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index 4.29.13

 

Markets set new closing highs today with S&P500 hitting 1593.61.

What does this mean? Are people still under-invested, over exposed to fixed income? Have to many people plowed into health care, staples and utlities?

What is the next likely move from here: Summer swoon or rally continues?

~~~

What say ye?

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

33 Responses to “Markets at New Highs: Now What? (Open Thread)”

  1. chartist says:

    the weekly MACD shows a divergence….I’d be more comfortable with an 8% correction over the next two months…..I still say the SPX reaches 2000+ over the next 3 years…..I love Ford Motor and see it reaching $30 in three years.

  2. matt wilbert says:

    I still think this rally has too few believers. People have been skeptical since 2009, but I have a possibly misguided theory that the recent well-publicized swoon of Apple may have reinforced a possibly diminishing reservoir of doubters. I also think that the recent reduction in austerity fervor is nothing but good for the market. So I think the medium-term trend is higher. But I would be completely unsurprised by a good sized (7-10%) correction at anytime, because I think a lot of the buyers are skeptics too; skeptics who can’t afford to miss rallies but who are too nervous to stay invested through even a mild correction.

  3. chartist says:

    gold and silver feel like they’ve had a pullback like 1987. If money velocity starts to ramp, then I think silver @ $100 and gold @ $5000 are possible in 10+ years.

  4. sellstop says:

    What do you mean? Does a new high mean it is time to sell?

    They keep saying the public isn’t in on this yet. But I think they are coming in. Talking to aquaintances who don’t trade makes me say that. Some surprising revelations about who is committing money to stocks.

    And the economy hasn’t even started to grow yet. Or should I say the currency hasn’t even started to devalue yet. The velocity of the money is just getting started!

    gh

  5. Concerned Neighbour says:

    Up, obviously. Fundamentals – either economic or corporate – cannot compete in the face of central bank pumping. I think there is a non-negligible possibility that central banks will never exit, and trade the “free markets” ever higher in perpetuity, though likely not at the current pace. After all, if markets kept going diagonal up at 7-8% per quarter, people might actually start to question whether the free markets are manipulated.

    • I say “sell in May and go away”. Better yet, sell now, before May hits. The charts I read are all screaming “incoming: major correction”. Negative divergences in multiple sectors, profits topping out and various technicals putting in lower highs, and even the defensive sectors are in epic blowoff tops… I think the smart money is hunkering down for a Big One. Or else they just want a peaceful summer of elite vacationing…

      The central bank pumping is already priced in, and the Fed has already signaled that it’s preparing to slow the flow. In each of the last 3 years, we also faced a Fed-policy unwind situation in the spring, and Sell in May was the correct call. No reason for this time to be different…

      Edit: just rescanned comments and I see I’m not alone in thinking “Sell in May…”

  6. chartist says:

    They say the Lindberg baby killing was the crime of the century, I disagree. Just prior to the 9/11 attack, I noted heavy put buying in large cap names like Dupont. This was across the board, large block put buying. For example, Dupont Oct 45 puts for 70 cents traded 750 contracts. Now, when market makers get burned on takeover insider trading, they complain and the SEC comes in. Not so in this case; no one complained on the market maker side. This tells me they were made whole post 9/11. I rang the alarm on AOL boards, no one listened…I myself bought 20 AA puts and made $10K on a small investment. I didn’t know anything except that someone knew something. There are records of these trades, yet no one is investigating.

  7. wisegrowth says:

    Rick, it is something you wrote a little while back… that aggregate profits are peaking… something like that. I totally agree and I feel that aggregate will not pick back up and start increasing again. Their time is over. I have my research to back up my thinking on that.
    But where will the market go from here. I see the market swaying back and forth around this peak for months with news up and news down. A little crash here… a little recovery of stock value there… and then one day, definitely within 16 months, it all starts coming down. That is how close I think we are to the next recession. The data is now making a slow slide to it. At the moment I see real GDP reaching $14.050 trillion. The recession will hit $100 billion above or below that amount. The first graph at this link…
    http://effectivedemand.typepad.com/ed/2013/04/as-ed-model-raising-labor-share-of-income.html
    shows effective demand sloping down toward the $14.100 trillion point.
