Denial is not a river in Egypt, although the stock market consolidates, mostly in such an orderly way. You’d think it was the Lazy River encircling the Mandalay Bay pool in Vegas, writes Gene Inger Wednesday night.
There’s a big disconnect between what is going on behind-the-scenes (rotation into lower-momentum stocks) and what the apologists for the market consider to be blind-selling of stocks.
I have argued the necessity of a transition to an active approach rather than merely passive investment approach more so this year than in many years, and I have themed my talks at TradersExpo New York and MoneyShow Las Vegas accordingly.
Reuters: Wall Street rises Thursday as top technology stocks hit record highs.
I believe the market increasingly is reflecting this stock picking approach versus a mind-numbing grouping of stocks in sectors, as if all had prospects more or less similarly. For instance AT&T (T) is in the same Communications ETF now as Facebook (FB) and Alphabet (GOOGL) and by no means has the risk exposure those two bloated stocks have.
Related Inger commentary: Fund managers eye new categories for tech stocks including FB, GOOGL
That’s not to say they are incapable of longer-term advance, but that they are now very expensive compared to any history. And hence they actually are seen that way (struggling at high levels). This is reflecting higher short interest that periodically gets run-in, and you get the rebounds.
With the Dow Industrials (DJI) and S&P (SPX) either higher or still within a range as has prevailed for months, it’s surely denial indeed to believe the shadows looming over this market are irrelevant.
By virtue of declining Wednesday, as we expected albeit not quite as dramatically as it might have been we did get a rebound. (I advised not selling or shorting early weakness.) Even if the tectonic risks do not go to fruition, it’s an extended time of risk.
And just imagine if this smaller global world actually does really get to deal with the full-blast of trade implications rather than symbolic.
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Recorded at MoneyShow Las Vegas May 14, 2018
Duration: 4:10.
