore this user

  34. November 11th, 2020 at 12:19 pm | Permalink Ignore this user

  35. November 11th, 2020 at 12:20 pm | Permalink Ignore this user

  36. November 11th, 2020 at 12:20 pm | Permalink Ignore this user

  37. November 11th, 2020 at 12:21 pm | Permalink Ignore this user

  38. November 11th, 2020 at 1:00 pm | Permalink Ignore this user

  39. November 11th, 2020 at 1:08 pm | Permalink Ignore this user

    Is the webinar on?


  40. November 11th, 2020 at 1:09 pm | Permalink Ignore this user

    Sorry for the Delay. We are having tech. difficulties on our end that is requiring  a reboot of our system. Thank you for your patience. We should be up in about 10 minutes.


  41. November 11th, 2020 at 1:15 pm | Permalink Ignore this user

  42. November 11th, 2020 at 1:15 pm | Permalink Ignore this user

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  44. November 11th, 2020 at 1:15 pm | Permalink Ignore this user

  45. November 11th, 2020 at 1:16 pm | Permalink Ignore this user
    Supreme Misjudgment on ObamaCare
    By: The Editorial Board


  46. November 11th, 2020 at 1:16 pm | Permalink Ignore this user

  47. November 11th, 2020 at 1:16 pm | Permalink Ignore this user

  48. November 11th, 2020 at 1:16 pm | Permalink Ignore this user

  49. November 11th, 2020 at 1:43 pm | Permalink Ignore this user

    I see at least one person I (used to) know, Mike Osterholm, is in the Biden covid19 task force. He's very competent – I used his investigations of the Schwann ice cream outbreak and the Daycare center HUS outbreak as teaching papers. I've heard he can be difficult to work for, though….not sure what to make of that. Anyway, solid competent people on the task force is good.
     


  50. November 11th, 2020 at 2:21 pm | Permalink Ignore this user

    I wonder whether the Trump family will have Secret Service protection while in prison?


  51. November 11th, 2020 at 2:44 pm | Permalink Ignore this user

    I find Osterholm to be very competent as well. While I have not worked with him, I have heard him interviewed many times on our great public radio station – MPR. He seems to speak the truth, even when it is difficult. He will describe where we are at in terms of a baseball game. I think he said we were in 3rd or 4th inning last time. I also like what Andy Slavitt has to say; he was the Administrator of the Centers for Medicare and Medicaid Services (CMS) under Obama. 


  52. November 11th, 2020 at 3:09 pm | Permalink Ignore this user

    Phil / Questions / Help – I am looking at lantern ( say 12 month) support / resistant lines would like to get your take on them – PM - I have them at 70 and 80,  And T – I have at 29  and 37 ish….  I use these points to sell short calls and puts….


  53. November 11th, 2020 at 3:20 pm | Permalink Ignore this user

     

    Phil / ENPH – as I look at the solar power industry this looks like the best company out there.  from a technical standpoint.   They specialize in micro inverters, which is a key control / technology for the industry.  T
    hey have the best technology in micro controllers…. it is now expanding more into partnerships with other mkt players / installers.   The financials look solid with OPMgn growing from 5.5%  to  15% from '15 to '20.  GM is in the mid 30%.  I have them at a revenue growth of app 30% / year out to 2025 ish., and Earnings going from $1.0 to $1.9 /sh over the same timeframe to.  They have a lull in earnings due to convertible notes kicking in due to the stock price increase.   I think a reasonable price is about 80 to 100 in the next 2 to 3 years…..   I"m looking at starting a position with selling some '23 post for 32ish…Would like your take on the company and my projections, ..thanks.


  54. November 11th, 2020 at 10:46 pm | Permalink Ignore this user

    LTRN/Batman – They seem like a fun company but I know nothing about them – just a craps roll to me. They are "pre-revenue" but only $100M in market cap so not a huge gamble.  They have $20.8M in cash (just raised) and burned $2M for the Q so they have a couple of years to come up with something before diluting you.  That's up to you if you think it's worth a toss.  

    ENPH/Batman – $15Bn valuation with $700M in sales and $102M income?  Seriously?  What would you like me to say about it?  I think you might have missed the best price for them – they were $20 a  year ago….

    I'm not saying it's a bad company – I like them as a concept but it's the kind of concept you should have liked at $20 or $40, not $120.  Yes it's a hot space but they aren't the only game in town.  Energy storage is going to be booming under Biden – and subsidized – which will make it a lot easier for competitors to move in on this space.  

    $12Bn with $1.4Bn in sales and $145M in income.  

    Bit of an overnight sell-off in progress.


  55. November 11th, 2020 at 11:27 pm | Permalink Ignore this user

    Phil / ENPH –  They just spike up to 120 in the last week following Biden's win.  They were at 100 prior.   This is the best company technically and financially much stronger than SEDG .  SEDG is essentially a competitor to ENPH but further along in the tie-ups with less impressive growth and financials ahead of it due to inferior tech.   SEDG mkt cap of 12B @ 235 / share, ENPH mkt cap of 15B at 120 / share.   If they were both at 12B make cap ENPH were at 100 also at 12B mkt Cap I would go with ENPH they have higher margins.   '19 ENPH Rev / net Profit = $625M / $ 161M, SEDG was $1425M / 147M . growth going forward 40% for ENPH and 25% for SEDG…. ENPH has better technology so they are selling IP and MICRO Controller at a higher premium.  Also what SEDG is doing now ( with partners) ENPH is starting to do now, but at a higher profit margin given better tech so growth is much better.   So higher growth due to tie-ups with installers, and better tech = higher premium.    We need to look at this industry and pick best companies…. in this space micro controllers – a key technology in solar power management ( between Solar Panel, and Batteries) is high profit area…. These smaller type companies will also be a target for larger cos. to buy up – Think Total ( they have a big stake in SPWR) .  


  56. November 12th, 2020 at 7:36 am | Permalink Ignore this user

    TOT/Batman – There I agree, TOT is the long-term play.  At $100Bn they made $11Bn last year and they can swallow up both those companies for breakfast.  This is like betting on which 3D printing company will win a few years ago.  It was NONE OF THEM!  Even when the technology is sure to be the future – that doesn't mean any single, small company is going to make it through to the finish line.  That's all I'm saying (but no one would listen to me about 3D either).  

    Although THIS is what I'm interested in now:

    3D printing milestone quadruples Nano Dimension shares, lifts peers

    |About: Nano Dimension Ltd. (NNDM)|By: , SA News Editor 

    Nano Dimension (NASDAQ:NNDM) has continued to rally, up more than 333% after earlier reporting a breakthrough with HENSOLDT that may allow the production of electronic components.

    HENSOLDT said it assembled the first 10-layer printed circuit board [PCB] that carries high-performance electronic structures soldered to both outer sides.

    Shares of 3D printing name Voxeljet (NYSE:VJET) surged today, perhaps in sympathy, up more than 60% at one point, putting it on track to have its best day in years. Larger 3D printing names like Stratasys Ltd. (NASDAQ:SSYS) and 3D Systems Corp. (NYSE:DDD) are largely unchanged.

    HENSOLDT CEO, Thomas Müller said, “To have high-density components quickly available with reduced effort by means of 3D printing gives us a competitive edge in the development process of such high-end electronic systems.”