The stock market is looking to continue gains from the past week as we have seen strength, without a lot of power. The Dow Industrials have pushed up to the annual highs we saw in early March just over 10,900. The weekend shopping is said to be up considerably from last year at least among preliminary reports so the market has no worries: the consumer seems to be impervious. The Wall Street Journal reports that shoppers are as “reliable as ever”.
As we assess the stock market as well as the precious metals, we see them being more over bought than normal with bullishness running high, marks that bring the contrarian out in us. We see historic opportunities for people to sell here. There are so many pitfalls in trading the stock market but one of the worst is to get bullish when the party is almost over.
We remind you that we are just now seeing the Dow match its high of earlier this year. This is not a sign of a healthy market. People are bullish without prices actually going up. We aren’t sure but Monday morning trading could be the high we have been looking for in this rally. The overnight markets are running high in anticipation of a good up opening but we know from experience that this is not such a good thing. Monday’s are normally stronger than other days of the week but we have seen prices up for about week in a row without a pause.
We are posting on Monday morning for a change and we can see that the party is certainly going strong for the opening. We are near the end of the month, a typically stronger time for the market. These are treacherous times to be buying and we recommend taking advantage of the high prices to sell. Be careful.
Dow Industrials: 10,931.62 +15.53
RYVNX: 18.39
TLT: 90.51
BGEIX: 14.08
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1 comment:
Glenn,
Thanks for the clarification on our consumer debt situation. It helps bring it into perspective and I agree with the logic. We keep borrowing money to buy imported goods. Banks are more than happy to lend the money to the consumers and foreign governments seem content to continue buying US Debt. There is a thread hanging there but I can't seem to put my finger on it. The simplified version I keep thinking of is the old Bully in the lunchroom theroy. If we (US consumers/Debtor Nation) keep borrowing and they (foreign govt/investors) keep letting us do it, the bully never stops taking your lunch.
At what point do your hunger pains force you to take a swing and end the "free lunch"?
Another question. Are there any pip sqeeks out there willing to take that first swing and if so (I'm not sure anyone has the kahuna's to do it given all the built in dependency on the US economy) who and why? Shaking a fist at the USA because we are glutonous borrowers doesn't really scare us. It seems to boil down to idle threats that inflict as much harm on the fist shaker as on the bully of the school yard.
I'm done rambling now.
Thanks for all the insights.
GO COLTS!
Erick
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