Risk assets everywhere are now facing a good news glut.
My 2024 market top target of 6,000 for the Dow S&P 500 is rushing ever forward with reckless abandon.
Today’s price action really gives you the feeling that we have just seen a short-term blow-off market top.
The stock market is turning into the Bitcoin market.
A few years ago, I went to a charity fundraiser at San Francisco’s priciest jewelry store, Shreve & Co., where the well-heeled men bid for dates with the local high society beauties, dripping in diamonds and their mother’s Channel No. 5.
Amply fueled with champagne, I jumped into a spirited bidding war over one of the Bay Area’s premier hotties who shall remain nameless. Suffice it to say, she is now married to a tech titan and has a sports stadium named after her.
Obviously, I didn’t work hard enough.
The bids soared to $37,000, $38,000, and $39,000.
After all, it was for a good cause. But when it hit $40,000, I suddenly developed a severe case of lockjaw. Later, the sheepish winner with a severe case of buyer’s remorse came to me and offered his date back to me for only $37,000. I said “No thanks.” $36,000, $35,000, $34,000?
I passed.
The altitude of the stock market right now reminds me of that evening.
If you rode the S&P 500 (SPX) from 700 to 5,200 and the Dow Average (INDU) from 6,000 to 39,000, why sweat trying to eke out a few more basis points, especially when the risk/reward ratio sucks so badly, as it does now?
I realize that many of you are not hedge fund managers and that running a prop desk, mutual fund, 401k, pension fund, or day trading account has its own demands.
But let me quote what my favorite Chinese general, Deng Xiaoping, once told me in person: “There is a time to fish and a time to hang your nets out to dry.” If you followed my Trade Alerts this year and are now up 15%, you don’t have to chase every trade.
At least then I’ll have plenty of dry powder for when the window of opportunity reopens for business. So while I’m mending my nets, I’ll be building new lists of trades for you to strap on when the sun, moon, and stars align once again.
