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5.9.2018 - Free Investing Newsletter Bookmark

That Time Of Year
 
A few weeks ago,  for a day, our entire region was out of Verizon telephone service. A few texts would dribble out now and then, but no talk service was available from Tampa all the way to Fort Myers.
 
Verizon was down. For some it was an inconvenience. For others it was truly a life and death matter. Why? Because more people today have cell phone service than hard lines at their homes. With Verizon down, no one on their network could call 911.  People with severe medical problems were in a panic.

 
But even on the “street” you could sense the unease. People were genuinely freaking out over not having service. People were flocking to wifi hot spots, hoping to use their wifi connection to make phone calls. Kids were whining about not being able to get on Instagram and face book. It was crazy.
 
It didn’t last that awful long. It was not even a day. But it had everyone’s attention. People ( at least for a few days) actually pondered the wisdom of having just one carrier, or having no land line. But as is modern society, they forgot about it in a couple days, and life went back to ‘normal”. 
 
Yesterday, I saw a quick blurb on my local news, saying that they were going to do a “hurricane special” next week. Hurricane season down here is officially from June 1, to November 30. Well June 1 is only a few weeks away. So, last night I was doing some web surfing and I decided to take a look at the weather models for the Caribbean area.
 
Holy crap, what was that?! Sure enough, on the 16 day forecast, there was a pretty nasty tropical storm forming just South of Cuba.  Sixteen days, puts us at the end of May. Just days away from the official start to the season. Naturally  I had a simple thought. What if mother nature doesn’t care about official seasons and decides to whip up a starter-kit hurricane at the end of May? It’s not unheard of. There’s been May Hurricanes before.
 
Which brings me back to Verizon being down a few weeks ago. They said that the reason they went down was because something “very rare” had happened.  What was that rare event? Well it’s like this; most people think of wireless when they’re talking about cell phones. But that’s really not true. The only wireless part of cell service is from the broadcast tower, to your phone.
 
What Feed’s those towers, and what feeds those call centers is FIBER. Fiber optics cables, mainly laid underground, carries the tens of millions of data packets, that finally end up going up a cell tower and ultimately broadcast to your phones.
 
Well, Verizon says that they have a “redundant” system, where if the main fiber optic “trunk” is damaged, all the traffic is routed to the backup trunk. The “rare” part of their explanation was that their back up trunk failed also. Now here’s the most interesting part, when asked what happened to those lines, Verizon wouldn’t say. They danced around it saying that a lot of things can cut or break a fiber line, and mentioned things like construction, weather, lightening, etc.
 
I tend to think that the truth is probably more sinister. I bet those lines were cut by someone “on purpose”.  I have no proof of that, but let’s ask the silly question: If it was a construction backhoe that goofed up and cut them, why not just say it? It would be easy to just come out and say ‘okay folks, no big deal, a construction project was a bit off course and snagged our lines, we’ll have them fixed soon!”  But no, they would NOT mention why those lines failed, just they had been damaged. 
 
Sabotage? Probably. And I observed just how many people were affected by the outage. It was a quiet panic. So here’s where I’m going with this. Down here, we’re coming into Hurricane season. We just had one in September, with Hurricane Irma.  We didn’t have cell service for about a week. There’s always the chance that we get hit again. Well, it’s one thing to lose cell service in a Hurricane, because you have days and days to prepare for it. I saw NONE of the quiet panic around the Sarasota area after Irma because the phones didn’t work. Everyone just took it in stride like “of course there’s no phones, we just had a hurricane!”
 
 But the Verizon outage had NO warning. There was no storm coming for days and day. So when it went down, no one was prepared. People with medical issues hadn’t put any redundancies in place. People were doing their quasi panic not ONLY because they had no phone service, but because they didn’t KNOW why.
 
That little event, is the very thing that always makes me shiver a bit when I think about our infrastructure. One day of no cell phone service and people’s lives were affected. What if instead of a cell phone service, it was 2 or 3 major power generation stations?  Society can get along without cell service. They will NOT get along with no electricity.
 
