The market kicked off 4th of July celebrations early by making new highs.
The Dow, S&P 500 and Nasdaq all hit record levels. There’s no arguing with the chart — the bulls are back in command.
But stocks aren’t the only game in town… or the only assets moving higher.
Both gold and bonds are screaming higher while waving a warning sign. In fact, both have outperformed the S&P 500 over the past three months. Stocks (black), gold (yellow) and bonds (blue) can’t continue to go up together forever. The only question is which will break down first:
Investors may be cheering on bonds’ lower rates, but they are neglecting the fact that those rates are a function of a weakening economy.
It’s still early in reporting season, but earnings are not looking strong and several companies have already revised estimates lower for the year. In fact, the S&P 500 is setting up for an earnings recession in Q2 this year.
I’ll be honest, there’s nothing I love about the U.S. economy right now. The best you can say is that it’s not “as bad” as the rest of the world. I guess that’s enough to send stocks to all-time highs…
My gut says we are walking towards a ledge, yet the party keeps going on. I’m a trader, so I’ll continue to play price action. This isn’t my favorite way to trade, but I guarantee you that I won’t be left holding the bag.
I am quick to get out of losing trades right now, and I won’t be shy about taking profits. By the time this party stops, I’ll already be betting on the other side of things.
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Let’s get wealthier together,
Jeff Bishop & Jason Bond