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A report released last week accusing Supreme Court Justice Clarence Thomas of improperly receiving lavish gifts from a wealthy friend is nothing more than a political hit job, one expert claimed.

This is just grasping at straws by the left that is desperate to tear down Justice Thomas because he now has a working originalist majority on the court,’ said Roger Severino, vice president of domestic policy and The Joseph C. and Elizabeth A. Anderlik Fellow at The Heritage Foundation.

‘This is politics. Plain and simple.’

Severino’s comments to Fox News Digital came in response to a ProPublica report on Thursday accusing Thomas of improperly receiving lavish vacations from Republican mega donor Harlan Crow.

The ProPublica report accuses Thomas of taking trips across the world on Crow’s yacht and private jet without disclosing them and Crow acknowledged extending ‘hospitality’ to Thomas but insisted he never asked for it and that the two families have been friends for decades.

The ProPublica report claimed that trips taken by Thomas ‘have no known precedent in the modern history of the U.S. Supreme Court,’ which Severino, a Harvard Law graduate, flatly rejected.

There is no ‘there’ there because the justices have received gifts of hospitality from friends forever,’ Severino said. ‘And many of the justices have taken far more trips than Justice Thomas on somebody else’s dime, including Justice Breyer, who we know has taken at least 233 trips when he was on the bench.’

Severino explained that justices are permitted to accept invites to properties of friends for dinner or vacations without paying for it or disclosing it.

There’s nothing to see here because there’s been no allegation whatsoever that accepting travel to a friend’s property somehow influenced Justice Thomas’s decision-making,’ Severino said. ‘That’s absurd. If you know anything about Justice Thomas, it’s that he’s not influenced by outside pressures one whit. He’s guided by the law and the Constitution. Period.’

Severino accused liberals of giving a ‘pass’ to perceived bias on the left, pointing out that the late Justice Ruth Bader Ginsburg officiated a same-sex wedding before the Obergefell decision that federally recognized gay marriage.

‘Did that perhaps indicate bias where she should have recused herself?’ Severino asked. ‘The media was fairly silent about that and that sort of thing is much closer to the heart of impropriety in judging.’

Justices are not required to disclose invitations and travel that are considered ‘personal hospitality’ and the Supreme Court is not subject to an ethics code.

The Washington Post reported that the Judicial Conference, the policymaking body of the court, decided last month that judges must report travel by private jet, which Severino says is further proof Thomas was abiding by the rules.

It actually further reinforces the fact that he’d been acting within the rules and according to the practice that has been understood for decades,’ said Severino, who served from 2017-21 as director for the U.S. Department Health and Human Services Office for Civil Rights where he oversaw compliance with ethical rules including those regarding gifts.

‘Hospitality includes when somebody picks you up to take you to their house or to their property. That’s what hospitality is. It just happened to be a friend that has made it in the world that’s been quite successful, doesn’t change the fact that he’s a friend.’

Constitutional law professor and Fox News contributor Jonathan Turley told Fox News Digital that until recently, ‘even lower court judges were not required to report such trips under a personal hospitality exception.’

‘Justice Thomas would not have been required to report the trips under the prior rule,’ Turley said. ‘Once again, the Democrats and the media appear to be engaging in the same hair-triggered responses to any story related to Thomas. This includes the clearly absurd call for an impeachment by Rep. Alexandria Ocasio-Cortez.’

In terms of the ProPublica implication that Thomas’s relationship with Crow somehow affected his rulings from the bench, Severino said, ‘Nobody with a straight face can say Justice Thomas has been influenced by anybody except by the Constitution and his best reading of it.’

Many liberals on social media referred to the ProPublica report as a ‘bombshell’ and some called for a resignation.

At the same time, conservatives on Twitter echoed Severino’s conclusion that there is no ‘there there’ with the report.

‘Laughably stupid,’ author Dinesh D’Souza wrote. ‘He vacations with a rich friend, who also pays for dinner! Is this the best they’ve got? Clarence Thomas’ real offense is being black and conservative.’

‘I read the latest high tech lynching of Clarence Thomas for going on vacation with his rich friend,’ conservative communications director Greg Price tweeted. ‘I also read the disclosure laws for judges linked in the story that says they don’t have to report gifts from personal friends. ProPublica mysteriously left that out of their story.’