So, let me offer up a few suggestions. If you find yourself with a cell phone outage, the first thing to do is find out if it’s just YOUR carrier. For instance, Verizon went down, but there were other carriers that still worked. So in an emergency, if say you have Verizon and it goes down, but your neighbor has AT&T, ask to use their phone if you’re in need.
 
If everyone you know has say Verizon and it’s down, try finding one of the zillions of Comcast “free” wifi hotspots. Most stores, coffee bars, etc, have free wifi and more times than not it will be something different than Verizon. So you can use your phone to connect to their wifi and try that.
 
Another thing you can do if there’s more than one person in your household, is to use separate carriers. Put yourself on Verizon or Sprint or what have you and put your spouse on AT&T for instance. The chances of both carries going down at the same time, is very rare, and would signify something “bigger” has happened.
 
 
If you’re really having a hard time, try getting to one of your local fire houses. When things go to hell in a handbag, the emergency guys flip back to old-school radio communications.  So, a manned firehouse will always be able to contact the police and ambulance people.
 
I’ll probably revisit the emergency tactics you can use during this upcoming Hurricane season. Don’t forget, when things get ugly there are alternatives. Everything from the age old CB radio, to marine VHF radio’s to short wave hand held radio’s to main frame  “ham” set ups.
 
Call it prepping, call it emergency planning, call it what you want. But if you’ve lived through any of Mother natures worst, you know how badly things can go. I’ve lived through 2 hurricanes and the worst ice storm the Pocono mountains ever had. I have come through all of it in pretty good shape, simply because I “learned things” from people that know what and how to do things. I’ll always try and pass some of that  onto you all. It’s that important.
 
 
The Market:

Well they've done it. Or have they?


I'm not beating this to death here. We've been trapped in a range for 3 months and our guess was that "eventually" something had to give, and it was my feeling that we'd come out of that range to the upside.

 
Okay, so 3 times in 3 months, the S&P has gotten over its own 50 day moving average and each time it lasted for 3 days before fading back below it. Will this be number 4, or is this the one that finally sends us higher?
 
I tend to think that we're going to go higher. I think this one will finally hold up and the market will rise.
 
But the question is, how far? ahh there's the rub. I don't think we're going to see any new all time highs. I think that we might get a counter trend bounce to say 2750 or maybe even 2800 and the bounce runs out of gas. From there, I think we could enter a pretty long winded decline.
 
The only thing gumming up my feeling here is the stupid volume Today we broke over the 50 day and gained a whopping 25 S&P points and yet the SPY only traded 55 million shares. That's horrible volume. Horrid volume.
 
One would think that a breakout of that magnitude, would get all the algo's fired up and we'd see some monster SPY volume. Nope, it didn't happen. So that is indeed something to raise an eyebrow about. That said, maybe, just maybe the market players are just waiting to see if this ends up being just another headfake, and it doesn't hold up. We'll see.
 
If this goes, we'll have a short window of opportunity to jump on the long side train. But where to go? Right now it looks like tech, energy and financials are holding up best, with some industrials "trying" to make a statement.
 
We're carrying 5 short term positions. MU, AMAT, MIME, DE and CRM.  For the moment, they're all looking pretty good for us. Hopefully this really is a breakout and we can hold these things for a bit.
 
So, why don't I think we're going to new highs if this breakout holds? There's a million reasons, but mostly its rising rates, rising inflation, the length of this run, and Central banks suggesting cutting back on their money printing.   Yes the insane buy backs are going to help stocks. Qualcomm just announced a 10 billion dollar buy back, but if rates do keep rising, some of these companies have used borrowed money to buy their stock back. Rising rates will dent their earnings.
Obviously time will tell, but for now in the here and now, they've  managed to clear the hurdle of the 50's. Let's see if they can finally make it stick.

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