The market has lost touch with reality. It is being led higher by a couple dozen stocks and the volatility we have seen this week is not normal. Back to back days of 300-point reversals is not normal. This kind of volatility is commonly seen at market tops. I have no idea if a top is near but this is a warning signal. Boeing has added almost 400 Dow points in the last 8 days. This rocket ship is going to crash. It is only a matter of time and it will take the Dow down with it. Several other Dow stocks have also been packing on the points as though there was nothing to fear in the future. Analysts are starting to compare the Dow to Bitcoin because of its incessant rise. We know what happened to Bitcoin.
The S&P is up 5% for the year with the median S&P forecast for yearend at 2,975. Of 18 analysts surveyed, nine analysts are at 3,000 or higher, eight are at 2,850 or lower. That means the S&P is less than 50 points from the year-end targets of half the analysts in the survey. Wells Fargo said the market is in the early stages of the silly season where euphoria is rampant. Katie Stockman at BTIG warned today that momentum will slow in the coming sessions and there is likely to be a 4-5% pullback as we enter February. My personal target date is expiration week.
I do not believe we should just keep piling on new positions so the next 300 point drop can stop them all out. The futures were up sharply in the early session but have declined to flat. They could rebound again by morning but that would just mean another crazy day.
Do not forget that we could see a government shutdown at midnight on Friday. Democrats have drawn a line in the sand saying "no continuing resolution" to extend the deadline again for another 30 days. While this could still happen we should not be putting real money to work ahead of that event.
There is always another day to trade if you have money in your account.
This is going to end badly.
NEW BULLISH Plays
No New Bullish Plays
NEW BEARISH Plays
No New Bearish Plays