17 October 2013

SP 500 and NDX Daily Charts - Around Kap Hoorn, and Into Uncharted Seas


The SP 500 hit a new all time high today, driven by exuberance over the pushing of the debt ceiling and budget debate into the future.

The Dow did not fare as well, being weighed down by IBM that showed rather poor earnings results. It is a 'real economy thing.'

We don't have much in the way of dependable economic data yet, since the government has just come back to work, and the ranks of the unemployed might be swelled by those impacted by the shutdown, so we will have to watch this carefully.

I am not so rosy in my outlook for the economy, and think that the SP 500 is rather richly priced at a trailing PE of over 16, but it really is a QE thing.

The Fed is pumping money for all it is worth, expanding its purchased assets at a steady $80+ billion per month. The economic data will most likely be rather poor for 4Q, but that will be dismissed because of the shutdown.

So it looks like it is onwards and upwards. Let's sail round the Horn and into the blue Pacific.  But be forewarned, I see some rough seas across the next horizon.

I have not been short stocks for quite some time, occupying my leisure time playing the wiggles in gold and silver. But I am now getting an itch to start looking for a short entry point, but slowly. There is a notorious tendency for suckers to short new highs, and especially new all-time highs. And that does not often prove advantageous.

So let's make haste slowly, as the old Romans used to say, and enjoy this brief respite in our sea of troubles.

Have a pleasant evening.