The ProPublica article cited multiple experts who blasted Thomas’ actions, including a retired judge appointed by former President Bill Clinton who called the justice’s actions ‘incomprehensible.’

Other experts, including legal ethics expert Stephen Gillers at NYU School of Law, adopted a tone more similar to Severino’s.

‘Justice Thomas could plausibly claim, and I think has claimed (as have others) that so long as an invitation itself came from a ‘person,’ not a corporation or business entity, it was ‘personal hospitality’ and he did not need to report it,’ Gillers told the Washington Post.

On Friday, Thomas released a lengthy statement saying just that.

‘Harlan and Kathy Crow are among our dearest friends, and we have been friends for over twenty-five years,’ Thomas said in a statement. ‘As friends do, we have joined them on a number of family trips during the more than quarter century we have known them.

‘Early in my tenure at the Court, I sought guidance from my colleagues and others in the judiciary, and was advised that this sort of personal hospitality from close personal friends, who did not have business before the Court, was not reportable. I have endeavored to follow that counsel throughout my tenure, and have always sought to comply with the disclosure guidelines.’

Thomas acknowledged that the guidelines were changed last month and it is his ‘intent to follow this guidance in the future.’

Turley told Fox News Digital that Thomas was ‘right to release a public statement.’

‘Justices have long been guests of private hosts,’ Turley said. ‘They are allowed to have friends and accept their hospitality. There is no evidence that Crow had business before the court. Nevertheless, expensive gifts or benefits should be disclosed, in my view, in the interests of court integrity.’

‘I have also long argued for a code of ethics that applies to the court. The question is where to draw the line so that judges are not constantly forced to treat every friend like a lobbyist or influence seeker.’

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Rep. Alexandria Ocasio-Cortez argued there is a crime wave within the Republican Party, citing former President Donald Trump’s indictment and controversy over Supreme Court Justice Clarence Thomas. 

‘I admit it is very difficult to see a path in the Republican Party that refuses to hold itself accountable, and in fact, breaches the law itself,’ Ocasio-Cortez, D-N.Y., said on CNN. 

‘The crime wave is within the Republican Party. It is within all…. what we are seeing, we have seen, we are seeing, breaking of the law by conservative members of the court. We are seeing a former president of the United States just indicted in recent days, I mean, we need to hold our systems accountable,’ she said. 

Trump was indicted on 34 counts of falsifying business records in the first degree in a Manhattan court. The indictment comes as prosecutors looked into hush-money payments that the former president allegedly made to adult film actress Stormy Daniels and former Playboy model Karen McDougal.

Thomas was accused of improperly receiving lavish gifts from a wealthy friend, which one expert described as a political hit job. 

‘I believe that we should pursue the course and if it is Republicans that decide to protect those who are breaking the law, then they’re the ones who then are responsible for that decision, but we should not be complicit,’ Ocasio-Cortez continued. 

Ocasio-Cortez made no mention of the Biden family’s alleged corruption, including Hunter Biden’s notorious laptop that reportedly contains information about the Biden family’s business dealings with foreign nations. 

Days earlier, Ocasio-Cortez joined Democratic Sen. Ron Wyden of Oregon in advocating to ignore a court order that would block the distribution of mifepristone, a drug used to medically induce abortions.

‘Sen. Ron Wyden has already issued statements, for example advising what we should do in situations like this, which I concur, which is that I believe that the Biden administration should ignore this ruling…. The courts have the legitimacy and they rely on the legitimacy of their rulings,’ AOC continued. ‘What they are currently doing is engaged in an unprecedented and dramatic erosion of the legitimacy of the courts.’

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A liberal group bankrolled by millions of dollars from George Soros notched a victory with the Biden administration’s newly proposed Title IX rules, which include gender identity and would bar educational institutions from banning transgender athletes.

The Education Department rolled out its Title IX proposed rule on Thursday, which mirrors an action memo from a once shadowy group called Governing for Impact (GFI). GFI quietly works behind the scenes with the Biden administration on policy and also has a high-level Soros employee on its board of directors.

‘The U.S. Department of Education (Department) proposes to amend its regulations implementing Title IX of the Education Amendments of 1972 (Title IX) to set out a standard that would govern a recipient’s adoption or application of sex-related criteria that would limit or deny a student’s eligibility to participate on a male or female athletic team consistent with their gender identity,’ the Education Department wrote.

