The S&P 500 poked its head above 4,500 on Wednesday for the first time in history. The “sell in May” crowd now finds themselves 300 points behind. So much for conventional wisdom…
Is 4,500 finally the top? Not if we use recent history as a guide because the same was said about 4k, 4,100, 4,200, 4,300, and 4,400. Heck, even I thought 4,400 was getting a tad too far.
But as long as something keeps working, we have no choice but to stick with it. Maybe 4,500 is finally far enough. Or maybe 4,600 is just around the corner. Either way, we will know the answer soon enough. Until then, continue giving this unstoppable bull market the benefit of the doubt by moving our stops up and continuing to hold.
Headlines remain benign and we have a couple of weeks until Labor Day signals the traditional end of the slower summer trading season. But once we get into the heart of September, be on the lookout for signs the market’s mood is changing. Until then, enjoy the ride.
Last week’s rebound in Amazon (NASDAQ:AMZN) is progressing nicely and this trade is going according to plan as long as it remains above $3,200.
As I wrote last week:
If $3,200 doesn’t bounce soon, then $3k is coming up. On the other side, a dip and bounce back above $3.200 is a buyable entry with a stop just under this level. This is acting like it wants to go lower, but it always does that just before the bounce. In this case, have a trade ready for either direction.
As it turned out, AMZN was playing possum and looked the most hopeless moments before turning it around. While there are no guarantees this bounce will stick, for those that acted early and decisively, this bounce gave us a low-risk entry with a lot of upside potential.
For those that missed the buyable bounce, this stock is still trading at attractive levels, unfortunately, buying now requires taking on a little more risk than buying last week. But the risk/reward still favors buying this bounce.