Why sell? That pretty much sums up last week. And the week before, and the week before and............next week too? Of course I don't have the results of the French election yet, but it looks like Le Pen will not be President. More good (??). So, last week was the 3rd week in a row of new highs for all the major averages (DOW, S&P 500, NASDAQ Composite) with all the news being looked on as bullish and any warning signs just flat being ignored. Yeah, I know,
WHAT
warning signs? Oh things like crude oil selling off, interest rates remaining low (2.35% 10 yr treasury) and certainlynot
pricing in strong growth, job market tightening (wages follow?), China slowing and optimism/expectations soaring.Wow!
Now that I wrote that I get it. All those things are meaningless and there isNOTHING
to worry about. Hit the buy button again. So, to be specific, theDOW
rose+0.3%
to21,006.94
, theS&P 500
+0.4%
to2,399.29
and theNASDAQ Composite
rose+0.4%
to6,100.76
.Crude oil
lost6.3%
closing at$46.22
(and that's with a Friday rally), metals lost across the board and (as above) interest rates slipped slightly with the10 yr treasury
at2.35%
. Of course one of the reasons for the strength in the averages is tech earnings, more specifically a veryselect
group of tech stock's earnings. Fewer and fewer stocks are driving the market meaning the concentration in the Amazons. Facebooks, Googles, Pricelines, etc and ETF's crowding in on them is a bit.........scary. Since we follow the KBW NASDAQ fintech index (KFTX) lets take a look at how those several stocks can distort (or mask, or hide, or fool) investor's perceptions. For the record, theKFTX
closed up9.14
points (+0.8%
) to1160.14
. To compare, theS&P Tech
sector rose1.4%
on the week (it includes the FANG's and the other 'big favorites') with theKFTX
(50 stocks) up +0.8%...........a0.6%
difference. For the year, theS&P 500
tech sector is up17%
while the broaderKFTX
is up "only"9.9%
........a7.1%
difference. What I am trying to say, the markets are getting more and more crowded in only a small select group of stocks which isNOT
healthy. Of course, if you never sell............ But if they are sold......watch out.So, next week? More new highs? Still time to "sell in May and go away". The jury is still debating but don't get caught in the hallway when the verdict comes in.