WASHINGTON, June 1, 2015 – In spite of positive numbers showing up in the averages at the noon hour Monday, stocks are still essentially trading flat on pitifully low volume, continuing the aimless meandering that marked trades during the final week of May. Volume is light and market directions are meaningless as the big money is either on holiday or content to sit with cash and dither.
Its as if the entire trading zone has been afflicted by Hamlet Syndrome. “To trade, or not to trade?” Or perhaps, “To short, or not to short?” Those are the questions. Perhaps these days, it’s safer just to dither and worry rather than doing anything decisive. Traders have a sense that anything decisive right now will invariably prove a disaster as the market goes the other way.
Aside from the usual summer seasonal weakness and a hangover from “Sell in May” syndrome, this is a market that senses only negative catalysts like the oft-rumored, never executed Federal Reserve interest rate hike and the “will they default or won’t they” game the Communist government of Greece has been playing with the European Central Bank (ECB), deploying Ho Chi Minh negotiating tactics like perpetual stall ball.
It’s all a mess, made worse by the outright economic fairy tales both the Fed and the administration are weaving. The government has gotten away by telling Gramscian lies for coming up on eight years now. But even low information voters are beginning to suspect they’ve been majorly duped. “If everything is getting so much better,” the average American is thinking, “why is my life always getting worse?”
That’s a good question and the answer is quite simple. Everyone else’s life is getting worse, too, except of course for the 1 percent and the political class of barnacles they gladly support in exchange for even more of your money. The “improving economy” is a lie, and Wall Street doesn’t want to believe. Shareholders are losing faith in 2015, and that’s what we’re seeing.
There’s likely still money to be made here. But until and unless we get some clarity on Greece and on U.S. interest rates, this indecisive, Hamlet market is going to go on and on until something really big hits. And when it does, particularly if it involves economic truth-telling, the results will not be pretty.
For now, we continue to hold income-producing items like term preferred stocks with maturity dates under 10 years and similar issues, plus a few common stocks that should remain relatively stable and a couple of representative ETFs. We remain at about 50 percent cash in our accounts. Better that then overcommitting too early and paying a heavy price for irrational exuberance.
We hate this market. But, unfortunately, it’s the only one we have. So keep your powder dry, and pick your entry—or exit—points very carefully.
Back tomorrow, assuming we have anything new to report. The Maven is not optimistic that we will.