Tuesday, April 6, 2010
The amazing stock market melt-up of 2009-2010 continues.
In a move that has even the Las Vegas bookies scratching their heads, the S&P 500 rose again yesterday. That makes it 27 out of the past 31 Mondays that stocks have closed in the green.
This is even more remarkable: The S&P has now gone 38 trading days without experiencing so much as a 1% pullback. That's a measly 12-point decline from one day's highest point.
Mr. Market has indeed become the hot shooter at the craps table. The crowd around the table is growing larger and louder. Every roll of the dice is accompanied by a boisterous cheer, and Mr. Market's winning streak continues. Even folks outside of the casino are tempted to come in and join the party.
Of course, we all know winning streaks come to an end, and every hot shooter eventually craps out – usually after covering all the numbers and when there's the most money to lose. For now, though, that's an inconvenient truth. It's more fun and – for the time being – more profitable to believe the stock market is a one-way bet and we're all smart enough to cash in our chips before reality strikes.
It's also fun to believe deep-fried chocolate bars and bacon-wrapped sausages are good for you.
I'm not trying to make a bearish argument here. That's not necessary. After all, there aren't too many people who actually believe it's a good thing to have government continue to spend far more than it receives in an effort to pump up the economy (last month's estimated deficit is $300 billion). Most people can see through the rainbow-laced economic headlines and determine today's growth is being bought and paid for with tomorrow's tax dollars.
We can all spot the storm clouds in the skies above us.
Most people, though, think they'll be quick enough to find shelter on high ground once the rains begin and the flooding starts.
That's what most people thought in 1987. It's what most people thought in 2000. But most people got soaked back then.
It looks like history is getting ready to repeat.
If you've been hanging out at the craps table behind Mr. Market, congratulations. It's been an amazing, odds-busting run. At this point, however, it makes sense to cash in a few chips and maybe even make a small wager against the hot shooter.
On the other hand, if you've avoided going into the casino up to this point, don't let the incessant cheering coax you inside. Buying stocks now is similar to buying stocks in August 1987, or in January 2000.
Keep your money in your pocket.
Best regards and good trading,
Sharp rebound for natty... fuel surges 10% from last Wednesday's bottom.
10-year rates on the move... yield touches 4% for first time since last June.
Rally continues for heavy equipment... Caterpillar, Cummins, Dover, and PACCAR hit fresh highs.