The Stock Market Party is Over

The boldest, brashest, and dumbest thing anyone can do is to declare a stock market top.  Well, a lot of people already think I am an idiot, so what the hell.

Read my lips:

The Party is Over. The Corrective Phase is Here.

A few months or even weeks from now, we will look back and say that when the S&P 500 Index hit a high of roughly 1991 on July 24, 2014, stocks peaked.  As for today, if there was ever any indication that the bull market is tired, has no strength, or breadth we saw it this morning. GDP was kick-ass (a professional term) and consumer spending soared beyond expectations.  Twitter (NASDAQ – TWTR) roared back to life. Sold off stocks rebounded. But it is all for naught.

Despite all of this good news, it is really bad news, as evidenced by the swift shift in the S&P 500 from up .5% to down in less than 30 minutes. GDP growth in Q2 of 4% led by consumer spending means that inflation has reared its ugly head and the Fed knows it and will react. More strong employment numbers just released cancel out the high consumer debt levels even though they should not.  High consumer confidence and belief in the stock market has provided a platform for scary complacency that will be drowned out and overcome by investment professionals just waiting for the other shoe to drop since they have no conviction in equity purchases.  

If ever there was a day for a collective sigh of relief it is today. Instead there are hushed tones among the silence as confused traders and investors try to make sense of all of this and we bounce from positive to negative territory and back again. The month of August begin this Friday. Raise some cash, go on vacation, and don’t look at the market.

It could get ugly. Or I am just a fool that called it too soon. Time will tell.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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