Home About Archives RSS Feed

@theMarket: Flirting With Record Highs — Again

By Bill SchmickiBerkshires Columnist

You can't keep a good market down, so why is everyone so darn worried about the stock market? Could it be that too much of a good thing may be dangerous to your financial health? If so, someone should tell the bulls.

Truly, no one should be complaining. Here we are at the end of May, normally a month where the markets come under selling pressure, and we are a mere five points away from the S&P 500 Index's all-time high. The contrarian in me says that too many people are waiting for the shoe to drop right now, so it probably won't.

Officially, it is the Memorial Day weekend that kicks off the herd migration from Wall Street's gray canyons and valleys to more amenable vistas. Highly-polished Wing-tips are exchanged for Gucci sandals, as the high and mighty head for the over-crowded beaches and multimillion dollar "cottages" of Long Island and the Hamptons.

Those who remain are the young and ambitious. Without much trading authority, they will have a hard time moving markets. Nonetheless, they will attempt to make a killing for their bosses at the expense of the rest of us. As market volume dries up this summer, it is a toss-up on whether markets become even more volatile or simply wallow in apathy and neglect.

In my career, I have seen both during the summer doldrums. In recent years, the markets have tended to be more volatile with fairly large declines in June and July. In other periods, you could hear a pin drop for weeks at a time on New York trading floors. I'm betting we see more volatility than less.

While the markets continue to grind higher so does the short interest in the stock market.

Short interest is the quantity of stock shares that investors have sold short but not yet covered or closed out. Many strategists use short interest as a market-sentiment indicator, since it indicates how many investors think a stock's price (or market) is likely to fall. Both the short interest aggregate dollar amount of the S&P 500 Index and short interest ratio (days to cover or buy back these shorts) are at levels not seen since mid-2007. We all know how that ended for investors.

The markets continued to make new highs until the end of the year and then subsequently crashed in 2008-2009.

Last week the markets touched my S&P 500 Index target of 1,900 — briefly. It was so quick that I half hoped we would make another stab at that level and possibly break it. It appears we are trying to accomplish that as I write this. Markets are never neat and tidy so if we break this level to the upside, I would expect a bout of short-covering which could propel the markets higher by another 20-40 points quickly. At the same time, I think too many people are bearish for a sell-off right here and now. If we were to see a fast jump higher and a panic stampede into the market at that time we just might be set up for a last hurrah.

Have a happy Memorial Day weekend. But while you are grilling, swimming or just plain having fun, do me a favor. Take a moment to remember our servicemen and women both past and present. I know I will be remembering my buddies in Vietnam that didn't make it. Semper Fi

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Fairview Hospital Receives the 2024 Women's Choice Award
Butternut Fire Contained; Conditions Improve
Information Sought Regarding Illegally Shot Vermont Bald Eagle
Holiday Hours: Thanksgiving
Williamstown Chamber of Commerce Touts Online Successes
Downtown Pittsfield Announces Holiday Downtown Passport
North Adams Recreation Center Opens Long-Closed Pool
Clarksburg Joining Drug Prevention Coalition
Pittsfield Road Cut Moratorium
Adams Lions Club Makes Anniversary Donations
 
 


Categories:
@theMarket (509)
Independent Investor (452)
Retired Investor (217)
Archives:
November 2024 (6)
November 2023 (1)
October 2024 (9)
September 2024 (7)
August 2024 (9)
July 2024 (8)
June 2024 (7)
May 2024 (10)
April 2024 (6)
March 2024 (7)
February 2024 (8)
January 2024 (8)
December 2023 (9)
Tags:
Stimulus Unemployment Fiscal Cliff Currency Interest Rates Election Crisis Deficit Stock Market President Oil Pullback Taxes Qeii Federal Reserve Euro Bailout Metals Congress Jobs Markets Japan Retirement Economy Banks Rally Recession Energy Stocks Europe Commodities Debt Ceiling Debt Greece Selloff
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
@theMarket: Stocks Should Climb into Thanksgiving
The Retired Investor: Thanksgiving Dinner May Be Slightly Cheaper This Year
@theMarket: Profit-Taking Trims Post-Election Gains
The Retired Investor: Jailhouse Stocks
The Retired Investor: The Trump Trades
@theMarket: Will Election Fears Trigger More Downside
The Retired Investor: Betting on Elections Comes of Age
@theMarket: Election Unknowns Keep Markets on Edge
The Retired Investor: Natural Diamonds Take Back Seat to Lab-Grown Stones
@theMarket: As Election Approaches, Markets' Volatility Should Increase