A Holiday Weekend: Are We There Yet?
Some thinking about "Melt Up" in stocks on this holiday weekend. Hey, just some. There's lots more to a holiday weekend than musing about markets. But here goes re markets.
Looks like the "Melt Up" proponents have center stage. After months of "Is it or isn't it?", "It is" has prevailed. Everyone and his mother mimics the Melt Up criers. They're no longer lone voices in the wilderness.
Being in a crowd always give me the heebee-jeebees. Maybe that means I'm a contrarian, although I don't like that label either. "Labels" belong on suits, not people. But I do religiously avoid crowds. It's not that I don't like people; it's just that I don't like lots of them all in one place.
And so, when it comes to "Melt-Up" there's a conflict: I see the crowd embrace it; and the evidence for it really does point to it's being firmly in place. So - deep breath - I'll suck it up and go with the "Melt-Up" crowd - for now.
With that settled, the natural next question: Are we there yet? The Melt-Up has hit its stride: That's for sure. But is it entering the home stretch? That question may be raised if we get what seems to be the immediate next phase of stock market action: some sort of correction. After all, prices keep hitting all-time highs and simply won't cross below their 50-day Moving Average - even when prices dropped 600 points a week or so ago. That's a pretty powerful up move. Here's a 1-year chart of daily prices:
You can see that RSI (the Relative Strength Index) at the top of the chart has spent much of its time in the upper regions. That's usually a sign of an item being oversold. Then again, it's not at extremes at the moment.
So what am I trying to say here? Is a correction due or not, darn it?!! Well, could be; but could maybe be some consolidating action where prices bounce around a bit and let the 50-day MA catch up.
If a correction comes - of any sort - we may get the worry warts claiming the Melt-Up is over and done and the end of the world has arrived. That's just the typical sort of overreaction and/or media hype you get in situations like this. I'm planning to ignore it if it comes.
What about a consolidation? Perhaps we don't get the drama in that case. Then again, in a world driven by tweets focused on whatever the current "story" or stories might be, so many of us are hooked on social media adrenaline, the craving may prove too much and trigger a round of - well, some sort of drama.
At the end of the day, there's nothing out there that shouts: "The Melt-Up is over!" There's not even any real indication that it doesn't have - possibly - a lot further to go.
But that's just the story for stocks. What's more intriguing is the persistent rise in virtually everything of any consequence. (Maybe not oil and other commodities, but that could change.) Does that rise shout "Everything Bubble!"?
Maybe something to think about on this Holiday weekend. Then again, if markets are taking a breather, maybe it's best to do the same.
Looks like the "Melt Up" proponents have center stage. After months of "Is it or isn't it?", "It is" has prevailed. Everyone and his mother mimics the Melt Up criers. They're no longer lone voices in the wilderness.
Being in a crowd always give me the heebee-jeebees. Maybe that means I'm a contrarian, although I don't like that label either. "Labels" belong on suits, not people. But I do religiously avoid crowds. It's not that I don't like people; it's just that I don't like lots of them all in one place.
And so, when it comes to "Melt-Up" there's a conflict: I see the crowd embrace it; and the evidence for it really does point to it's being firmly in place. So - deep breath - I'll suck it up and go with the "Melt-Up" crowd - for now.
With that settled, the natural next question: Are we there yet? The Melt-Up has hit its stride: That's for sure. But is it entering the home stretch? That question may be raised if we get what seems to be the immediate next phase of stock market action: some sort of correction. After all, prices keep hitting all-time highs and simply won't cross below their 50-day Moving Average - even when prices dropped 600 points a week or so ago. That's a pretty powerful up move. Here's a 1-year chart of daily prices:
You can see that RSI (the Relative Strength Index) at the top of the chart has spent much of its time in the upper regions. That's usually a sign of an item being oversold. Then again, it's not at extremes at the moment.
So what am I trying to say here? Is a correction due or not, darn it?!! Well, could be; but could maybe be some consolidating action where prices bounce around a bit and let the 50-day MA catch up.
If a correction comes - of any sort - we may get the worry warts claiming the Melt-Up is over and done and the end of the world has arrived. That's just the typical sort of overreaction and/or media hype you get in situations like this. I'm planning to ignore it if it comes.
What about a consolidation? Perhaps we don't get the drama in that case. Then again, in a world driven by tweets focused on whatever the current "story" or stories might be, so many of us are hooked on social media adrenaline, the craving may prove too much and trigger a round of - well, some sort of drama.
At the end of the day, there's nothing out there that shouts: "The Melt-Up is over!" There's not even any real indication that it doesn't have - possibly - a lot further to go.
But that's just the story for stocks. What's more intriguing is the persistent rise in virtually everything of any consequence. (Maybe not oil and other commodities, but that could change.) Does that rise shout "Everything Bubble!"?
Maybe something to think about on this Holiday weekend. Then again, if markets are taking a breather, maybe it's best to do the same.
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