Projecting the path of this weekend’s hurricane (Nate) is more accurate than the old explorer routes; and probably more precise than gauging direction a fairly exhausted stock market advance will take over the very near future. In my view this past week was one of lower-volume thrusts to new high levels; a form of exhaustion; rather than precursor to a super-parabolic leap higher.
An equity blowoff doesn’t have to navigate a classic pattern that drags in all reluctant so-called retail investors, but can be an exhaustion in this case for a few reasons. One has to do with the Indexing and ETF’ing of the markets I have addressed, so that individuals generally don’t pick stocks but sectors. I view that as a risk too; because stocks in an ETF will often move with others in the group, even with differing fundamentals. This trend has been one that allows the ‘easy way’ for analysts to approach stocks; with less analysis and that I don’t view as a positive factor for investing in general.
