DOWN!
There are as many expressions on Wall St. as there are shares to trade. One of the most famous should have you second guessing yourself as to why do I even want to risk my hard earned money at the casino.
It goes like this, "The market's purpose is to take the most amount of money from the most amount of people in the shortest amount of time." That is the reason why bonds is the choice for the conservative investor. However, the Federal Reserve has taken that choice off the table. It is one of the many reasons why we at Evolution say, "End the Fed!"
Anyway, I am not about to give you a litany of meme's on the stock market. I will attempt to explain what we have noticed, particularly on last Wednesday. The market surged to a new record. There is also underlining thoughts on the market. One of them says, if the market hits a new high, it could go higher. We do not disagree with this adage. The same thought holds true on the downside.
Back to the market: On the subsequent days, the market did follow through as well as NASDAQ. Even the transports kept their high price. So, why all the pessimism, you ask? Last Wednesday, the market surged. However, it was just the powerful techs that caused the climb. Amazon, Microsoft, Google and Apple pushed the S&P 500 to record levels. Big money still has control of the market. Their power could prove our call wrong. This will change when they sense fear. However, as we see it, as we looked closer, the market's advance decline was scary. There were only 31 of the 500 firms in positive territory. That equates to 469 firms declining. This shows the market lacks conviction. The volume of shares are falling off the cliff as the market moves upward. That is another tell.
Put it this way. You have a store and you have a sale. It is crowded with customers. You are happy and realize that you could sell at even a higher price. You raise your prices. People are still coming to your shop, but less and less each week. Then, one day, you look around and no one is in your store. This is the present state of the market.
Last Friday
We saw earnings from Amazon and Apple, the two leading engines of the market. I thought the numbers were good, but the market had even greater expectations. Both stocks fell. So, who will carry the baton for the market? This leads back to expressions. One must realize that no words on variable actions can be a tautology, but there are grains of truth. From a chart view, the market climbs like a staircase or the "wall of worry." It declines like an express elevator going down.
One last thought. I would feel terrible about giving advice and it turns out wrong. So, do the prudent thing. Put in a stop on your shares. If the market continues to climb, no harm no foul. It it falls, you get out with little or no damage. These are words for the wise. Peace.
