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The high price of cash

Since the beginning of January, many investors have sold their holdings in the stock market and are sitting on the sidelines in cash. Is it too late to sell, or would selling out be a wise move? read more…

Stocks Rebound

reboundIt had to happen at some point. The averages declined almost every day for three weeks in a row, so a relief rally should be expected. The question is how long will it continue? read more…

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Holy Cow

 

While shopping for my Memorial Day cook-out last weekend, I experienced a lethal dose of sticker shock.  Steaks, roasts, spare ribs, pork loin, even ground beef were commanding prices that were a good five to nine percent higher than they were at the start of the year.  Unfortunately, it appears prices will go higher still in the months ahead. Here’s why. read more…

Flirting with record highs once again

You can’t keep a good market down, so why is everyone so darn worried about the stock market? Could it be that too much of a good thing may be dangerous to your financial health? If so, someone should tell the bulls.

Truly, no one should be complaining. Here we are at the end of May, normally a month where the markets come under selling pressure, and we are a mere five points away from the S&P 500 Index’s all-time high. The contrarian in me says that too many people are waiting for the shoe to drop right now, so it probably won’t.

Officially, it is the Memorial Day weekend that kicks off the herd migration from Wall Street’s gray canyons and valleys to more amenable vistas. Highly-polished Wing-tips are exchanged for Gucci sandals, as the high and mighty head for the over-crowded beaches and multi-million dollar “cottages” of Long Island and the Hamptons.

Those who remain are the young and ambitious. Without much trading authority, they will have a hard time moving markets. Nonetheless, they will attempt to make a killing for their bosses at the expense of the rest of us. As market volume dries up this summer, it is a toss-up on whether markets become even more volatile or simply wallow in apathy and neglect.

In my career, I have seen both during the summer doldrums. In recent years, the markets have tended to be more volatile with fairly large declines in June and July. In other periods, you could hear a pin drop for weeks at a time on New York trading floors. I’m betting we see more volatility than less.

While the markets continue to grind higher so does the short interest in the stock market. Short interest is the quantity of stock shares that investors have sold short but not yet covered or closed out. Many strategists use short interest as a market-sentiment indicator, since it indicates how many investors think a stock’s price (or market) is likely to fall. Both the short interest aggregate dollar amount of the S&P 500 Index and short interest ratio (days to cover or buy back these shorts) are at levels not seen since mid-2007. We all know how that ended for investors. The markets continued to make new highs until the end of the year and then subsequently crashed in 2008-2009.

Last week the markets touched my S&P 500 Index target of 1,900—briefly.
It was so quick that I half hoped we would make another stab at that level and possibly break it. It appears we are trying to accomplish that as I write this. Markets are never neat and tidy so if we break this level to the upside, I would expect a bout of short-covering which could propel the markets higher by another 20-40 points quickly. At the same time, I think too many people are bearish for a sell-off right here and now. If we were to see a fast jump higher and a panic stampede into the market at that time we just might be set up for a last hurrah.

Have a happy Memorial Day weekend. But while you are grilling, swimming or just plain having fun, do me a favor. Take a moment to remember our servicemen and women both past and present. I know I will be remembering my buddies in Vietnam that didn’t make it. Semper Fi.

 

 

 

 

Can it be this simple?

 

Financial gurus have come up short in explaining exactly why interest rates are going down, and not up, as everyone expected them to do. The same thing is happening overseas. What gives? read more…

Don’t buy the dips

 

The S&P 500 Index hit 1,900 this week. The Dow Jones Industrial and Transportation averages also reached new historical highs but the euphoria lasted about a minute and a half. That’s about as long as it took for traders to sell into the move. Not good. read more…

Potholes take center stage

 

Can you count the number of potholes you hit or narrowly avoid every day?  Do they make your blood boil, teeth clench and trigger a choice euphemism or two during your commute?   Unless the Highway Trust Fund (HTF) receives a $302 billion injection of funds this year, it could get a lot worse. read more…

A shift in leadership

 

Throw out the new, embrace the old, not something you see often on Wall Street. But as technology stocks and other high flyers continue to get trounced, utilities and other oldies but goodies are doing quite well. read more…

Inequality in the housing market

 

 

“You, you said that they — What’d you say just a minute ago? They had to wait and save their money before they even thought of a decent home. Wait? Wait for what?! Until their children grow up and leave them? Until they’re so old and broken-down that — You know how long it takes a workin’ man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you’re talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?”

George Bailey, “It’s a Wonderful Life”

 

The most expensive home ever sold in America occurred over the weekend in “The Hamptons,” Long Island’s playground for the one percent. Just a week before that a Greenwich, CT estate sold for $120 million. At the same time, the percentage of America’s first-time home buyers is at its lowest level since 2008. What does that say about homeownership in the United States? read more…

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About Bill

Bill Schmick was born in a blue-collar neighborhood of Philadelphia, just a few blocks north of “Rocky Balboa” territory where most of his Catholic schoolmates grew up to be either cops or criminals. He narrowly escaped both professions by volunteering to fight in Vietnam as a U.S. Marine... Read More

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