Bear market rallies and American Greatness are both fueled by the blood of skeptics. We are a mighty yet insecure people, forever stuck in fight, flight or boast mode.
Despite America’s economic alpha-dog status we typically spend years of our investing lives in hiding, convinced the end is near. Crash calls sound all the smarter for having been wrong roughly 215 out of the 224 years the US stock market has existed.
The clock is always ticking on a bomb that seldom explodes.
In the last 6 years we’ve had three relatively large sell-offs driven by fears Greece would exit the European Union. (Note: Greece doesn’t matter even a little bit to America.)
There is nothing new. Ever. Worried about gridlock? Go look at 2011. Election stress? Please. Trump is H. Ross Perot with smaller hands. I don’t even remember what disaster traders were looking for last month. The S&P 500 has gone up more than 10% in three weeks. Seems safe to conclude the worst case scenario didn’t unfold. It probably won’t next time, either.
Try to remember that when this rally comes to an end, as it inevitably must. 2000 works as an upside S&P500 target. The easiest argument for a pullback is how embarrassing it would be to buy right now. We don’t need a better reason than that to give back a few percent.
I’m taking some profits (selling 1/4 positions) and calling it a week. The easy trade is done but worry not: you’ll be stunned at how soon we’ll come up with some Bogeyman to justify a pullback to support.
Here are you levels of note in post-Fear America:
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