Alexander Elder
In the top area of every major rally, a mass media story comes out that most people ignore but which in retrospect looks truly bizarre, a sign of unsustainable optimism.
Like a story of a young teenager in 2007, during the end stage of a huge bull market, who made a quarter million dollars daytrading stocks. He would buy a penny stock at the close, send out a promo email to his list of 2,000 names before going to school in the morning (email was still pretty young then), and sell the stock after returning from school.
Later, when an investigation began, he turned out to be too young to sue, and his profits could not be clawed back. Grownups were buying stocks pumped by a child…
The New High – New Low Index tracks the leaders in strength (stocks making new highs) and weakness (stocks making new lows). This indicator is now neutral in all four timeframes that we track. It reminds me of a famous commercial for a fast-food restaurant: “Where’s the beef?”
Where are the New Highs? Who or what is now leading this rally? Inertia, I presume. I sometimes drive my stick-shift cars using inertia, but it doesn’t get them all the way to any destination.
An inset shows the lead into an article in today’s WSJ. A 23-year-old jobless “AI researcher and influencer” with zero investment experience gets going a $1.5 billion investment fund. Do I hear a bell ring?…
Looking at Spikers’ picks, I like HEI short and RIOT long.
Best wishes for the week ahead.