It is the dog days of summer, when everyone is supposed to be “vacationing”. I don’t know about you but I can do almost everything I can do at the office while on the beach. Therefore, there is no vacation any more unless you really unplug. Good luck with that…
After I nailed the market peak earlier this year with the date of a late April peak, the market travelled south for exactly one month. Since June 4, its been one headline risk after another and one perfect uptrend until this moment when markets are just a day away from the yearly peak. And more importantly, since Apple reported its first earnings disappointment in years, the stock has added 15% or about $80 billion in market value in the past three weeks. Never mind that they recognize two years worth of Carrier revenue immediately upon the sale of an iPhone. The issue now with Apple is that nobody will ever sell the stock no matter what because “greed is a bitch”. Also, throw a few sour grapes in because I bought at $225 and sold at $350.
Since Knight Capital entered an incorrect keystroke and lost a half billion dollars, the markets have experienced a 50% decrease in the already 50% decreased volume market. So now we are running at about the 25% mark of 2006 volume. And only the most paranoid, self-loathing and hysterical of the market prognosticators think there is anything wrong with the marketplace. The only thing that has mattered since the crash is price. Please respect price and the uptrend line. You need to know nothing else, for if you do, you will miss the gains, or worse yet, lag your peers. Heaven Forbid!
The fact is that there are no sellers because there is no yield. And no yield forces money managers to reach for risk. Plain simple and engineered by our friends at the Federal Reserve. Bravo as they have single handedly saved the world! Sarcasm noted.
As far as the stocks everyone loves, they continue to trade in a range and are all pushing the top of their ranges. I expect to see the market and the favorite stocks appear to breakout. and then, just as it is “confimed” by biz-media, and folks “get excited”, we will get a wicked reversal as the breakout will fail. And it won’t need a reason.
Remember, we are in the Silly Season, where the election takes precidence. Wall Street is busy making hay while the sun shines.
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“Since Knight Capital entered an incorrect keystroke and lost a half billion dollars, the markets have experienced a 50% decrease in the already 50% decreased volume market. So now we are running at about the 25% mark of 2006 volume.”
WTF is the big money going to do to capitalize off of this rally? There’s no volume to sell into without trapping their own position much lower. They need the masses to go crazy over the mania of higher stock prices before any sort of top can really form. At the same time, if everyone is expecting a crash of some sort and is prepared for it, it can’t really happen very easily. There has to be enough people not expecting bad things to suddenly fear bad things and ell and overwhelm the buyers. I suppose the big money at any time in a low volume market could do that as well, but instead, why not a reverse flashcrash to the high, huge volume surge and then the masses get in and the big bucks gets out, the dumb money dies and the smart money narrowly escapes.
“As far as the stocks everyone loves, they continue to trade in a range and are all pushing the top of their ranges. I expect to see the market and the favorite stocks appear to breakout. and then, just as it is “confimed” by biz-media, and folks “get excited”, we will get a wicked reversal as the breakout will fail. And it won’t need a reason.”
Money!
thanks scott.