MARKET ROUNDUP | |
Dow | +26.32 to 18,298.88 |
S&P 500 | +6.47 to 2,129.20 |
Nasdaq | +30.15 to 5,078.44 |
10-YR Yield | +0.087 to 2.228% |
Gold | -$0.40 to $1,224.90 |
Crude Oil | -$0.04 to $59.65 |
Stocks hit all-time highs today! So where’s the “Oomph?”
I’m talking about the momentum. The excitement. The broad participation. The euphoria that accompanied the day “Dow 10,000” hats rained down on the stock exchange floor.
Forget the bang. Today’s S&P 500 close of 2,129.20 and Dow Industrials close of nearly 18,300 – were both a fresh record highs for the broad averages – but they hardly elicited a whimper on Wall Street.
I’m not the only one noticing. Here’s one piece from TheStreet.com talking about “joyless rallies” and saying “the lack of excitement out there is reaching new depths.” Here’s another recent article on the topic from a college professor in Massachusetts.
For its part, the Financial Times also offered its take on the trend a couple months ago in this article. What did the FT blame for the lack of excitement:
1) The artificial nature of the rally. Investors have had a hard time embracing it because excessively easy central bank policy has helped fuel the gains.
2) The fact Wall Street bankers aren’t earning the huge paychecks they used to when markets surged. That sure dampens enthusiasm in New York, London, and other centers of the financial markets universe.
3) A lack of broad participation from Main Street investors. Unlike in the late 1990s, when average Americans were trading tech stocks like crazy, many of them are missing out on this rally. They’ve been so scarred by the dot-com crash, the housing crash, and the market meltdown that accompanied the financial crisis, that they’re just holding cash or ignoring the markets entirely.
Frankly, I can understand a degree of caution and skepticism. This economic recovery has left too many Americans behind. The wealth being generated by the markets isn’t touching as many of us as the rally in the 1990s did. We’ve seen the pain that bursting bubbles fueled by too-much easy money can inflict on individuals and the economy as a whole.
In the current rally, the broader Russell 2000 index hasn’t hit a new high. The Dow Transports and Dow Utilities are also lagging the Dow Industrials.
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Stocks hit a record high, but where’s the excitement? |
But is there a point where healthy skepticism turns into something worse? Where it becomes an unhealthy hindrance to building wealth – at least in reasonably priced, non-bubble-icious asset classes and investments that actually deserve your trust and hard-earned capital?
I’m not suggesting that just because the S&P 500 sets a marginal new high, you should plow every buck you have into the 2015 version of Pets.com. What I am suggesting is that you shouldn’t remain blind to opportunities, even as you continue to pay prudent attention to risks.
One of my favorite strategies has been to focus on anti-bubble sectors, like energy that have already had the heck beaten out of them.
That doesn’t completely insulate you from downside risk. But I believe it increases your chance of success. You’d be amazed at how many opportunities are out there.
(Note: That’s one reason I put together a time-sensitive, informative briefing for you. Click here to find out more.)
I’ve also been zeroing in on cheap foreign stocks and higher-yielding companies in sectors swept up in their own private bull markets. Plus, I’ve been using the 100 percent conflict-of-interest-free, time-tested Weiss Ratings to help steer investors like you away from the lousiest stocks and toward those with inherent, quantifiable fundamental and technical strength.
“One of my favorite strategies has been to focus on anti-bubble sectors, like energy.” |
Lastly, you could even make an argument that a market without too much “Oomph” is actually a good thing. It’s precisely when everyone is lathered up with excitement — and dog-piling into an investment or stock market sector — that you probably want to start thinking about heading for the exits! That was certainly true for dot-coms in 1999, housing in 2005, and government bonds just a couple of months ago.
So what’s your take here? Did you take much note of the all-time closing high in the S&P 500? Or was it a non-event?
Why do you think so many investors seem apathetic toward stocks, or at least aren’t publicly professing enthusiasm about them like tech in the late 1990s? What would it take, in your view, to give this market more “Oomph?” Please do weigh in over at the Money and Markets website and let me know when you have a minute.
Our Readers Speak |
In the meantime, and based on the comments I’ve seen, you’re clearly wondering if energy stocks are truly cheap — and whether that’s enough to make them attractive “Buys.”
Reader Chuck B. offered his take by saying: “Those charts from Friday are interesting, but it would have been more useful to have similar charts from several previous months or quarters to compare them with and look for trends.
“Energy, for example, trails the charts, but if it was higher in previous readings, it may still become weaker. If it was lower, then it may be showing strength. We would need more data to make informed decisions. Of course, one might take the pure contrarian route and jump on board without a care.”
Reader Jim added: “If we were chain-bound to the supply and demand fundamentals of oil, I would agree that caution was warranted now. However, past fluctuations in this market have been more political than economic and I suspect that is the case now.”
Finally, Reader Denis M. said: “I like well-managed energy stocks. Most of mine are Canadian. Recently, I’ve sold some of my physical gold, as I think it will remain in a bear situation for quite a while. I’m going to invest in more mid-tier oil/gas stocks and some select banks.”
