September 12, 2019
By Peter Bower
A ride on a merry-go-round may go round and round, up and down but goes nowhere. That may be an apt metaphor for the U.S. stock market for most of the past two years; a lot of action but little progress. The Bull predicted this; how much longer is anybody’s guess. However, positive signs are emerging that the long trading range may be coming to an end.
Throughout the selloffs this year, money flows or signs of accumulation remained; sometimes quite strongly. Recently, these metrics have exploded to the upside and more sectors of the market have participated. In fact, value sectors that have been all but abandoned are now perking-up. This may be another simple rotation from expensive to cheaper opportunities, but it looks more like a broadening of market leadership.
What all this means is that investors are sniffing out that the economic slowing will not result in a recession. Muddling though is now a probable and reacceleration may be in the offing. Some partial accord or truce on the trade front may be part of the catalyst for rebuilding confidence. Others could be fiscal stimulus in Europe, lead by Germany, a delayed Brexit, and a strong U.S. consumer and holiday season. Stay steady, my friends.
The Lonely Bull
