The market keeps grinding higher. The first week in september was a shortened week with no trading Monday. Everyone kept saying that after Labor day volume picks up as the big boys come back from their vacation homes in the Hamptons and the kids on the Eastern seaboard head back to school. Well the market hasn't exactly been flooded with volume yet but I suspect that it can't be long before more players return to their battlestations. Over here in Montana it's beginning to feel a bit more like fall as the air turns crisp and the nights cold.
As America winds down its QE, Europe begins theirs. I wish I knew and understood macro economic policy a little more because I would like to think that there is reasoning behind some of these moves central bankers have been making other than some overbearing desperate attempt to save struggling economies. Seems to me as a layman that if an economy is strong it doesn't need help from central bankers. You can put the training wheels on the bike, but sooner or later you are going to have to take them off and learn to ride on your own. Anyways as a result of the agressive monetary policies the Euro is tanking and the USD is soaring. Vacation time anyone?
Traders are scared of heights. This is because if you spend much time in markets you eventually learn (most likely the hard way) that what goes up, must come down. The market is chopping around, strength off the back of the ECB aggressive monetary policies got faded three times last week which is a bit of a change of character in the market. However any sell pressure at all would be a change of character as this market continues on its unprecedented bull run. Friday was met with buyers as people were afraid to let the 1% 'buying opportunity' slip through their fingers. I am of the opinion that if you wait long enough you can almost always find a better price to buy or sell something at but traders are not patient people. We must work with what we are given every day and at least for now BTFD continues to reward. The S&P closed the week at an all time closing high.
The market is in overbought territory and is working off the last V shaped rally sideways for now. SAR indicator flipped to resistance. Volume is starting to pick up slightly from the summer doldrums. Along with the market, bullishness is at an all time high.
The risk to bulls is a swift and fierce correction as Americas QE winds down. The risk to bears is an explosive blow up in equity prices as bulls continue their unrelenting stampede and trample bears. The market is a pendulem, momentum is a very powerful force. Just keep in mind that sooner or later it slows and begins to swing the other way. Never get complacent or the market will humble you. Have a good week and make some $!
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