Thanks for sharing. We’re at a very interesting level in the energy market, with oil prices consolidating their recent gains around $60 – and oil and gas stocks doing the same.
This looks like a normal pause that refreshes, and I continue to believe the path of least resistance is higher. Canadian producers, cheap, foreign oil and gas firms, and domestic takeover plays look particularly attractive to me.
Please do continue to add your thoughts to the mix, using this website link. I’ll respond to as many comments as I can to keep the discussion going.
Other Developments of the Day |
ISIS overran Iraqi defenders in the critical regional capital city of Ramadi over the weekend. They managed to do so despite U.S.-led airstrikes and intelligence sharing that was designed to support Iraqi police and military units. Several hundred troops died in the fight, while tens of thousands of residents fled in advance of the ISIS attack.
So much for that ceasefire. Airstrikes resumed in Yemen after a five-day, humanitarian truce between Houthi rebels and Saudi-backed government forces expired. Peace talks on a more lasting solution have gone nowhere.
Is it possible a mystery object struck Amtrak Train 188, helping lead to the fatal derailment in Philadelphia? That’s one theory investigators are considering, given a mark on the windshield and the fact two other trains were struck by projectiles around the same time and in the same location.
Several biker gangs got into a massive shootout in Waco, Texas, on Sunday, leaving nine dead and 18 wounded. Rival gangs had decided to meet at the Twin Peaks restaurant for unspecified reasons, before words and blows were exchanged, followed by gunfire.
Any thoughts on the latest Middle East conflicts? The most recent theory about the Amtrak 188 derailment? Then use the website to share your thoughts on those stories, or any others I didn’t cover!
Until next time,
Mike Larson
{ 23 comments }
Hmmm……. The price action over the last few months is very consistent with a corrective move based on the Elliott Wave Principle in a wave 4 up. I am presently in a short of oil with SCO to take advantage of the next move to the downside. Of course, when that move down to around $32 bbl is complete, THEN I will turn bullish. There is currently not enough blood running in the streets for this move down to be complete! The current OPEC production is still slamming out oil on a daily basis, and it will take a few more months for the over-produced oil to thin out for the next advance.
Kunta, I tend to agree with your analysis. This is definitely a wave 4 bounce. The only question really is……. how high will the bounce go before another big leg down starts? It could be over soon. And the quiet in the rest of the market? I think that there is a lot of exhaustion…and the fear in the debt markets does not help.
Amtrak derailment: The front windshields on locomotives are one inch plus lexan. In addition many locomotives running through Northeastern cities have urban gorilla mesh screens over the windows on locomotives. Flying objects are old stories. That doesn’t explain why the train was running past the century mark. This locomotive was barely a year old so there might a problem, Amtrak has had that before, their first locomotives had a derailment problem which resulted in a massive rebuilding program making them a different model with four instead of six axles..
Speaking of blood in the streets, as Kunta did above, but more literally, the biker war in Waco seems to reflect the fact that people are losing all respect for the justice system, and seeing police, prosecutors and judges as mere toadies of “The Man”. That is as instruments of repression, not as peacekeepers. The unrest in Ferguson, Baltimore and elsewhere also shows this. The Waco bikers were out to settle some dispute among themselves, and damn the consequences. In Baltimore, since the recent unrest, things have settled down in most of the city, but in certain city areas, there has been a sharp uptick in the number of shootings, stabbings, beatings and homicides, as people also settle their own problems violently. I warrant you will find similar outbreaks in many cities across America. What can you expect when government has taken on the functions of the gangs, “enforcing” peace in its fiefs by club and gun, demanding “protection money” under threat of harm and handing out favors to friends.
I predicted the Dow would hit 18,300 over six months ago.
And I further predict, that you should spend the money you give your wife to charity.
Neal Weintraub
312-3991851
Good on you Neal,give us another one,not sure about the wife bit though
You can talk all you want,all I want is the very moment in time when this damn crash,if, is going to happen.any guesses,all welcome,a lollypop for the one nearest,honestly
Maybe biker gangs are shooting at train locomotives in the NE, but at each other in the SW?
I love the “quiet” melt-up in the stock market. As soon as the loud-mouths come in, I’m getting out. Expecting a 10-20% sell off in the second half. Same for oil, which is why I’m loaded up on SCO options–fantastic leverage to make $ while those who listen to Mike lose their shirts. Listen to Larry!!!
The market hits all time high, while stocks edge lower. For the last few months the common investor has been robbed. I think they are a little tired of the game.
With the CN$ being so low 80c, why are you not jumping into the TSX or fully invest in Canadian stocks, be it energy or/& finance. how can you possibly go wrong ??
