Yes, thirty five. That is the number of times this year (already) that the Dow Jones Industrials have hit a new all-time high. Buzz on the Street is, how long can that streak keep going? And, how much over-valued is the market at the moment?
Opinions, they say, are like fingers. Everybody has at least ten of them. When it comes to market analysis, there are many, many opinions out there. One of the foremost leaders, Jamie Dimon (CEO of Morgan Stanley), says today that we’re close to a bond bubble bursting, and the head of DoubleLine Capital says he “sees too much of a good thing and want no part of it.” We know that those same opinions have been – or could have been — proffered for a half-dozen years now. Like a stopped watch, one of these days they are going to be right.
Not today, however. Late in the trading day the Dow is off minimally and the other major indexes are walking right in line. August does have a history of severe spikes downward, and we approaching the un-steadiest time of year: September and October. So far to date though we have been doing pretty well.
This week’s strong relative strength sectors were about the same as last week’s (which shows a trend intact): Rare Earth Strategic Metals (REMX), Coal (KOL), Lithium (LIT), Brazil (EWZ), and Latin America (ILF). On the weak side were again Oil & Gas Services (XES), Natural Gas (UNG), Livestock (COW), Silver (SLV), and Pharmaceuticals (XPH).
The Technical Tea Leaves – like some of the pundits – see some hesitation building (wait, is that an oxymoron?): Intraday high prices of the market have increased to a 21 day high. Nevertheless, the advance/decline oscillator is negative. This unusual event is read as a very strong bearish signal that is often followed by a downward price movement.
Intraday high prices of the market have increased to a 21 day high. But the up/down volume oscillator is negative. In this up-trending market, this is taken as a very strong bearish signal that is often followed by downward price movements.