It has been a good week for the bulls! After four straight days of red ending last week, the bulls stepped up exactly when they should have. While I would have preferred a weaker opening on Monday the market doesn’t always cooperate perfectly. But this time, it was fairly easy to forecast higher prices, especially when Jim Cramer was imploring and begging people not to buy for another week, meaning today, after a big up week. Today, I am a whole lot less enthusiastic about the stock market than I was on Monday.
Some people told me I was being too hard on Cramer or I was unfairly singling him out. You’re probably right. However, when you stand in front of a camera and beat your chest, telling people how smart you are along why so many others are wrong, you deserve to be called out. I will never forget Jim pounding the table on Bear Stearns and laughing at the bears, literally the trading day before the company declared it was insolvent. Showing humility and being accountable to your constituency goes a long way. It’s so much easier to write a newsletter, commentate or be a paid actor rather than actually pull the trigger and be accountable to clients every year, every quarter, every month, every week and every day.
Anyway, today we have the annual Russell indices rebalance. I estimate roughly $12 trillion is in their index products. Stocks will be added and removed at the close today. Volume should soar. Portfolio games have been played this week and should continue into the close.
Apparently, there is a bipartisan, trillion dollar deal on infrastructure. Materials and industrials did not respond well and as I have written before, much of that deal has already been priced into the market. We own some of those sectors along with a bunch of that stocks although I have steadily reduced the size of those positions.
The stock market may need a little rest, nothing big and perhaps barely noticeable. So many things are stretched to the upside. The Dow Industrials have been lagging. They could play catch up at the expense of the others. I do not think it’s the time to go all in on equities. As you know I like to take the other side of the crowd in many cases.
