Bulls on Shaky Ground Today

After a fast and furious rally by the bulls, we saw a little change on Friday as “too far, too fast” became my theme. I thought the best case would be for a pause to refresh or some backing and filling. That appears to be the case as the new week begins. I am very keenly watching for the market’s reaction if and when it gives back all of last Wednesday’s huge, post-election gains. That should speak volumes about the next week or so. On the Dow, that’s roughly 25,600 and 2750 on the S&P 500.

Not a single thing has changed in my thinking that an immediate return to new highs could very well spell the end of the 10-year bull market. That remains in play, however, as I have been discussing, the odds do not favor that behavior. Rather, stocks are “supposed” to see another decline to build a better launch pad for the next rally to 27,000.

Where is leadership, you ask?

It certainly isn’t in the banks or semis. That’s a little troubling. High yields bonds are about to make new lows. The NYSE A/D Line isn’t much help at this point as it basically looks like the stock market. As I keep offering, the defensive sector is standing out. Utilities, staples and REITs. It’s great if you own them, but not comforting for the overall stock market. Another fun week ahead!

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Paul Schatz, President, Heritage Capital
Paul Schatz, President, Heritage Capital
If you have at least $250,000 of investable assets and would like to schedule a complimentary meeting, call, or video conference with me, please click on my calendar here email me at Paul@investfortomorrow.com or call the office directly at 203.389.3553.

Comments

  1. Paul,
    Are you buying any inverse etf”s

    thank you for all your insights !

    • Paul Schatz, President, Heritage Capital says:

      For me, it’s tough to put on shorts when stocks are already in the midst of a decline. I am better shorting into rallies.

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