You know what’s good for the stock market?
New all-time highs.
Go study every bull market ever. You know what you’re going to see? You’re going to see a lot of new highs.
You’re not going to see a lot of new lows in bull markets. Also, in bear markets, you’re not going to see a lot of new highs.
If we know that in bear markets you don’t get a lot of new highs, well, if we’re making new highs, are we in a bear market?
Probably not. It is what it is.
And it’s just math.
Peter and Me
I was with legendary trader Peter Borish again on Tuesday.
Peter is Paul Tudor Jones’s long time partner. Paul Tudor Jones is the Michael Jordan and the Wayne Gretzky of macro trading.
And I was chatting with his partner on Tuesday. For the second time in a week.
Peter and I were on a panel at the New York Athletic Club, talking markets to 800 people.
These folks had to have a billion dollars in assets under management in order to be there, to be listening to Peter Borish and me.
What a treat it was, let me tell you. Suit and tie, you should’ve seen me.
I don’t wear a lot of suits these days, but I looked great. And it was nice to dress up and go to a fancy place.
Peter was talking about this secular rise in interest rates.
And the people wanted to know, “JC, what do you think?”
I said, “Well… I’m not disagreeing with you. But I gotta make money this quarter. So I’m not worried about the next 15 years.
“I’m worried about now.”
And people liked it. That answer resonated with people, they told me afterwards.
And these are billion-dollar-plus portfolio managers.
Interest rates have been range-bound for the last couple of years. And the market has rewarded stocks during that period.
Everybody assumes that interest rates are going up. And I don’t disagree with that.
Bigger picture, 10 years, 15 years: Are we in a rising rate environment?
Probably. But I’m not worried about 15 years from now. I’m worried about today.
I’m worried about this month. I’m worried about this quarter.
Sorry… not sorry.
Here and Now
Let’s take a closer look at the charts — because history has a way of repeating itself, even if this time feels different.
The S&P 500 Index (SPX) is less than 3% away from new all-time highs.
The Nasdaq100 (NDX) is a little more than 2% away from new all-time highs.
Two percent?
That’s a pretty good afternoon or a decent week. That’s how close we are to new all-time highs, just for perspective.
Look at bonds.
Every time the iShares 20+ Year Treasury Bond ETF (TLT) has been down near these prices, they’ve come in and bought them:
Every time.
But keep in mind that this time is the only time that matters.
This time is the only time that can pay us.
And, this time, commercial hedgers are buying bonds at extreme rates. That means the dumb money is selling bonds.
So I like bonds for a bounce.
And that’s a good scenario for stocks.
We’ve got to put things in perspective. And we must act responsibly.
We do both around here.
And I hope you’re getting used to how this works.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs