Extended bouts of euphoria are actually tamer than appreciated. That is not to suggest that we have to advance immediately upon DJIA 20,000 but it does reflect how there’s an orderly sense to the ongoing rotation. It’s been visible simply by noting the market’s ability to forge ahead absent a continuous oil firming. On Friday oil did gain a bit; aiding the S&P and DJIA in achieving ever-higher levels.
We haven’t and still don’t believe that just because it’s spiky and seriously ahead of valuation metrics (any type of fundamental assessment aside of course, wishful thinking), it has to reverse aside periodic refreshing pauses to refresh. Now sure, I hear the comparisons with 1999 or even 1929 out there; and I understand the parabola they’re looking at. Just following what I have said for a month now; and that’s the belief that ‘everything changed or is at least perceived to be changing’ for the better as far as business.
Of course there’s going to be a day-of-reckoning; and a short-term top of some consequence is in the offing over the course of the next three weeks or so (as we approach the point where trades can settle in a new tax year). I suspect next week could see some pause or hiccup related to the FOMC, and perhaps their statement more so than just the hike they implement. I also suspect that will be contained (should there be selling on that) and to the chagrin of any wannabe bears out there, the market catches itself in fine fashion, and trucks ahead as the blizzard of money comes back in.
Now again, this is not to say I’m entirely comfortable with everything that our new President is setting up.
For now, with clear understanding of how divided society is about things, I am focused on the business and market implications of perceived policies as regard taxes, regulations and trade. I am not saying all are endorsed or anything like that. And I’m not saying there won’t be monetary, currency or debt service issues (there will be); nor am I suggesting all that is being done is somehow ideal for society. I simply projected (even weeks before the vote) that it would be well received and thrust the market much higher (and not necessarily this high; just that we stayed bullish seeing how it all unfolded).
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