S&P 500 Fails To Reach New Record

Stocks Flat Again

The S&P 500 has been within 1% of its record high for a few days. It still couldn’t break out on Thursday. It was down 0.14%. The Nasdaq was up 0.24% which means it extended its winning streak to 8 days which is its longest streak since October. Amazon stock was up 0.64% to a new record high which means it is about to be the next company to reach a $1 trillion valuation; its current market cap is $932 billion.

New Samsung Note 9

Samsung unveiled its latest Note device which will cost $1,000 or $1,250 depending on which model you want. This further opens the door for Apple to raise prices on its high-end devices. If the next iteration of the iPhone X costs $1,000 again, the new larger full-screen device could cost about $1,200. Premium device sales will grow Apple’s profits for another year which means it can maintain its $1 trillion valuation and help the Nasdaq keep up its momentum in the near term. Apple is susceptible to weakness in consumer spending, but there’s no indication the consumer will weaken in the next few months as the Redbook report was great. There will likely be another strong holiday shopping season since the labor market is strong.

Energy Lags

The energy sector was the worst performer again as it was down 0.89%. The energy sector is down 5.2% since May 21st. That doesn’t sound like a huge decline, but it means the sector has underperformed the overall market by a lot. The S&P 500 was up 0.44% in that period, meaning energy has lagged about 5.6% in about 12 weeks. Telecom was the best performing sector because treasury yields fell. It was up 0.98%.

Less Greed, Still Overbought

I have been bearish in the near term and neutral in the medium term. I have been moderately bearish because the market has run too far. With the Thursday pullback, the CNN Fear and Greed index fell from 74 to 71 which still signals greed. I think the market needs to fall a bit more to eventually rally again and take out the record high. Technically speaking, you’d rather the market fall about 3% now than have a false breakout where it hits a new record and then craters about 5%. I don’t think there’s any risk of a double top given the great earnings season and momentum the internet firms have. Amazon and Apple have a big say in where the market goes.