‘The proposed regulation would clarify Title IX’s application to such sex-related criteria and the obligation of schools and other recipients of Federal financial assistance from the Department (referred to below as ‘recipients’ or ‘schools’) that adopt or apply such criteria to do so consistent with Title IX’s nondiscrimination mandate.’

The Education Department’s proposal is similar in structure and reasoning to a legal memo GFI earlier supplied to the department. A backbone of the Biden administration’s proposal includes bringing in gender identity, which GFI advocated for within the document.

GFI’s memo proposed ‘implementing regulations to include sexual orientation, gender identity, and transgender status; and that Title IX and its implementing regulations require schools to treat students consistent with their gender identity for purposes of Title IX and not to discriminate on the basis of sexual orientation or gender identity.’ 

GFI has received immense funding from Soros’ Open Society Foundations network. The Foundation to Promote Open Society, a nonprofit in Soros’ network, has funneled nearly $10 million to GFI since 2019, records show. The Open Society Policy Center, Soros’ advocacy nonprofit, sent $7.45 million to GFI’s action fund during that time.

While GFI’s total contributions are unknown, the sheer amount of Soros’ cash likely makes him one of the group’s largest – if not its largest – donors. GFI and its action fund are not required to file tax documents to the Internal Revenue Service since they are fiscally sponsored projects of the New Venture Fund and Sixteen Thirty Fund, not standalone organizations. 

GFI’s four-person board, meanwhile, includes Tom Perriello, the executive director of Soros’ Open Society-U.S, who maintains close access to the White House. 

Perriello’s name appears in White House visitor logs 13 times on eight different days between May 2021 and September 2022, according to a review of the records. On three of the days he visited, multiple appointments appeared on the forms.

‘Open Society is proud to support Governing for Impact’s efforts to protect American workers, consumers, patients, students and the environment through policy reform,’ Perriello previously told Fox News Digital.

‘Their work gives voice to people often overlooked in a regulatory environment too often dominated by corporate interests,’ he said. ‘Our support for Governing for Impact’s work is publicly available on our website and we are transparent about our enthusiasm for their victories for American workers and families.’ 

GFI was established with a vision of preparing the Biden administration for a ‘transformative governance’ and produced ‘more than 60 in-depth, shovel-ready regulatory recommendations’ for dozens of federal agencies,’ a now-deleted job advertisement on Harvard Law School’s website read.

 

Governing for Impact’s … by JoeSchoffstall

The group has bragged in internal memos of executing more than 20 of its regulatory agenda items as they work with the administration to reverse Trump-era deregulations by focusing on education, health care, housing, labor and environmental issues. 

GFI has also organized legal policy memos for at least 10 federal departments and agencies and 10 administrative law primers as of 2021, according to an internal slideshow from the group.

‘We’re glad the administration is revising its Title IX guidance,’ Rachel Klarman, GFI’s executive director, previously told Fox News Digital. ‘During the transition, Governing for Impact made a number of recommendations for how this policy could be improved, which are available on our public website.’

Klarman also previously said that they are proud of the ‘ongoing efforts to help ensure that the federal government works more effectively for everyday working Americans, not just for members of industry groups that have long devoted vast resources to pursuing their own policy agendas.’

The public will have 30 days to provide comments on the rule before its implementation. 

The Education Department did not respond to a request for comment.

Fox News Digital’s Andrew Mark Miller contributed reporting.

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Former Attorney General Bill Barr slammed former President Donald Trump as ‘the weakest of the Republican candidates,’ predicting that Trump will ultimately lose to President Joe Biden in the 2024 presidential election.

‘I think ultimately the savvy Democratic strategists know [the Manhattan District Attorney’s Office probe] is going to help Trump, and they want him to be the nominee because he is the weakest of the Republican candidates, the most likely to lose again to Biden,’ Barr said on ABC’s ‘This Week’ on Sunday.

Barr’s comments came the week after Trump pleaded not guilty in a New York City courtroom to 34 counts of falsifying business records in the first degree. The former president and leading Republican presidential candidate for 2024 was indicted on March 30 as part of the Manhattan DA’s years-long investigation into hush-money payments made during the 2016 election.

‘I don’t think anything’s going to happen before a nomination is made and even perhaps until the election, the 2024 election,’ Barr said when asked about the likelihood of Trump being convicted and sent to prison. ‘This stuff is going to drag out through ’24, and it’s going to stymie and disrupt the whole Republican primary process.’

