Markets Stalled at All Time Highs

July 30, 2017

 

Markets stalled at the end of the week and we attribute that to Trump’s inability to pass anything related to healthcare with John McCain defecting and also from the North Korean ballistic missile fired towards Japan. Presently, futures are flat.  These events and lack of volume and momentum resulted in us leaving the SPY trade early but with a 4% return. 

 

Markets are at all time highs and this too, coupled with a super low VIX levels not seen in over two decades.  Some market analysts are also trying to inject fear into the market by comparing todays markets to past market situations where it was followed by significant corrections.

 

The decline coincides with the release of a research note from JP Morgan strategist Marko Kolanovic, who sees similarities in today’s market to big sell-offs in 194 and 2001.  Only time and history will tell what will happen. 

This coming week Apple (APPL), the most valuable company in the world by market capitalization, will report fiscal third-quarter earnings.  Apple’s results should set the tone for the overall technology sector and, to a large degree, the broader stock market. Tesla (TSLA), with a cult a following, will announce its earnings on Wednesday.

 

The markets are high and we think set to move slightly higher until the end of August.  We should see some dips of significance, if not a full-blown correction, starting in September through the end of October.  What will a correction look like at this stratospheric levels? The DOW is at 21,830 a 10% correction would cause the DOW to drop 2,183 points to 19,647. It will create much fear in the global markets if this happens and we could see an even greater correction because most people will panic.  We like panic as it creates the greatest buying opportunities. There have been 14 declines greater then 5%. 

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