It’s a stock market top! Just kidding, there is no way any of us know whether or not today was a market top or not despite many who will try to call a market top. GDP this morning gave a big boost to the market showing a GDP grew 1.7% annualized in the second quarter. We can pin the great GDP growth on works of art and movies. The government “adjusted” its calculation to GDP erasing many recessions. Traders were happy to buy this market all the way up to noon time prior to the release of the FOMC rate decision. After the rate decision the market went up then down and up then down again. It was quite a ride, but does it mean we have run out of steam? Perhaps we have and today’s stalling action could be signaling this market has run out of steam. We need more evidence. Traders will turn to the Job’s report on Friday while we focus on price.
July was a great month for stocks after June’s decline. Low volume or not you cannot argue with the price action we saw over the month. It pays not to miss out on gains. We have seen many people calling a market top in May and leave the market entirely. Now we are at highs again, making calls like that can cost you some serious gains. Not something you want to occur.
Today’s ADP report showed better than expected job growth. Whether or not they were full-time high wage jobs is another story. I am sure we’ll have tremendous job growth, but favoring part-time workers. Even if the report says what I think it may say does that mean the market should react a certain way? It will most likely not move the way I think it will. So many will try to “play the number,” but they are better off playing black jack or craps at the Wynn Las Vegas.
We’ll continue to follow the trend until we get signals telling us our ride is over. Cut your losses and ride your winners.
