Date: August 18, 2021

Market Not Running on All Cylinders

I keep chuckling when I listen to people talk about the pullback in stocks. After all folks, the S&P 500 is one single day removed from all-time highs. Same for the Dow Industrials. The NASDAQ 100 is close. The S&P 400 and Russell 2000 continue to lag and warn that something isn’t right. However, none of my key sectors are at or close to new highs, another warning sign.

Ask me which sectors are at new relative highs. Go ahead. Ask. Consumer staples and utilities. Those are not exactly the bastions of risk on behavior by investors and it’s something to be concerned about. The credit market remains okay, but certainly not leading nor strong.

Now, just because I keep writing about all these warnings doesn’t mean Armageddon is upon us. It is entirely possible that the stock market can explode higher from here and correct many, most or all of the warnings. I don’t think that’s the likely scenario, but it is a possible. I do think that the market will pullback sooner than later to reset the 18 month old bull market. Stay tuned on that.

I will continue to buy weakness and sell strength as best I can until proven otherwise.


Paul Schatz, President, Heritage Capital