{"id":7504,"date":"2017-12-13T07:30:17","date_gmt":"2017-12-13T12:30:17","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=7504"},"modified":"2017-12-13T07:30:17","modified_gmt":"2017-12-13T12:30:17","slug":"im-sitting-out-the-year-end-stock-rally","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/im-sitting-out-the-year-end-stock-rally\/","title":{"rendered":"I\u2019m Sitting Out the Year-End Stock Rally"},"content":{"rendered":"

The S&P 500 is trading at new all-time highs. The index is up more than 18% for the year. It\u2019s up almost 4% in just the past month alone.<\/p>\n

There\u2019s no doubt, the bull market is alive and well.<\/p>\n

But I can\u2019t shake the feeling that the bulls are being set up on this recent move.<\/p>\n

Things are just too comfortable. It seems no one is concerned about any possible downside. Everyone in the financial media is \u201cbuy, buy, buy.\u201d There\u2019s hardly ever a mention of risk.<\/p>\n

Oh sure, we get the obligatory reference to the highest P\/E valuation ever. But it\u2019s shrugged off. \u201cThe new tax bill changes everything,\u201d they say.<\/p>\n

I\u2019m not so sure.<\/p>\n

Traders should be defensive here. There are just too many warning signs<\/a> in the recent action. For starters, the NASDAQ is lagging. It hasn\u2019t confirmed the recent high in the S&P 500.<\/p>\n

Semiconductor stocks \u2013 which are usually market leaders \u2013 are lagging badly as well. The VanEck Vectors Semiconductor ETF (SMH) is still 6% below its November high.<\/p>\n

VIX options are pricing in a much higher VIX<\/a> over the next day and the next month. Plus, the chart of the VIX looks to me like it\u2019s poised for a sharp move higher. All of the technical indicators on the intraday charts of the S&P are overbought.<\/p>\n

I\u2019m not even including the speculative action in bitcoin in the discussion yet.<\/p>\n

Yes\u2026 it\u2019s Christmastime \u2013 which is a hugely bullish seasonal time of the year. Normally, I\u2019m looking to buy stocks on weakness during this season.<\/p>\n

But I\u2019m not about to buy anything here (except gold stocks). I just have an uneasy feeling about things. I\u2019d rather stay sidelined and miss the extension of the recent stock market rally \u2013 if it happens.<\/p>\n

Maybe I\u2019ll look back a few weeks from now and wish I had told folks to get aggressive on the long side, lever up their positions, and try to make the most money possible as the stock market extends its rally into the end of the year.<\/p>\n

But then again, maybe I\u2019ll be glad we sidestepped whatever carnage the Market Gods might throw at us over the next few weeks.<\/p>\n

From my perspective, whatever that\u2019s worth, I just don\u2019t like the look and feel of things right now. I\u2019d rather miss out on the potential gains of an overpriced market \u2013 one that still might race higher into the end of the year \u2013 than suffer the consequences of buying overpriced stocks in an extended market.<\/p>\n

Holding a large percentage of cash is a good thing right now.<\/p>\n

Best regards and good trading,<\/p>\n

<\/div>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

Today, a reader asks for Jeff’s thoughts on \u201cmillennials\u2019 gold\u201d\u2026<\/p>\n

Recently an online commentator commented that as gold was the safe haven for our generation, bitcoin is the safe haven of the millennials.<\/p>\n

Do you think the importance of gold and, hence, its position as a safe haven, will diminish as bitcoin grows?<\/p>\n

\u2013 Jerry<\/strong><\/p>\n<\/blockquote>\n

Jeff:<\/strong> Hi Jerry, thanks for writing in.<\/p>\n

There\u2019s no doubt that bitcoin is the young person\u2019s version of gold. Someone was on CNBC yesterday morning talking about why he liked bitcoin. All of the reasons were similar to why we old folks like gold\u2026 It\u2019s a store of value, the government can\u2019t just print it out of thin air, it\u2019s portable and can be used as a currency anywhere in the world, etc.<\/p>\n

But I\u2019m not convinced that, if bitcoin didn\u2019t exist, the younger generation would be buying gold instead.<\/p>\n

Gold is old. It\u2019s a relic. There\u2019s nothing sexy about it. When I talk to my kids about the practicality of owning gold, their eyes gloss over. I might as well be teaching them how to change the oil in a car \u2013 which is also something the younger generation has no idea how to do.<\/p>\n

Meanwhile, bitcoin is hot. It\u2019s anti-establishment. It\u2019s rebellious. And the younger folks love that image. So, they\u2019re flocking to it.<\/p>\n

Of course, it helps that bitcoin is up 1,200% this year while gold is marking time.<\/p>\n

Maybe gold needs a new Public Relations agent?<\/p>\n

But, back to your question\u2026 Do I think that gold\u2019s position as a safe haven will diminish as bitcoin gains popularity?<\/p>\n

In a word\u2026 no.<\/p>\n

People aren\u2019t buying bitcoin today as a store of value, or as disaster insurance. They\u2019re buying bitcoin because it\u2019s hot, sexy, and running wild.<\/p>\n

There\u2019s nothing wrong with that. But it\u2019s not the sort of trend that will last for generations.<\/p>\n

Do you have any trading stories about gold\u2026 or bitcoin? Send them in here<\/a>, along with any other questions or suggestions you might have.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Right now, things just don\u2019t feel right.<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-7504","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/7504","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=7504"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/7504\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=7504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=7504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=7504"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=7504"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=7504"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=7504"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=7504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}