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Financial crisis or the Great Recession, if you still remember them, seems so far away… we are now in the best six-month stock market rally since 1933. The bulls have been running riot in the stock market, seemingly unassailable and making money effortlessly, while the bears are licking their wounds.
Green shoots have “blossomed” but it is during such exuberant times that we have to be cautious. Of late, I noticed that the debate has intensified on whether the stock market has topped or will continue to break-out. In the last week of August, there are days when the stock market came under furious selling pressure at the open, only to end in positive region by aggressive buying towards the end of trading sessions.
Clearly, there are manipulative forces at play, aided by a media which put a positive spin on any economic news. As they say, less bad is the new good. But the rally will not work without greater fools hopping on the bandwagon. What eager retail investors see is the stock market advancing each day, thus they are happy to stay vested and let their profits ride.
If the Federal Reserve hikes interest rates and stops creating money from thin air tomorrow, the party will be over but since that is not likely to happen and the US stock market is buoyed by so much liquidity, I wouldn’t be surprised that there is more upside to this rally.
However, given that September is historically the worst month of the year and with some big boys getting uneasy, selling pressure could escalate in the coming weeks as they unload their huge inventories of stocks.
Already, interest in US stocks is waning. Last week, trading was dominated by a few counters, namely the notorious gang of nationalized financial institutions (Fannie Mae, Citigroup, AIG, and Freddie Mac). If the top traded stocks are discounted, market volume is pretty thin which doesn’t make a convincing case for the stock market rally to continue. Read more...[caption id="attachment_2585" align="alignright" width="150" caption="Photo by R'eyes"][/caption]
Financial crisis or the Great Recession, if you still remember them, seems so far away… we are now in the best six-month stock market rally since 1933. The bulls have been running riot in the stock market, seemingly unassailable and making money effortlessly, while the bears are licking their wounds.
Green shoots have “blossomed” but it is during such exuberant times that we have to be cautious. Of late, I noticed that the debate has intensified on whether the stock market has topped or will continue to break-out. In the last week of August, there are days when the stock market came under furious selling pressure at the open, only to end in positive region by aggressive buying towards the end of trading sessions.
Clearly, there are manipulative forces at play, aided by a media which put a positive spin on any economic news. As they say, less bad is the new good. But the rally will not work without greater fools hopping on the bandwagon. What eager retail investors see is the stock market advancing each day, thus they are happy to stay vested and let their profits ride.
If the Federal Reserve hikes interest rates and stops creating money from thin air tomorrow, the party will be over but since that is not likely to happen and the US stock market is buoyed by so much liquidity, I wouldn’t be surprised that there is more upside to this rally.
However, given that September is historically the worst month of the year and with some big boys getting uneasy, selling pressure could escalate in the coming weeks as they unload their huge inventories of stocks.
Already, interest in US stocks is waning. Last week, trading was dominated by a few counters, namely the notorious gang of nationalized financial institutions (Fannie Mae, Citigroup, AIG, and Freddie Mac). If the top traded stocks are discounted, market volume is pretty thin which doesn’t make a convincing case for the stock market rally to continue. Read more...
[/caption]
Financial crisis or the Great Recession, if you still remember them, seems so far away… we are now in the best six-month stock market rally since 1933. The bulls have been running riot in the stock market, seemingly unassailable and making money effortlessly, while the bears are licking their wounds.
Green shoots have “blossomed” but it is during such exuberant times that we have to be cautious. Of late, I noticed that the debate has intensified on whether the stock market has topped or will continue to break-out. In the last week of August, there are days when the stock market came under furious selling pressure at the open, only to end in positive region by aggressive buying towards the end of trading sessions.
Clearly, there are manipulative forces at play, aided by a media which put a positive spin on any economic news. As they say, less bad is the new good. But the rally will not work without greater fools hopping on the bandwagon. What eager retail investors see is the stock market advancing each day, thus they are happy to stay vested and let their profits ride.
If the Federal Reserve hikes interest rates and stops creating money from thin air tomorrow, the party will be over but since that is not likely to happen and the US stock market is buoyed by so much liquidity, I wouldn’t be surprised that there is more upside to this rally.
However, given that September is historically the worst month of the year and with some big boys getting uneasy, selling pressure could escalate in the coming weeks as they unload their huge inventories of stocks.
Already, interest in US stocks is waning. Last week, trading was dominated by a few counters, namely the notorious gang of nationalized financial institutions (Fannie Mae, Citigroup, AIG, and Freddie Mac). If the top traded stocks are discounted, market volume is pretty thin which doesn’t make a convincing case for the stock market rally to continue. Read more...