‘I also think, though, as far as the general election is concerned, it will gravely weaken Trump,’ Barr said. ‘He’s already, I think, a weak candidate that would lose, but I think this sort of assures it.’

Barr maintained his earlier statements that the Manhattan case lacks merit, calling it ‘transparently an abuse of prosecutorial power to accomplish a political and … an unjust case.’

‘If it was fraud, it was committed in the course of fraud. And I don’t see anywhere specified in here exactly what the fraud was,’ Barr said. ‘These were his own business records. He was paying himself the hush money and the business records were his own company. He’s the owner of the company.’

Barr also said he would be most concerned about the Mar-a-Lago document case, saying Trump has ‘dug himself into a hole’ given his ‘reckless and self-destructive behavior.’

‘In many respects, he’s his own worst enemy,’ Barr said.

The hush-money payments include the $130,000 payment made to adult film actress Stormy Daniels and the $150,000 payment made to former Playboy model Karen McDougal. Both women were paid for their silence on alleged affairs with Trump – affairs Trump has repeatedly denied.

Fox News’ Brooke Singman and Marta Dhanis contributed to this report.

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An attorney for former President Donald Trump called out what he said was a ‘cheap shot’ from NBC‘s Chuck Todd while discussing Trump’s handling of classified documents.

During a Sunday appearance on ‘Meet the Press,’ Todd pressed Trump attorney James Trusty over Trump’s handling of classified documents after leaving the White House, asking if the former president was attempting to get a settlement similar to that awarded to the estate of former President Richard Nixon for records over two decades ago.

‘Does Donald Trump think he should get paid… because Nixon got paid $18 million,’ Todd asked.

‘That’s a cheap shot,’ Trusty responded.

At issue were statements Trump recently made comparing his case to that of Nixon, citing the Presidential Records Act and arguing that the Nixon estate was paid $18 million for records related to him while Trump’s Mar-a-Lago home was raided by federal authorities amid talks for Trump to turn over documents in his possession.

‘This is the Presidential Records Act. I have the right to take stuff. Do you know that they ended up paying Richard Nixon, I think, $18 million for what he had? They did the Presidential Records Act. I have the right to take stuff. I have the right to look at stuff. But they have the right to talk, and we have the right to talk. This would have all been worked out. All of a sudden, they raided Mar-a-Lago, viciously raided Mar-a-Lago,’ Trump said during an appearance on Fox News last week.

But Todd accused Trump’s legal team of ‘misrepresenting the law’ during his discussion with Trusty, arguing that the Presidential Records Act was passed after Nixon left office.

‘Nixon has a case because a law wasn’t in place,’ Todd said.

The Presidential Records Act, which was passed in 1978, changed how presidential records are handled, making records such as documents legally public and not the private property of former presidents. 

But Trusty argued that recent former presidents have had similar cases to that of Trump, though their handling of presidential materials was not nearly as closely scrutinized.

‘Let’s go more modern day, because you’re right about the timing of the Presidential Records Act,’ Trusty responded. ‘Bill Clinton had multiple recordings he kept in a sock drawer, of his presidency, while in the Oval Office…. he basically said ‘hey that stays in my sock drawer, it’s personal’ and NARA (National Archives and Records Administration) didn’t blink.’

Trusty also pointed to the case of former President Barack Obama, arguing that Obama kept ‘millions of documents,’ thousands of which were classified, in a furniture store in Illinois, something that NARA evidently did not take issue with.

‘This has rotten underpinning in terms of bureaucrats being politicized followed up by an all too eager DOJ to criminalize something that is not a crime,’ Trusty said.

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A Democratic U.S. senator on Sunday blamed former President Donald Trump for leaving the Biden administration with ‘very bad options’ that led to the chaotic Afghanistan withdrawal in 2021.

Sen. Ben Cardin, D-Md., who sits on the Senate Foreign Relations Committee, made the remarks during an appearance on ‘FOX News Sunday.’

‘Make no mistake about it,’ the senator said, ‘the Biden administration had very bad options. The decision to withdraw from Afghanistan was made by the Trump administration.’

Cardin’s comments follow the White House’s public release of a 12-page summary of the results of the U.S. policies around the ending of the nation’s longest war, taking little responsibility for its own actions and asserting that Biden was ‘severely constrained’ by Trump’s decisions.

