The Dow Average up 11 days in a row?
The last time I saw this in 1987, Armageddon ensued, it hailed fire and brimstone, and dogs and cats lay together.
Excuse me for being nervous, but it was enough to prompt me to get into an extremely rare 100% cash position.
Whatever follows is not good, whether the markets go up OR down.
And you know what is even scarier?
Some 20% of the Dow gain since November 8th has been concentrated in a single stock, Goldman Sachs (GS), whose former executives now occupy several key government positions.
What’s wrong with Morgan Stanley (MS)? Did they back the wrong horse?
Will he? Or Won’t he?
That is the paramount question on the minds of every trader on Wall Street going into the first State of the Union Address by the new president after the close on Tuesday.
If the president delivers granular, highly detailed plans to cut taxes, as he promised, markets will rocket.
If he gives us a harsh, divisive replay of a campaign rally for his base, attacking global warming, Rosie O’Donnell, and Sweden, a long overdue correction will ensue, possibly as much as 10%.
And here is what is keeping everyone awake at night.
Markets are going into the address to both houses of congress more overbought than at any time in history. NASDAQ has risen every day during the month of February!
Markets are not just prices for perfection, but double, or even triple perfection.
If perfection doesn’t arrive, the consequences could be severe.
Any professional trader caught loading the boat here would be fired.
Better to buy on a dip, or a momentum driven upside breakout, than at an absolute apex.
I have recently taken profits in Apple (AAPL), Amazon (AMZN), Palo Alto Networks (PANW), the Russell 2000 (IWM), Goldman Sachs (GS), gold (GLD), silver (SLV), the S&P 500 (SPY), and short positions in US Treasury bonds (TLT) and the Japanese yen (FXY).
It was all enough to bring my 2017 year-to-date performance to 15.74%, and my trailing one year return to a positively meteoric 38.9%. February now stands at 6.39%.
It has been the best start to the year since the inception of my service almost a decade ago.
All is now on hold until Tuesday night. That evening, we get the major market-moving event of the month, the first State of the Union Address by the new president.
On Monday, February 27th, at 8:30 AM EST, we learn January Durable Goods.
On Tuesday, February 28th at 8:30 AM EST, we receive the latest read on Q4 GDP, and see if we get any improvement in the last lowly 1.9% print. February Chicago PMI follows at 9:30 AM.
On Wednesday, March 1st, at 10:00 AM EST, we get the most important data of the week with the Fed Beige Book, a collection of anecdotal evidence from the 12 Fed districts.
Thursday, March 2nd, we learn the Weekly Jobless Claims at 8:30 AM EST. We are still plumbing 43-year lows, and all time lows when adjusted for population growth.
On Friday, March 3rd, at 1:00 PM EST, Fed Chairwoman Janet Yellen speaks at the Executives’ Club of Chicago, and will no doubt drop more hints about the likelihood of an interest rate hike at the upcoming March 14th-15th Federal Open Market Committee (FOMC) meeting.
Wrapping up the week also at 1:00 PM EST is the Baker Hughes Rig Count, which has been up 17 out of the last 18 weeks, boding ill for oil prices.
Good luck and good trading.
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