    We are not near a recession at the moment. It is at least 6 months away at the earliest and 16 months away at the latest.

  8. A says:

    The trend is your friend, until it isn’t.
    Perhaps it’s getting close to the time where mental stop loss positions turn into hard stop positions.

  9. parsec says:

    Not much euphoria for a real downturn yet, but we’re getting into slump season. We’re also near the end of the 16-year bear that features two sharp drops and a fuzzier third. I’m looking for that third. Then it’s off to the 16-year bull races.

  10. bear_in_mind says:

    Looks like the path-of-least-resistance is upward, on continued low volume, no less.

    I cleaned out my losing positions and I’m content to add to some winners while letting some moolah rest until the inevitable pullback occurs. If it goes up another 6 percent, then sheds 10 percent, boogah-boogah, I’ll leg back in. If it goes up another 18 percent and pulls-back only 5 percent, well Lloyd can kiss my Blankfein.

  11. BigSpooky says:

    Higher. I think its reasonable to say that the SPX is going to have the same yield as 10yr treasury, which is like 1800 SPX with 10yr @ 1.8%. As someone with a lot of finance (20+ years buy side trading), it seems crazy to say the risk premium is zero, but where is the real risk? Being on the wrong side of the bond market seems downright horrifying versus the flexibility and versatility of betting that companies are going to manage through.

    Part of me thinks the endgame of all the QE is once you have removed the easy yield, once you get to this point where there is nowhere to just park your money and get real returns, there is this renaissance where people start to take their capital and create value. Small startups, ideas manifested, yada yada. Velocity of money gets all jiggy, jobs get created etc. Yeah its harder work then just plopping your money into the 10yr at 5%, but isnt that the whole point? To get capital out there working harder?

    But people are inherently lazy, and there are not a lot of good diversified investment vehicles to support that kind of investment, so I dont think we can reach that “permanent plateau” or whatever you want to call it until traditional yields are much lower. Nice diversified junk bond portfolios still yield over 7%. So yeah, higher. Probably much higher.

  12. YouthInAsia says:

    The signs of easy credit starting to flow are all around. I’ve been getting many offers for new credit cards. I snagged a Lowes Credit Card because it seems like they are offering a 5% discount on all purchases now if you use it – two minutes to answer some questions and a $6000 credit line was mine. More anecdotes like this, in little ole Eastern North Carolina

    http://www.carolinacoastonline.com/news_times/news/business_news/article_ad48bf0c-ba3c-11e1-a92e-0019bb2963f4.html

    This place was a ghost down when I moved down here three years ago. Homes are being built in many pockets in the area where they weren’t being built just 2 years ago.

    It’s only a matter of time before that easy money starts re-employing the people that have had trouble over the past few years and the next bubble will accelerate in earnest.

  13. Willy2 says:

    My favourite (credit stress) indicator peaked in late april 2011 and NEVER reached that level after that. This indicator went – on average – down in 2013 I wouldn’t be surprised to see a sharp sell off in the next few days.

  14. idaman says:

    There is a very high correlation between market tops and how often I check my account balances.

    Since the 1990′s I have kept a spread sheet of my asset allocation. In that sheet is my total liquid assets. In the last three weeks I have checked the total assets line 6 times. That’s twice per week.

    When I check every day, you can expect a we are near a short or medium term top.

    When I check intra-day, multiple times, we are near a bull market reversal. Thankfully, it seems the bull market is intact.

  15. donna says:

    Sell in May and go away? ;^)

  16. theexpertisin says:

    The late, great Dr. Martin Zweig said it best.

    Don’t fight the Fed. Don’t fight the tape.

  17. this dude, on CNBC Worldwide Exchange (7 Mar 2013), Bill Spiropoulos, president & CEO at CoreStates Capital Advisors, broke out with..

    http://video.cnbc.com/gallery/?video=3000153561

    ~”…the Roaring ‘teens…with (a lot) more Volatility…”

    Seems right to me..

    The whole clip is worthwhile..

