Thursday Thoughts – Window-Dressing Flatlines Markets into the Holidays

We’ve gotta hold those highs, right?

There’s nothing Fund Managers and Brokers hate more than to have their clients talking about pulling money out of the market around the barbeque.  With a holiday weekend approaching, we can expect all the stops to be pulled out to maintain our record highs but what happens when the big boy traders come back from their summer vacations is anyone’s guess.  

At the moment, as you can see from the SPX chart with volume, there is a huge surge, like clockwork, at the end of each trading day, that pushes the index higher into the close and even higher overnight (when there is no volume at all) and that has accounted for about 1/2 of the S&P 500s gains for the week.  The rest of the gains came from a new trade deal with Mexico that’s worse than our old trade deal (NAFTA) and now Trump says he will have a deal with Canada tomorrow, probably also worse – so of course the markets should be higher…

It’s all nonsense, of course but Alice in Wonderland was all nonsense for 90 minutes and then she woke up.  It’s hard to say when investors will wake up but they usually do at some point but, as I noted yesterday, things can get a lot sillier before they get saner.  

Oil (/CL) is hitting our silly target of $70 this morning and we discussed shorting at this line in yesterday’s Live Trading Webinar and I reminded our Members in Chat this morning that we are shorting below the line only, with tight stops above but I’m willing to lose a few Dollars while wating for the nice, post-holiday pullback we’re expecting.  

Oil and Gasoline (we’re short that too) are things that are bought by the masses, not just rich folks and, although our GDP is expanding at 4.2% in Q2 and people like us (who have enough savings to be able to play with stocks) are feeling pretty good, economically, a new study by the Urban Institute reminds us that 4 out of 10 Americans are struggling to pay for their basic needs such as groceries or housing.  It’s a problem even “Middle-Class” households confronting.

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Provided courtesy of Phil’s Stock World.