Simple Pleasures…and All Time Highs

'I enjoy the simple pleasures, the setting sun, a glass of wine, the Dow hitting an all time high.'

I like today’s cartoon on simple pleasures, however, joking aside, trading and investing is not so simple.  As we hit another all time high today, I was pleased to be still long the market.  But just how much further up it will go is anybody’s guess.  I sense that there will be a correction of some sort coming this year.  I just don’t know when.

Of course, I always welcome corrections as they are just great opportunities to sell near a top and buy after the fall.  So bring it on Mr Market, well actually, just let me lock in a decent profit first on these trades.  They are off to a good start.

Hopefully, we will see further short covering by mid week, as there must be some significant shorts around these levels.  Should the market continue to grind higher, at some point they will capitulate and send us on another 1% rally on the indexes.

I have a few splits in the ETF’s I trade to contend with over the next few days to make life a little more interesting.

Market News:

U.S. stocks closed higher on Monday, with the Dow Jones industrial average and S&P 500 ending at new records, as investors shook off earlier concerns about Greek debt and a renewed rise in bond yields.

The Dow Jones industrial average closed above its previous closing and intraday high of 18,288.63. The S&P 500 closed at a record for the third day in a row, passing its closing high set on Friday and topping its intraday high of 2,125.92.

The Nasdaq Composite ended 20 points within its closing record, outperforming the major indices with the iShares Nasdaq Biotechnology ETF (IBB) gaining 1.3 percent.

Speaking early Monday at the Swedish capital, Chicago Fed President Charles Evans said the U.S. Federal Reserve could look at a rate hike in June if the economy is strong enough, Reuters said. His speech argued for rates to start rising in early 2016.

Evans told reporters if the Federal Open Market Committee had confidence that inflation was going to move up and that first quarter economic softness was temporary, “you could imagine a case being made for a rate increase in June.”

Most of the second-quarter data reports have showed a slower-than-expected rebound from a weak first quarter.

The only data out Monday was the National Association of Home Builders’ survey, which showed builder confidence slipped two points in May, missing expectations of a slight gain. Housing starts and existing home sales come out later in the week, along with the Federal Open Market Committee’s meeting minutes.

In Europe, stocks closed higher amid abating fears that Greece is on the verge of bankruptcy.

Earlier, U.S. stocks opened mildly lower as European equities dipped on news that a Greece government spokesman said on Monday that authorities will pay public-sector wages and pensions in May, but needs a deal with creditors by the end of the month.

Greece proposed to its international lenders that Europe’s bailout fund pay back maturing Greek government bonds held by the European Central Bank as a way to overcome a funding crunch, Finance Minister Yanis Varoufakis said on Monday in a Reuters report. Athens could then pay the European Stability Mechanism (ESM), at a later date, Varoufakis told the annual assembly of the Greek Industrial Federation.

National officials in Athens also sent a letter to the International Monetary Fund that showed Greece came close to defaulting on a 750 million euro ($860 million) repayment last week, local newspaper Kathimerini and the Financial Times reported.


Earnings: Wal-Mart, Home Depot, TJX, Dick’s Sporting Goods, Medtronic, Autodesk, Red Robin Gourmet Burgers, Vodafone, Analog Devices

08:30 a.m.: Housing starts

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