After hitting fresh record high after fresh record high last week, the market started off with more record highs this week. And then some prolonged sideways chop gave way to some downside. With yesterdays sharp move lower, punctuated with a low of day close.
Could the top finally be in for the market?
The talk continues to grow about the economy here and abroad. Growth has clearly slowed. Economic data is what has the FED set to start cutting rates again. CSX plunged lower yesterday with their earnings confirming the slowdown.
Transports this week:
* CSX cuts rev outlook
* Knight trucking cuts Q2/Q3 outlook
* Cass freight index down for 7th month
* US rail traffic down 3.3% YTD
— Carl Quintanilla (@carlquintanilla) July 18, 2019
And yet... the stock market is not the economy. With the FED cutting rates by as much as .5% at the end of this month, it will signal the easy money policies that have been around since the Financial Crisis are here to stay.
I remember Ben Bernanke saying years ago that the savers are sacrificing for the good of the country. And that they will be better off down the road.
The savers are still not better off. Of course I think Bernanke meant better off as in the world avoided a global depression, better off. Not, I'm 75 years old and have to go back to work because I have no income from my retirement savings, but at least I'm not 75 and living in a cardboard box, type of better off.
With low interest rates set to screw the honest savers out there for at least another couple of years, money will continue to flow into risky assets. Stocks.
I don't think we've seen that parabolic, fomo stage of this bull market. Actually the upside action recently has been quite measured.
Each record high seems to be greeted with more disdain for the FED rather than celebration. Which means so many are not participating in this rally still.
Amazing how tough it is for people to wrap their minds around buying something at the highest price its ever seen. And yet these prices just keep going higher. The trend remains up.
It's going to be a fabulous ride down, when this market finally rolls over. Perhaps the signal will be those uber bears finally throwing in the towel. However there remains such a disbelief that stocks can go higher. Not many were calling for SPY $300 when stocks were at their 2019 lows in 2019. And yet here we are. The same people calling any rally in 2019 a bull trap still have the same negative perspective today.
I'll get off the soap box.
Right now $SPY $QQQ $IWM $DIA are still not showing a momentum roll that has preceded market weakness. Yesterdays pull back may end up being just that. A small pull back.. A reset.
I'll be watching momentum for a sell trigger. In the meanwhile I don't think the top is in and I don't think we've seen the highs for the year. Despite some ugly earnings moves and economic data.