By deflating slightly, the S&P 500 and the Dow Jones Industrial Average are in the strange position of being down over six months, but up over the longer term.
It seems that the two indices are struggling to reach that six month highs, but have really blossomed in the past month despite concerns about things like government shutdowns, US/ China trade relations and Federal Reserve interest rates.
However, some analysts and experts as well as financial reporters are suggesting that maybe the rosy picture might hide indications of a market correction.
“Some can’t help thinking everything may just be a little too awesome right now,” writes Markets Reporter Barbara Kollmeyer at MarketWatch, putting out some Cassandra feelers against the more evident sentiment from investors that “everything is awesome” in today’s trading session.
Kollmeyer cites Tim Knight of Slope of Hope who suggests that higher levels of bullishness might actually be a precursor to lower values to come.
“It is possible we can burn through these elevated readings and go higher, but the odds don’t favor it,” Knight reportedly said, showing charts where similar market activity was not indicative of longer term gains.
Later Kollmeyer notes the rise of European and Asian stocks along with changes in U.S. consumer spending.
Meanwhile, analysts at Zacks note better-than-expected GDP growth reported February 28.
“On Feb 28, the Department of Commerce reported that U.S. GDP for the fourth quarter of 2018 grew 2.6%,” Zacks experts write. “This figure was better than the consensus estimate of growth of 2.4%. However, the Bureau of Economic Analysis reported that annualized real GDP growth in 2018 was little more than 2.9%, slightly below the target rate of the government. … Better-than-expected GDP growth can be attributed 0.7% increase in consumer spending, which constitute more than 70% of the U.S. GDP. U.S. consumer spending was $13,044.25 billion in the fourth quarter of 2018 compared with $12,953.29 billion in the third quarter of 2018. Notably, consumer spending reached its all-time high in the fourth quarter of 2018, during the period of 1950 to 2018.”
In the absence of direct threats to market buoyancy, many traders will be likely to hold the line and expect higher values next week. We’ll see if these warning signs pointed out by the naysayers end up manifesting in next week’s market.