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Bulls or Bears? Pre-holiday stock market action not providing many clues

Written By | May 27, 2021
bulls or bears, NASDAQ recovery, McClellan Oscillator, purchased money market funds, bank sweep accounts, bank sweeps

Bull and bear. Public domain image via Pixabay.

WASHINGTON – Bulls or bears? Who won on Wall Street Thursday? Today’s action, just closing now as the NYSE rings their 4 p.m. ET bell, essentially saw traders and investors winding down and snugging up their pre-Memorial Day holiday bets. Kind of indecisive, really. Although the Dow Jones Industrials rose more than 100 points, pre-holiday market action didn’t really provide many clues about tomorrow.

Many investors are already likely involved in some kind of holiday weekend getaway prep (except in paranoid Blue States). Activities in general may tilt more toward beer and brats for friends and family at home. Or, at least in Red States, a mass migration to the sunny beaches oppressed Americans haven’t seen for over a year.

Who really won today, bulls or bears?

So back to our original question. Was it bulls or bears who dominated Thursday’s action? In reality, markets closed mostly up today (except for those snake-bit techs). But today’s inconclusive trading patters haven’t provided many clues. So maybe neither the bulls nor bears actually won today. The match probably should go to the ditherers.

Evidence? We saw as many selling imbalances as buying imbalances near Thursday’s close, indicating that investors may have been pulling marginal stock bets from their portfolios in advance of yet another potentially terrifying long holiday weekend.




Terrifying? Well, yes, more or less. With not two but 3 news days ahead during which American investors, at least, can’t make any trades, defensively or otherwise, many investors don’t want too many risky bets exposed during this period.

Will this be another terrifying “headline risk” kind of weekend?

Who knows? This might be the weekend when Iran’s mad mullahs announce what many of us have known for a long time. Namely that they have nukes, have had them for years, and are eager to aim them at Jerusalem to fulfill their positive vision of a better world.

We’re kidding, of course. (At least for the moment.) But you get the picture. With all that’s transpired thus far this century – mostly unanticipated and very nasty surprises – investors are loathe to leave too many chips on the table when we’re constantly threatened by that greatest of all existential threats: Headline Risk.

What really might sort of happen during Friday market action?

So look for a downward, cross-market fizzle among a majority of stocks during Friday’s Beach Departure Day. Serious traders have already firmed up positions and are packing as this columnist lays down a bit more digital ink before grabbing some dinner.

It almost always works this way, particularly prior to Memorial Day (official beginning of this year’s hopefully non-Covid-terror summer fun) and prior to Labor Day (when relieved parents anticipate sending their kids back to actual classrooms instead of supervising their educational avoidance syndromes at home).

Our pre-Memorial Day list of things to watch if you’re an investor

In keeping with this observation, here are a few short observations for bulls and bears before we take the weekend off ourselves for yet another in a series of staycations.

First: Erratic trading action plus the Fear Factor

  • As duly noted, watch for a wobbly, indecisive day of trading action Friday, as most Wall Street moneybags head for the Hamptons or for their mistresses’ luxurious Upper East Side flats for a weekend of unmasked fun. See techs continue to put in a piss-poor performance, overvalued as they continue to be. Watch automobile and auto sales stocks waver as well. That chip shortage won’t be over by next week.

Second: Political headline risk

  • Keep an eye on the a_dit fun currently back in play in (always) sunny Phoenix, AZ. Anything that counters the media’s rigorously enforced fake narrative, even a little bit, could unnerve markets when investors return to the action next Tuesday, June 1. (We can’t use the real word above because search engine algorithms will quickly send us to pageview hell.)

Third: More commodities fun, starring the Chi-coms

  • Look for commodities to continue their wobbly way. If the US and world economies continue to pick up in 2021, even modestly, this will keep the pressure on commodity prices. Which affects interest rates, etc. Commodities cooled off this week when speculation grew that China had overstuffed its commodity inventories – particularly copper – heavily enough for now. Problem here is that the truth is malleable when the CCP allegedly puts it out. (Re: the Party line on the W___n F_u. Terms again redacted for CDN’s self preservation.)

Fourth: Those wild and crazy Modern Monetary Theorists at the Fed

  • To QE or not to QE. Once again, the Fed floated a trial balloon on this issue and punted. Markets predictably freaked for a couple of days. The Fed will try to stall on this decision. But they probably want to hold off until their actual (or virtual?) annual August meeting at Jackson Hole, Wyoming. (No word yet as to whether Liz Cheney will keynote.) Ultimately, they’ll have to cut off the feedbag, at which point we get the horrors of Taper Tantrum II. Looking forward?

The wrap:

Well, fellow bulls and bears, we’ll cut today’s full column off here, before we jump the shark, like everyone in The Swamp seems to do these days.

Have a great weekend. And if you’re of a mind to execute a few trades tomorrow anyway, check out our short column on the Memorial Day holiday trading schedule and settlement dates.

 



Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17