Cardin continued to lay blame along those same lines, saying that with troop numbers reduced to 2,500 by the time Biden started his term, the president ‘had little options left.’

‘President Biden basically had one of two choices: was he going to get out of Afghanistan or put more troops into Afghanistan with no end in sight?’

Cardin added that these ‘were not good options’ and Biden made what he thought was the best decision based on the intelligence available at the time.

‘Did it present real challenges for Americans and others getting out of Afghanistan? You bet it did,’ Cardin added.

The senator cited some mistakes with the withdrawal, including the intelligence on the strength of the Afghan government and the encroaching Taliban forces.

‘Admittedly, the intelligence information about the strength of the Afghan government to stand up against the Taliban was not accurate,’ the senator said. ‘The Taliban took over much quicker than anyone had anticipated.’

Cardin laid out three points in what he described as ‘the major mistake’ of the deadly withdrawal.

‘I think the major mistake was made in negotiating directly with the Taliban, not involving the Afghan government, unilaterally withdrawing our troops to a level that did not give us the ability to be able to protect U.S. interests moving forward,’ he said.

Republicans in Congress have sharply criticized the Afghanistan withdrawal, focusing on the deaths of 13 service members in a suicide bombing at Kabul’s airport, which also killed more than 100 Afghans.

The Associated Press contributed to this report.

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Senate Chaplain the Rev. Barry Black called for action after a mass school shooting at Nashville’s Covenant School left six dead, including three students, in Tennessee on March 27.

‘I have been hearing, ‘You have my thoughts and prayers,’ and that is valid for any person, again, who has been told ‘pray without ceasing.’ But I also know that there comes a time when action is required,’ Black said on CBS’ ‘Face the Nation’ on Sunday.

Black’s comments come after a wave of calls by Democrats to reintroduce gun safety legislation following the Covenant School shooting in which 28-year-old shooter Audrey Hale killed three adults and three 9-year-old children before being shot dead by police.

Black said he always strives to be ‘in a spirit of prayer,’ continuing on to say that the ‘tipping point’ for him was that the shooting took place in a church school.

‘It just was the tipping point for me to see 9-year-olds dying in a place that should have been a city of refuge, in a place that was preparing them not just for time but for eternity,’ Black said.

Black, who has served as Senate chaplain since 2003, did not address whether he received criticism from senators after saying that ‘thoughts and prayers are not enough’ shortly after the shooting took place. Black did say that members of the 118th Congress who attend his Bible study agreed to ‘fast and pray’ on mass shootings, among other topics, and ‘how to do better with this problem.’

‘These are challenging times in which people are hurting, and they are hoping that somehow government can help alleviate their pain,’ Black said on people’s perception of government.

‘I should not have to walk, as the chaplain of the Senate or as a citizen, into a Walmart wondering as I’m looking around whether or not an AR-15 is going to start spraying bullets. You know, what do I do? The Our Father or the Hail Mary?’ Black said.

Efforts to reintroduce gun-control legislation have gained momentum since the shooting, with the White House calling upon Congress to ‘do something.’ Republicans have instead said there is a mental health crisis facing the nation that no gun laws could fix.

‘How many more lives must be lost before Congress is moved to act?’ Sen. Ed Markey, D-Mass., said at a news conference days after the shooting. ‘How many families must be torn apart?’

Republicans have previously opposed expanded funding for gun-violence research at the Centers for Disease Control and Prevention, arguing that such efforts would lead to ‘propaganda’ for gun confiscation.

Fox News’ Chris Pandolfo contributed to this report.

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The release of the March payrolls numbers threw a wrench into the notion that the U.S. economy is slowing. At the same time, given all the negative data which preceded it, the big question is when the market will start to doubt the veracity of the monthly employment numbers.

Just a week ago, the stock market was back in a technology sector-fueled uptrend. But, on April 4, a major trend reversal took hold as JP Morgan (JPM) CEO Jamie Dimon remarked that the banking crisis was nowhere near over and that the repercussions would last for years. His remarks were reinforced by a slew of data showing a rapid slowing of the U.S. economy.

By Thursday, ahead of the Good Friday market closing, the market had found support. But when the employment data was released on 4/7/23, everything was once again up in the air, although the stock index futures moved slightly higher on the news.

The report delivered lower-than-expected private jobs at 189,000. A higher than expected number of government jobs boosted the overall print, which totaled 236,000. Hourly wages rose slightly, but hours worked dropped slightly. The highest number of new jobs was in the waiter/bartender category.

