Market Timers need to get new jobs. Getting paid for bad calls and big losses is getting old.
Last week Marc Faber called for a 50% correction. This morning Burt Dohman said The DOW could Lose 4000 Points In One Day. Earlier this summer Albert Edwards, strategist of Société Générale, warned that equities could lose 75% and see the biggest decline of a generation. Meanwhile Carl Icahn noted that stocks were 80% overvalued. This all comes on top of bearish sentiment that we’ve pretty much heard all year from the likes of Tom Demark to Dennis Gartman as it seems like everyone has called for a ‘market crash’.
It’s a funny thing to see. Most of those guys have made these types of calls, not just one or two times, but several. Sure there have been some sell offs. With the S&P up over 186% from its March 2009 lows that should be expected, but as I have said hundreds of times over the last several years, we live in a ‘world investing order’ where the things we used to make money don’t work anymore, and things that do work don’t last very long. What these talking heads / market timers do not get is that zero borrowing cost and the global bank quantitative easing trumps all.
Why Is No One Cheering?
Its an odd thing. The Dow, S&P and Nasdaq are all on all time new highs together for the first time in 19 years, clearly a stock market milestone. Yet, unlike my days on the trading floor, when the DOW or S&P would hit new all time highs, traders on the floor would be cheering. That’s not the case now. Almost 10 years after the onset of the 2007 credit crisis the stock market has not only recovered, but going way further than most people ever thought it would. Home prices have recovered as have the losses most people took in their retirement accounts.
Everything is great. The US economy is moving along. Europe is following the US lead with lowering rates and adding quantitative easing. The markets have not only stabilized, they have fully recovered, yet there is no confetti being thrown on Wall Street, or any places else.
The question that comes to mind is why? Why after such a big rally is the public not cheering? I think the reason can be put in one word…The public is skeptical and scared. In addition to that the public remains risk-reverse. The baby boomers are being moved out of the way by the millennials, and after the shock of the last several years, they are not jumping at stock marketing investing like previous generations. It’s not just the millennials that are not investing, its people of all ages.
DOW 20k
Making money in the stock market is not as easy as it used to be. With the Dow Jones trading above 18,500, the higher it goes, the harder it is to buy. Can the Dow Jones trade 20k this year? According to Howard Silverblatt, senior index analyst at Standard & Poors, you should get Dow 20k hat ready. Silverblatt says the consensus Wall Street one-year target level for the Dow Jones Industrial Average is now 20003.93. While that may sound far away it’s only 8% off the current high. Silverblatt said, “The contributors, again similar to the EPS estimates, are more from the sell-side, which leads to optimism.”
MrTopStep has been bullish and remains bullish, but we are continuing to be concerned about September and October, the two months leading up to the presidential elections. We agree that at ‘some point’ the markets will fall, but we do not see it happening now. We also don’t expect a 50%, or an 80%, correction when the stock market finally does sell off.
Low Volume Strength
Globex has once again seen strength overnight as both Asian and European markets have carried bids through much of their sessions. The S&P 500 futures made an early low of 2181.00 last night, and made it’s high print at 2185.75 early in the European session, before trading back to 2184.00. It’s been a tight range, and the volume has been the lowest of the year with just 75K mini’s trading, as of 6:15 am cst. With today’s light calendar, and what we have already seen on globex, today could become the new slowest day of the year.
In Asia, 7 out of 11 markets closed higher (Shanghai +2.44%), and in Europe 9 out of 12 markets are trading higher this morning (DAX +0.38%). This week’s economic calendar features the FOMC minutes and includes 19 economic reports, 2 Fed Speakers and 17 US Treasury Note/Bill events. Today’s economic calendar includes a 3-Yr Note Settlement, a 10 Yr Note Settlement, a 30-Yr Bond Settlement, Empire State Mfg Survey, Housing Market Index, a 4-Week Bill Announcement, a 3-Month Bill Auction, a 6-Month Bill Auction, and Treasury International Capital.
The Most Favorable Day of the Week
Our view: If there is something to get concerned about, Dennis Gartman said last week that “The trend in equity prices here in the U.S. remains upward despite the egregiously, the almost preposterously, over-brought nature of the market,” and “Investors are still dancing with TINA: There Is No Alternative. The music manufactured by the central banks continues to be played and investors continue to dance.”
My question for Dennis is simple… did he just wake up? It’s hard to believe anyone would pay for a service where his analysis has called for so many tops and now he is saying this. Whats wrong with the market timers? Gartman is bullish at S&P 2200? That can’t be good.
According to the S&P cash study, the Monday the week of the August options expiration has the S&P cash up 23 / down 9 of the last 32 occasions. It’s the most favorable day of the week. Our view is to sell the early rallies and buy weakness remembering that the last 12 of 18 Monday’s have seen the S&P cash close lower from its open.
Download all of the August option expiration stats here.
As always, please use protective buy and sell stops when trading futures and options.
The all new MrTopStep EURO IMPRO room is now open…Sign up for a FREE trial today!
- In Asia 7 out of 11 markets closed higher: Shanghai Comp +2.44%, Hang Seng +0.73%, Nikkei -0.30%
- In Europe 9 out of 12 markets are trading higher: CAC +0.07%, DAX +0.38%, FTSE +0.30% at 6:30am ET
- Fair Value: S&P -3.21, NASDAQ -3.21, Dow -47.34
- Total Volume: 1.27 mil ESU and 1.6k SPU traded
[s_static_display]
No responses yet