Is It Time To Buy The Dip??? - Part 44
The S&P 500 is now within 1% of its all-time high after Trump signed executive orders over the weekend to extend an expired benefit for unemployed workers and as investors remain hopeful that another stimulus package is on the way. The S&P 500 has now extended its winning streak to seven days, which would be its longest since the spring of 2019. It’s been a long grind higher since the S&P 500 fell 34% in March from the February highs. So is it time to celebrate or become even more cautious?
Goldman Sachs thinks that despite the US Feds buying up everything and the kitchen sink, the lows aren’t in yet due to the “X-factor,” Covid-19. But if the U.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said. That comment was made three months ago.
The US now has over 5 million cases of COVID-19. 5 million cases means the US has a quarter of the world’s know COVID-19 cases. Of those 5 million cases, California, Florida, Texas, New York and Georgia account for 40% of the cases. It took 99 days for the US to record 1 million cases and only 17 days to get from 4 million to 5 million cases.
Then there is the off again, on again tension between the US and China. Last week President Trump issued executive orders to ban TikTok and WeChat, citing they both cause national security issues. So by mid-September, Americans / US based companies can’t advertise, download or agreements involving the two platforms. Recently China announcement unspecified sanctions against US.
The other day I talked about the Buffett Indicator, which is the sum total of the market capitalization of all U.S. stocks relative to the nation's GDP and how it's at an all-time high.
but Chris Harvey of Wells Fargo Securities had a different spin for caution in the Markets.
Chris Harvey, Wells Fargo Securities head of equity strategy, told CNBC on Friday that the low level of short interest in the market right now left "significant scope" for it to rise, which could coincide with a market sell-off.
Low levels of short interest are a positive sign in the near term, Harvey said. They demonstrate that people are much more constructive and that bearishness has been "rinsed or washed out of the marketplace."
However, low short interest also means that there's much room for the levels to go up. "Typically some of the worst sell-offs we've seen is when short interest rises from very low levels, which is where it is. It's not a catalyst by itself, but it's a concern, and it's a concern as we see the market melting up," the strategist said.
Personally, I'm seeing the Smart Money continuing to buy up the Markets, almost everyday and when the Markets fall, the Smart Money is there to buy the dips. Thus, I'm looking for the S&P 500 to hit all-time highs later this week or next.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