Whose right on Oil? Mike or Larry? The markets have a habit of making us all humble. At $60 the Saudis are indeed slowly gaining market share which is their primary stated goal. If it goes much above that the efficient shale producers will begin completing their drilled but unfracked wells and up US output rather quickly. The War in Yemen has put a temporary floor under prices as it pits the Saudis against the Iranians, a dangerous geopolitical situation. My guess is that the current price of oil goes nowhere. However, the recent $17 rise in prices could well put pressure on the US economy and the dollar as well. Maybe, just maybe, gold surprises us here and gets a turn. Jim
A joyless rally? What rally? The market is so far behind where it is “supposed to be” we’re still in a generational bear market. If someone came back in a time machine and told you in 2000 that “the NASDAQ would be at the same level in 15 years as it is today,” the word rally wouldn’t come close to what you were thinking. Fact is, it’s taken 15 years just to break even. Remember the famous quote saying “stock gains average about 6-7% per year through thick and thin”? Well, if the S&P had gained 7% per year since 2000, it would be at 4213 — not the 2129 it is today. I’m 100% invested but will be the first to admit that the market has been a terrible place to be in the past 15 years. A rally? Not even close. We’re still digging ourselves out of the pit. When the DOW hits 35,000 and the S&P is at 5000, we’ll have reason to celebrate — as we run to the hills.
History will no doubt look back upon what is happening now as the Greater Depression of the 2000’s, and note that it began under the Republican administration of George Bush, just as the 1930’s depression began under Herbert Hoover. Just as the Great Depression continued under the policies of FDR, this one has continued, and probably strengthened under the policies of BHO. Remember, the Dow rose nicely under FDR, as it has, also, under BHO.
At the March 2009 bottom Weiss hosted a Webinar advising everyone to sell all stocks
and put the proceeds in safe U.S. Treasury Money Market Funds. Great call!
Larry has been bearish for nearly a year telling everyone to invest in reverse S&P
ETF’s. As part of the Weiss group why should anyone accept your recommendations?
No one is perfect and most of us didn’t realize the effect of QE. In any market one must read every ones opinion and then make their own informed decision as to the next move.
The China trade road in Asia will change everything. All should be thinking about effect the Chinese Yuan as a reserve currency will have on the U. S. economy.
The future of the U. S. will never be the same. The global economy has changed that forever. Wake up People.
Yes, Scott, the days of the U.S. as top dog seem to be numbered. Make sure your kids learn at least basic Chinese. They will likely find it useful.
I enjoy reading Money & Markets. A lot of helpful insight. This market is coming down, just don’t know when & how low it will drop. We took a portfoilo of 300K out of the market in June of 2007. This was not entirely luck. I am 70 years old. Kicked the full service brokers to curb in 1997. I have not drawn a paycheck since March 1993 when I was Laid off. We hammer in and of the market, example: recently bought SLB @ $80 & Sold @ $88. Yep, missed a little – still have my 300k. Now is the time once again, go cask and dabble in the market. The first job I held was in Huntsville, AL working on the Saturn 5 Moon rocket (capsule control Module) SpaceCraft, Inc. This market is on the MOON and headed back to earth. Good luck to all of you.
1. “Why do you think so many investors seem apathetic toward stocks, … ?”
2. “What would it take, in your view, to give this market more “Oomph?†”
Answer 1: Because its a synthetic market (contrived by the government, the FED, and the big banks) . And its a market looking to fleece the little guy. And its a market that the little guy isn’t smart enough or crafty enough to survive in. Its a time when our own government is becoming more and more predatory … especially against main street. And it a time when the hard down phase of the K-winter is about to take place. Its a time to find a good hiding place for yourself and your cash … and wait.
Answer 2: The greatest stock market crash of all time. A time when percent dividends equals PE. And a time when Gold finally makes its to Larry Edelson’s prophesied $5000 per ounce. I think that’s what it will take … at least for me. Then I might perk up and show some interest. But I don’t want that hammer coming down on me and those I’m trying to take care of. No thanks … I’ll wait … for as long as it takes.
In fact the only worth while thing to investment now … is secrecy.
Maybe lack of general public participation in stocks is due to baby boomers retiring and not wanting to risk what they spent a lifetime accumulating.
My retirement date was Dec 2009 and in March of 2007 took everything out of the market. The trigger for me was everyone I knew was buying properties on both coasts and selling only a few months later for big gains.
A good friend who is a mortgage broker was talking about more business than he could handle because of no doc loans. (NINJA, no income, no job, apply) I Had no inkling of a housing bubble, but knew if the market took a breather there was not enough time line for me to sleep easy into retirement waiting for any event to smooth over.
“Baby boomers retiring and not wanting to risk what they spent a lifetime accumulating.” I think Steve has a point here.
I think this is a great time to discuss whether or not AMTRAC should be privatized. The Federal gov’t does not need to run a train service. The money generated from the sale of AMTRAC, NPR, public TV and the post office could be used to decrease Federal spending and help save the dollar. Also if a flat tax was implemented, the IRS could be severely downsized.
It appears Obama finally did something right, in cutting back on the militarization of police forces. How can people respect what was becoming, in many places, little more than an occupation force, like the ones we put in several Middle Eastern countries. Notice, though, he only cut back on issuing them heavy gear. No more tanks and .50 cal. machine guns, but the lighter military arms are still available upon request.