That was seen as a middle of the road number. Yet it doesn’t jibe with the private market data.

Private Market Data Points to Worsening Labor Market

Prior to Friday’s employment report, purchasing managers data (ISM, PMI) showed a slowing economy as new orders faltered. Government jobs listings (JOLTS) weakened. The ADP private sector jobs created showed job creation stalling. The recent Challenger Jobs Cut report showed an increase in layoffs.

Inside the ADP data, the numbers from the Southern U.S., an area of strength, showed net job losses. This is significant, as the South has been the strongest economic area of the country, boosted by the migration of people from the East, West, and Midwest.

Here is the regional breakdown of the ADP new jobs created numbers:

Northeast: 141,000Midwest: 132,000West: 95,000South: (-) 228,000

These numbers reflect a slowing in new job creations, not necessarily layoffs. Reductions in manufacturing and financial services led the way, suggesting banking sector weakness. Moreover, manufacturers are struggling as export orders fall, a point made in the ISM and PMI data.

The Challenger Jobs Cut report and weekly jobs claim data from the Bureau of Labor Statistics added to the weakening picture. Challenger reported 89,000-plus job cuts for March, 270,000-plus for the year. The West Coast was the biggest contributor. Here is the breakdown of Challenger’s numbers:

East: 13,638Midwest: 21,764West: 48,123South: 6,178

The technology-sector accounted for 102,391 during the first three months of 2023. The bottom line is fourfold:

New job listings are falling;New job creation is stalling;Layoffs are increasing; andThe number of people requesting unemployment insurance is on the rise.

Bond Yields Collapsed, Mortgage Rates Follow

Prior to the jobs number, stocks were volatile and bond yields fell. The U.S. Ten Year note yield broke decisively below 3.5%, finishing the week below 3.3%, as bond traders bet on a recession. The initial response in muted Friday bond futures trading was an uptick in rates to just below 3.4%.

Of note, as I detail below, homebuilder stocks paused. The ADP data, showing job weakness in the South U.S., could be a problem, given that this is where the largest growth area for new homes is currently.

If the bond market is correct, the U.S. economy is heading for recession, and the Federal Reserve will be pressed to lower interest rates. The Fed meets on May 2-3.

Mortgage rates continue to fall, which is generally bullish for homebuilders. A multi-year view of the relationship between bond yields (TNX), the price action in the Homebuilders Subsector Index (SPHB), and mortgage rates (MORTGAGE), documents the close relationship between these three indicators.

To view my homebuilder picks click here.

Focusing on the Right Homebuilder is the Right Approach in a Volatile Market

In the short term, the SPDR S&P Homebuilder ETF (XHB) remains in an uptrend, as it is trading above its 50-day moving average. The current trading pattern suggests a likely continuation of a consolidation pattern. Still, in this market, it’s best to consider individual homebuilder stocks.

That’s because, even though XHB is a useful tool, it’s not a pure gauge of the homebuilder stocks. The ETF holds the stock of companies who supply materials to homebuilders, as well as specialty homebuilders such as Cavco Industries (CVCO). Cavco makes manufactured homes, and, although its recent earnings and revenues have been excellent, any type of weakness in the economy — such as a precipitous decline in the job market for the Southern U.S. (ADP data above) — would likely affect it more negatively than other homebuilders.

Comparing CVCO to Lennar (LEN), a homebuilder that targets a higher income bracket, you can see the weakening employment situation in the South was not as large a negative on LEN.

As a result, the action in CVCO and other individual companies in XHB can assert negative pressure on the ETF. In other words, this is one of those times when owning individual homebuilder stocks may outperform owning the entire sector.

I discussed the long term investment potential in homebuilder stocks in my latest Your Daily Five video, focused on investing in Megatrends. And I’ve just put the finishing touches on a Special Report titled: “How to Invest in the Housing Megatrend,” which is you can download my Buy me a Coffee page.

Breadth Pauses. Nasdaq Holds 13,000.

The market’s breadth did not break last week, but did show some weakness, as the New York Stock Exchange Advance Decline line (NYAD) dipped below its 50-day moving average while remaining above its long-term support line, the 200-day moving average.

The S&P 500 (SPX) also held up closing above 4100. 4100-4200 is still an important resistance band. On Balance Volume (OBV) and Accumulation Distribution (ADI) remained constructive.

