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S&P 500 Back To Making New Highs, But For How Long?

By Jani ZiedinsStock MarketsJul 27, 2021 12:52AM ET
www.investing.com/analysis/sp-500-back-to-making-new-highs-but-for-how-long-200593778
S&P 500 Back To Making New Highs, But For How Long?
By Jani Ziedins   |  Jul 27, 2021 12:52AM ET
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S&P 500 Index Daily Chart
S&P 500 Index Daily Chart

Following last week’s brief bout of volatility, the S&P 500 slipped back into its more leisurely summer mood on Monday, adding a modest 0.24%. But that was good enough for yet another record close and last week’s second thoughts are quickly fading from memory.

More important than this almost imperceptible 0.24% gain, the index continues holding last week’s bounce. False bottoms fail quickly and they most definitely don’t keep making new highs. By those measures, last week’s selloff is clearly dead and this bounce is the real deal.

But as I wrote last week, I also don’t have high expectations for big gains over the near term. It’s been a good run over the last few months and the rally will likely stall and grind sideways into the fall. That said, this is just my opinion and the market is always willing to prove me wrong. At the moment, the rally is trading well enough to be worth sticking with, just come into this trade with measured expectations.

We are a few weeks into earnings season and while there are still a lot of important companies yet to report, if there was something structurally wrong with the economy, it would have shown up already in the first wave of earnings. While we will continue to see individual winners and losers, overall, the economy looks to be in pretty good shape.

Inflation, money printing, deficits, the Delta variant, and all of the other reasons stocks should tumble from these highs are still out there. But most investors don’t seem to care and when they don’t care, I don’t care.

Knowing what we know now, selling last week’s dip at our stops was not necessary, but there was no way to know that at the time. Smart money trades everything as if it is the real deal because you know, it often turns out to be exactly that.

That said, we actually got lucky last week. Locking in some nice profits the previous week near the highs allowed us to jump in at lower prices during last Tuesday’s bounce. While that modest exchange isn’t making anyone rich, it is hard to beat protecting ourselves from a much larger selloff and getting paid to do it!

S&P 500 Back To Making New Highs, But For How Long?
 

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S&P 500 Back To Making New Highs, But For How Long?

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Comments (4)
Solomon Lalani
Solomon Jul 27, 2021 5:04PM ET
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Always loved your analysis.  So looking forward to today's write-up after the meltdown :)
Ell Skware
Ell Skware Jul 27, 2021 10:17AM ET
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Always enjoyed reading Jani’s bapanced perspective!
Val Mirov
Val Mirov Jul 27, 2021 2:25AM ET
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I’d give everything to work next to the traders who understand what is going on with the economy. Thank you, Jani, for sharing your thoughts with the community.
ECL SALES
ECL SALES Jul 27, 2021 1:05AM ET
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It would keep on going higher
 
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