"A Licking?!"

Jeffrey D. Saut, Chief Investment Strategist, (727) 567-2644, Jeffrey.Saut@RaymondJames.com May 31, 2018 Investment Strategy

In my misbegotten youth (1950s) there was a Timex wristwatch commercial featuring pitchman John Cameron Swayze, which went, “It takes a licking and keeps on ticking!” According to Pop History Dig: 

The Timex “torture test” advertising was also used in TV ads, a series made popular by celebrity newscaster John Cameron Swayze who hosted the spots.  A number of these ads also featured sports celebrities who doled out the tough treatment to the watches and/or supplied an endorsing statement.  Swayze also hosted non-celebrity Timex ads in which the watch would be subject to other trials — whether placed in a washing machine or attached to the bow of a speed boat (Timex).

Since the February 9, 2018’s “undercut low” the same can be said of the stock market, “It takes a licking and keeps on ticking.”  For sure, we identified that 2/9/18 “undercut low” and recommended recommitting some of the cash raise in January in anticipation of a February Flop.  Ever since then most of the oneday “wonder declines” have been followed by decent rallies; this week was no exception as Tuesday’s Tumble was followed by Wednesday’s Win!

The cause proxima for this week’s two-day two-step was mainly Italy, with a dose of Spain’s political troubles mixed into the equation.  As Tom Essaye writes in his daily must have “Sevens Report:”

First, for a bit of background, in March, during the last Italian general election, two “anti-establishment” parties, 5-Star Movement and the League, received the highest numbers of votes.  That caused some concern that if the two parties were able to form a functioning government, they might ultimately introduce a Brexit-style referendum to leave the EU.  Over the past few weeks, the League and 5-Star Movement (along with other smaller parties) have come close to reaching an agreement on forming a functioning government, and that raised “Italexit” fears last week.

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