Meanwhile, the Nasdaq 100 Index (NDX) held above its breakout level 13,000, which now becomes support. This remains bullish, as it suggests money is now pouring into technology stocks. When tech stocks rally, they give the whole market a boost. Accumulation Distribution (ADI) and On Balance Volume (OBV) are very bullish for NDX.

The CBOE Volatility Index (VIX) has broken below 20, a sign that the bears are throwing in the towel. The recent low is 17. A break below that would signal a severe decline in bearish sentiment.

When VIX rises, stocks tend to fall, which is a sign that market makers are selling stock index futures in order to hedge their put sales to the public. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying, which causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.

The market’s liquidity remains stable as the Eurodollar Index (XED) remained above support near 94.75. A move above 95 will be a bullish development for sure. Usually, a stable or rising XED is very bullish for stocks. On the other hand, in the current environment, it’s more of a sign that fear is rising and investors are raising cash.

To get the latest up-to-date information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

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Good news! I’ve made my NYAD-Complexity – Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by Benzinga.com and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe’s exclusive stock, option and ETF recommendations, in your mailbox every week visit https://joeduarteinthemoneyoptions.com/secure/order_email.asp.

Okay, first when I say “it’s easy”, I’m not saying it’s easy to call tops and bottoms. Instead, I’m say that answering that rhetorical question is easy. If you can call a top, you can exit equities with your capital completely intact. And if you can also time a bottom, you can reinvest at a much lower level. Isn’t that a pretty easy and logical reason to seek out market tops and bottoms?

I recall all the negative YouTube reactions in early 2022 when I said the S&P 500 had topped and could drop 20-25% (actually dropped 28%). Many believed the stock market was their personal ATM machine as sentiment turned as bullish as I’ve ever seen it. Opponents said “you can’t call a bear market if we haven’t dropped 20%!” I found that response ludicrous. Are we seriously supposed to watch our investments drop 20% and then get out? The majority of cyclical bear market downside is over by the time they’re down 20%.

Successful investing in stocks requires a heavy dose of perspective. Stock market history truly does repeat itself over and over. I’ll never understand why so many people approach the stock market with so much negativity. It provides the absolute best avenue to grow your money over time. Take one look at this 75-year chart and explain why we should maintain a negative market bias:

The bottom panel is quite interesting. It’s the 24-month rate of change (ROC). Keep in mind that the S&P 500 has averaged gaining just over 9% per year since 1950. So the “normal” 2-year ROC would be roughly 18-19%. The 5 points that I’ve identified on the chart above highlight the 5 times when this 2-year ROC has hit 75%, which is quite simply unsustainable. There’s a reason that we average going higher by 9% or so. Gross domestic product (GDP) plus inflation plus innovation is what produces those 9% gains over time. Moving higher by 75% over 2 years literally suggests to me, “reversion to the mean.”

1950s

This was the first example (since 1950) of what happens when you make an unsustainable move to the upside. In this case, the next two years were a total wash – the S&P 500 went nowhere and included a cyclical bear market as prices dropped more than 20%:

Note that once the S&P 500 fell back to test its 50-month SMA, the cyclical bear market was over and the secular bull market of the 1950s/1960s resumed.

1987 Crash

It was more than three decades later before the S&P 500 again saw the type of upside move that begged for a significant correction. That occurred in September/October 1987 as the unsustainable advance of the prior 2 years was simply too much:

The 1987 cyclical bear market turned out to be one of the fastest 36% drops in history, but it was, in part, foreshadowed by that unsustainable move higher from 1985-1987. Notice that the drop found support at its 50-month SMA, similar to the 1956-1957 decline.

The Late-1990s

There’s a reason why it’s referred to as the “dot com” era. The gains were as inflated as any time in history, except perhaps the euphoria just before the 1929 market crash and The Great Depression that followed. After the S&P 500 turned in its 75%+ gain over a 2-year period that ended in 1998, we saw a quick cyclical bear market, and then it ran another 55% higher over the NEXT 2 years. It took a secular bear market that included 2 of the worst individual bear markets (2000-2002 and 2007-2009) in history to iron out all the problems that the late-1990s advance created:

The 1998 cyclical bear market turned out to be a small taste of what investors would be facing in 2000, after the huge advance in 1999, and it never breached the 50-month SMA. It wasn’t just a short-term advance that investors had to pay for. It was the end of a two-decade secular bull market, which resulted in an extended period of financial pain, ushering in the next secular bear market.

