New All-Time Highs Pile Up and There's Hardly a Downtick to Be Found
Even the bulls would like to see a little downside as we head into a busy week of earnings and the Fed.
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Strong markets stay sticky to the upside, but recent action has been extreme. There have only been a few ticks of downside since July 22, and since June 20, the biggest intraday swing is hardly 1%. The gains aren’t large, but they are slow and steady with new highs almost every day. There are virtually no opportunities to buy a dip.
It is extremely positive action and great if you are heavily long and staying patient. It is not ideal if you have cash to invest and are looking for good entry points.
The trillion-dollar question is what will cause a shift in this very persistent trend. So far earnings, tariffs, and economic data have done nothing to stop the steady buying. The bears have been predicting disaster for months, but have been dead wrong about tariffs and inflation. The economic situation has been so good that the Fed is under extreme pressure to embrace the fact that inflation is under control and it is safe to cut rates.
Next week will be one of the busiest weeks of earnings reports, and there will also be the Federal Reserve interest rate decision. The reaction to earnings has been quite complacent so far, and the expectation is that the Fed will not take any action, but will the headlines act as a trigger for selling?
Technical conditions are very extended, and the lack of concern is a recipe for a reversal, but that has been the case for a while now and keeps trapping the bears. Even the bulls would like to see a little downside at this point so they can reposition a bit.
The market is staying extremely sticky to the upside. That can’t last forever, but it can last a lot longer than seems reasonable.
Have a great weekend. I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