  18. Pantmaker says:

    I know it sounds cliche but I think things really are different this time.

  19. sensibleinvestor says:

    The market has been up quite a bit in the first 4 months just like last year. However, it feels different than last year this time. I was 100% on cash by end of April last year. This time I think market will continue to rally. However, I expect a shallow correction like 5% sometimes in the summer. People will buy into corrections. US stock is the only game in town, where else to put money?

  20. Herman Frank says:

    Don’t care, I’m in it for the next 10 years, after which I shall hand it all over to our kids, who will preserve it for their children.

    We’re thinking nothing of paying $4 for a cup of coffee, which should be compared to us formerly thinking nothing of paying 50c for a cup. So if the DJ is now at some record, and I’m paying a record amount for my coffee – then what are we asking? That coffee go back or the DJ go back, because the old levels feel so warm and fuzzy and comfortable – or because then we can drink 8 cups of coffee?

    Do your homework as investor, have your shopping list ready, be diversified in your investments (sector ETFs are a wonderful tool), don’t be emotional, listen – but have your own common sense opinion, keep it very simple, and live an honest fruitful life in which you care for others. (Your kids will be much more enjoyable later in life when you give them that kind of example!)

    Forget about the hype of “timing the market”, it’s ink-blah-blah on the other side of advertisements.

  21. Expat says:

    Well, I say the market is meaningless in the first place. It’s a playroom for the rich and disconnected from the economic reality of 99% of the population.

    Second, a new high is a meaningless thing. Why not get excited over the market printing 14,879, which is a prime number? Or the new high for 11:37 in the morning on the last open Thursday of the week.

    While this is the kind of thing we love to talk about (Praise the FSM I did not watch CNBC for any reason yesterday) and pundits put stock in this kind of thing, it’s just a new number. Attributing anything else to it is just superstition and willful ignorance.

  22. Sun Tzu says:

    Revenues and earnings are flatlining. Guidance is headed lower. Big misses on key metrics are starting to appear. Maybe ECRI was just early on their recession call, as usual.

    I’m taking some profits, a little more than I normally do this time of year.

  23. nj-professor says:

    2013 is the first time in 17 years that there hasn’t been even a 5% retrace by May. (FatPitch)

    “Nothing goes up forever even in a FFF (fed fueled frenzy) market”. It is quite conceivable that naysayers who are staying put on the sidelines, since missing the initial big bull run, will rush in on first 10% drop or black swan, whichever comes first.

    Keep hearing that same thinking as the market has long since passed that 10% benchmark on the way up. If market is up 18% and drops 10%…..a lot of money in the mattress was doing nothing more than getting moldy.

    0 percent interest for another year (should be called tax on seniors and other money conservatives) is motivating many to make reckless choices in both equity and bond markets. Obama will never turn off the spigot during his term in office……it would tarnish his legacy even further.

  24. Eric Original says:

    I really don’t want to say, since historically the moment I post an opinion on the internet, the market immediately turns against me.

    But I will say that lately I’ve been rediscovering my roots as a Zweig devotee. The Trend Is Your Friend.

  25. zendiego says:

    I remember a time in 2008 when on this very blog we were commenting exactly like we are today, if that is not a “sign” with a sprinkle of history and simple observation, its not wonder we are still here saying the exact same things, repeating the same mistakes….lets do this again in 4 or 5 years and we will once again be saying the same things….I already bought my tickets…..its different this time!

  26. godot10 says:

    This general market feels like Apple’s run to $700 to me.

    A big central bank induced move up.

    Apple had to deal with “gravity”. Central banks may have eliminated (i.e. turned OFF) “gravity”, for now. I fear what happens when “gravity” is turned back ON.

  27. park city skier says:

    Capitulation is next at some point. The market believes the central bankers are omnipotent. It’s like people are running into a burning apartment building to collect the money under the mattresses, they continue to keep going up to higher floors to collect money believing no harm will come to them that the omnipotent powers (central banks) will protect them. The higher they go the greater the risk is that the floor will collapse and they will get severely burned. In Oct 2007 the market topped in Dec 2007 the great recession happen, let’s see how different it will be this time.