2011 Rebound

After the depths of the financial crisis were found in 2009, Wall Street rebounded in a big way, generating yet another 75%+ move over the next 2 years:

While the new bull market had not yet gotten started – that occurred in 2013 when we finally cleared the tops set back in 2000 and 2007 – the initial rebound was very, very swift, so another short-term drop of 20%+ was warranted and felt. In my view, this did not qualify as a bear market as it never began from an all-time high, but the consequence was the same. Note that the decline did move below the 50-month SMA, but never broke below the 2010 low.

2020 Post-Pandemic Advance

Many were caught completely off-guard by not only the 2020 stock market recovery, but more so by the magnitude of it. The 22-month advance from the March 2020 low through the January 2022 high was only topped by the euphoric 1920s – and there was going to be a price to pay. As I discussed at our MarketVision 2022 event, there were plenty of other warning signs, but the sheer magnitude of this advance suggested that caution be advised in anticipation of a potential cyclical bear market:

Once again, we’ve seen the 50-month SMA provide excellent support and confirm – at least for now – that the 2022 bear market was, in fact, cyclical in nature. Should we see the S&P 500 move below the October 2022 low, then a re-evaluation would be in order.

Final Thoughts

Secular bull markets have historically lasted two decades, while secular bear markets typically unfold over a dozen or so years. So I thought it would be interesting to review a long-term chart of the S&P 500 with a 20-year ROC and a 12-year ROC beneath the price chart. Here it is:

The green arrows in the 12-year ROC panel at the bottom show that the cumulative 12-year return is at roughly zero when new secular bull markets emerge. Meanwhile, those red directional lines highlight that secular bull markets end after a lengthy period of above-average market returns. Right now, our 20-year ROC is at 347%. That’s an average annual return of 7.78%, compounded over 20 years. The AVERAGE S&P 500 return has been over 9% since 1950. Therefore, it’s difficult for me to buy into the argument that the secular bull market has run its course. I believe we have much further to go. The 20-year ROC reached 750% in 1962 and was at 625% in 1969, when the 20-year secular bull market ended. The 1950s and 1960s had a compounded annual average return of 10.5%. The 1980s and 1990s had a compounded annual average return of 14.5%.

And I’m supposed to believe that this secular bull market has topped out at 7.78%? I don’t think so.

Now is the time to STOP listening to media outlets like CNBC. They offer little substance and value. Instead, turn your attention to EarningsBeats.com. We kept our members out of harm’s way throughout the cyclical bear market of 2022 and we said it was time to get back in the S&P 500 when it was 13% lower. Our next MAJOR event is this Saturday, April 15th at 10:00am ET. It’s our “Bulls-Eye Forecast” event, where I’ll provide you my latest expert opinion as to what you should expect over the balance of 2023 and into 2024. Best of all, it’s a 100% FREE event. Registration is required and you may do so by CLICKING HERE.

I look forward to seeing you on Saturday!

Happy trading,

Tom

Cintas Corp (CTAS) is just 1 of 83 companies that have qualified to be on our most powerful ChartList, our Bullish Trifecta ChartList. In order to make it, it must be on our (1) Strong Earnings ChartList (SECL – tracks companies that beat quarterly revenue and EPS estimates), (2) Strong AD ChartList (SADCL – requires a minimal SCTR score of 75 and a strong accumulation/distribution line to suggest significant accumulation by Wall Street), and (3) Raised Guidance ChartList (RGCL – just as the name implies, a company must have raised its quarterly or annual guidance). When CTAS reported its latest quarterly results on March 29th, they easily surpassed both revenue and EPS estimates. In addition, CTAS upped both its revenue and EPS guidance for the year.

The following chart of CTAS highlights the right side of a cup that formed with its earnings reaction. For the past week, it’s been pulling back in a nice handle as it approaches its rising 20-day EMA. Check it out:

My preference is to trade stocks that show all of the characteristics of CTAS – leading stock in its industry, under accumulation, strong volume trends, better-than-expected revenues and EPS, a strong market reaction after earnings, and a pullback within a very bullish continuation pattern. None of this guarantees a successful trade, but I do believe it increases the likelihood.

Happy trading!

Tom