Date: March 18, 2016

Still Laughing at the Bears

Yet ANOTHER solid week by the bulls! Chatting with my peers who also pounded the table to buy at the Jan and Feb lows, we all find it amazing how revisionist history is playing out and suddenly those who were the most bearish at the bottom and during the rally are now supposedly fully invested. Incredible how price movement along can change investor sentiment! I feel for those who have largely ignored scoffer at this historic rally. One thing about this business is that you can’t hide from performance.

Anyway, the positive trend for this week based on today’s expiration of options is just about over. At the same time, there is a 5 day trend after the Fed meeting that triggered which calls for lower prices next week. Additionally, stocks, once again, look a little tired in the short-term, just like they have four other times since February 11th. A brief and mild pullback next week is the most likely scenario.

I remember wondering in mid February where leadership would come from. Most of the sectors looked weak. My oh my have things changed. From a technical perspective, telecom, industrials, materials, energy, staples, utilities and transports all saw significantly higher lows on Feb 11 than when the stock market saw its previous low on January 21st. I said at the time that these were not the kind of leaders that could bring us back to the old highs. They did a great a job of stabilizing the market until the more aggressive and important sectors, like semis, were ready to take over.

This 7 year plus bull market continues to amaze and confound the masses. Betting against it has been quite hazardous to portfolio values, yet those who disavow stay their course. At some point, they will be right, but best of luck until that day comes…

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Paul Schatz, President, Heritage Capital