What can I say? This market is unbelievable. Unrelenting buying does not seem to end. We are in territories of extremes that have even caused the technicians in the world to say “I don’t know”. That’s right, we have moved so far so fast and so high, that people that are the professional chart readers can’t tell you when it will end.
I have seen projections that the S&P500 will hit 2062. DOW 17K, is almost a given at this point with the index coming within a few points of that number today.
What I find very strange is that with the market slightly positive today, most of the stocks I follow are in the red.
Volatility is in the toilet. The VIX is under 11, the /VX (forward looking volatility) is below 13. This means NO ONE IS AFRAID AND NO ONE CARES!!!. Even my lady friend (at my age, I don’t think it is politically correct to call her my “girlfriend”) had to put her two cents into the markets with me this morning. She started out by saying “don’t get mad at me”. Nothing good can come from a statement that starts that way. But her comment to me was, why could I not go long the market? I tried to explain to her (for the umteenth time) that the market has done nothing but rally for over 5 years. That we have not had a 10% pull back in this bull market during that entire time. That we have been up 21 of 23 trading days. Her reply was, “well, it keeps going up, so you should go in that direction”. She is in the salon industry, so I tried to give her an analogy that she could understand. I tried to use a commodity as an example. I said to her…if you had a product that was a commodity. And it was going up for years, and you know this product fluctuates with supply and demand along with market conditions. This product was going up for over 5 years. Would you buy a boat load of the product to protect against it going up more? Her answer was yes. At that point, I knew I couldn’t talk to her anymore or I would have to put my hands around her throat. But it also pointed something out to me in regards to how the general public operates. Every bear market was started by everyone being bullish.
All the news articles I read are saying how this bull market has much more to go. I have seen “experts” say we have another 3-7% of up for the year from this point. I can understand they have the Fed firing all weapons at the market as Janet Yellen came out this past week saying the Fed is going to keep interest rates near zero until 2016. Ms. Yellen also said that they are lowering expectations for growth, meaning the economy is not doing well. Along with that she said that if the economy begins to falter, the Fed stands ready to add more stimulus. UNBELIEVABLE!!! I want to tear my hair out. With all the QE (quantitative easing) becoming less and less effective, how is more free money going to get things going? The answer is, It will not.
We have a possible war situation still brewing in the Ukraine with Vladamir Putin building more troops at the Ukrainian border. We have Iraq unraveling with ISIS looking to storm Baghdad. Our president saying we will not have “boots on the ground”, and then sending 300 “advisers” (Green Beret, Navy seals, and Airborne rangers) to Iraq. And again…NO ONE IS AFRAID AND NO ONE CARES!!!! We even know this by the oil market which hasn’t moved much since last week.
What will it take for people to wake up and see what is really going on? How can someone be long this market, and not want to take some chips off the table with us at all time highs in the equity market, bond yields falling, and the possibility of being dragged back into Iraq? Apparently I’m the only one that sees all of this, or thinks it is a problem…because I’m the only one still short the market…even tho I get proven wrong every day. HELP!!!
The upcoming week, economically speaking, we have the existing home sales on Monday looking for a boost up to 4.75 million in home sales. I know that a couple weeks ago when interest rated bumped up, my real estate friend told me that all business dried up. Now with rates dropping again, maybe we will see more home sales.
Tuesday we have the home pricing index to see if home are rising in value. Along with that we have new home sales showing a modest rise to 440K from 433K. To round out the day we have consumer confidence number that are poised to be higher by 0.3% from the previous month. Yay…more optimism by the consumer…just what I need (sarcasm)
Wednesday we have the GDP revision numbers for Q1 again. As you remember, the original projection for Q1 was 2.6% growth, dropped down due to weather to 1.2% growth, then came out with an actual number of 0.1% growth. Then the first revision was -1.0%, not the projection for this revision is -2.0%. Yeah, that’s great economic growth (MORE SARCASM!)
Wednesday also brings the durable goods orders. Last time we had an upward surprise in durable goods, but this month’s expectations is to drop by 0.6%.
Thursday we have the weekly jobless claims. Last week we had 2K more than the estimate. This week we are looking at an estimate of 313K, or 1K higher than last week’s number. Not the direction you want to go with a growing economy.
Consumer spending will be a big number for the week, under the guise of a 0.4% rise in the estimate.
Friday ends us with the consumer sentiment number set to show a higher sentiment.
Someone please have the market get it’s foot off my throat. I can’t breathe!