Markets up! Markets down! That’s what they do…

Market high

Dow hits 35000

Markets move up and markets move move down – that’s what they do. So we really shouldn’t be that surprised when new record highs are broken – but this always makes for a good headline.

The Dow this week re-gained all of the losses from the previous week as it bashed through the 35000 point mark. At these levels – it doesn’t take too many percentage points to gain a new high marker. Moving from 34000 to 35000 is only around 2.9% and it has taken about 6 attempts to hold above 35000.

Quite an impressive climb since the pandemic low of 19174 in March 2020!

Retail traders

Much of the gain appears to have been generated by retail ‘day traders’ buying the dip. I haven’t checked the data to see how institutional investors are behaving as retail buyers appear to lead the way. Should we be concerned that retail buyers are buying at these levels?

Crazy or sensible buying?

The retail buying craze seen with Gamestop, AMC and crypto pushed these assets to remarkable and unrealistic highs only for them to adjust and fall to more realistic levels.

This can be seen clearly with the recent giddying rise of Bitcoin reaching $65,000 only to crash back to $30,000 and settle around $32,000.

More BIG gains for U.S. stocks?

Are there more gains to come, probably – but we are reaching stretched levels again and in my opinion U.S. stocks, especially big tech, are over valued and because of this I expect a ‘mini’ correction is due soon – most likely before summer is out.

U.S. Dow, S&P 500 and Nasdaq all hit record highs

All three of these U.S. indices hit new highs on Friday, 23rd July 2021.

Dow new record high of: 35061

S&P 500 new record high of: 4412

Nasdaq new record high of: 14837

More to come next week? We’ll see. But when you get the likes of a major U.S. adjusting their end of year prediction for the S&P 500 from 4400 to 4600 – it’s very likely more gains will be achieved in the week.

More U.S. earnings data is due too. However, expect more volatility. The delta variant is gaining traction in the U.S. and company reporting will all but complete.

What will be left to drive markets up? I can’t see any new major cataIyst but neither can I see anything obvious that we do not know about that may drive markets in the opposite direction.

One to watch

However, one such even to look for next week will come from the Fed and their policy and interest rate statement on Wednesday 28th July.

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