If At First You Don’t Succeed…
On Wednesday, the bulls tried to break stocks above what pundits are calling the “key” line in the sand. This was the fourth such attempt in the past three weeks. As I mentioned before the first try almost always fails and the second is usually a little more emotional. After that, one of the attempts usually sticks. You can see this on the chart below. Today, is that fourth attempt and we will see where the bulls end up.
Given the run we have had this week, coupled with negative seasonality next week, my initial take is that stocks are not going to run away from here. My sense is that the fourth try will be followed by a fifth one sooner than later but not immediately. However, even if stocks pause here or mildly pullback, I don’t think it will be enough to warrant much action. There is too much strength beneath the surface.
Just look at junk bonds below. When almost everyone left them for dead (including me) last year, this group has exploded higher, ripping the faces off of the bears. I will end with an oldie but a goodie that many of you have become use to hearing. Bull markets do not end with behavior like this.