Changing Markets

I think energy sector may be running out of steam, as it has come a long way in a short amount of time…oil may be peaking here, but it won’t be a drop — more of a sideways consolidation, I think. Just my opinion. Also, I’ve noticed a bearish sentiment emerging in the housing sector. The builders are all down today hard, as is Zillow. There’s talk the wood and other commodity prices are causing the builders problems. And housing prices have already gone through the roof — pun intended. It could well be that houses are now priced too high for the available buyers.

A Little Bit Crazy

Bears

Selling puts works nicely in a bull market, but if you have a true bear market, like the cruel year 2002, which doesn’t get much mention (they always comment rather on the precipitous drop in 2000 instead), selling calls would be best and selling puts would be disastrous. 2002 is a very instructive year for those who remember it, an experience that no one under the age of 40 has gone through.

Tulips and Bitcoins

Bubbles

The Federal Reserve put is well entrenched. Their mandates used to be to hold inflation in check and to promote high employment. They are still interested in promoting high employment, but they want now to CAUSE inflation, and the number one priority in the last decade and counting is to see to it that the stock market keeps going higher and never fails. They are the true custodians of the stock market. Since they have an unlimited balance sheet, they think they are in control of things. We shall see. The skeptics think instead they are just making a dangerous bubble bigger and bigger.

Trump’s Platform

Bear Market?

Stock market seems stalled near the all-time highs. PE ratios are through the roof. Despite the Fed-fueled market, we have, in fact, a very deplorable economy, with high unemployment.

Beginning to feel like it is a bear market. You get sharp, fear-ridden drops, and very sharp, bear-market rallies that end up fading. Feels like that is about to happen. Look for these 1.5%+ rallies that end up fading after sharp drops. If that starts to occur, would not be surprised to then see a big 5% down day soon. That would really unnerve the market. That would mean the bear market has begun with a vengeance.

Everyone is thinking the Fed will save us. What if that is wrong? One thing you don’t want to do is buy the dip in a true bear market — what everyone has been doing now for 10 years.

The new mantra could be sell the rally — as in get out — and then go short. But watch for these sharp drops, followed by explosive rallies. Yesterday was kind of like that. The S&P actually went down sharply to 3805 and then rallied back to a decent gain before ending the day fading into a small positive uptick.

When the bear does start, all the buy-the-dip traders are going to be fooled.

Stock Market