Friday, December 22, 2017

Signs of a strange market?

Heading into an eighth year of a bull market that, through fits and starts, has risen consistently, what are signs that this era is stretched.  It should be logical to think that this performance cannot continue unimpeded, but market indicators do not exhibit irrational behavior.  P/E's are above average but not crazed, the economy is slowly growing, and aggregate consumer spending is healthy and not noticeably irresponsible.  Many things could go wrong, especially with an unpredictable President(kind description), but almost a full year of his reign has been survived.

In recent days a few strange things have been noticed, as indicators that the strings of this racket are becoming taut. TD Ameritrade, the discount broker, has been running television commercials promoting their options trading platform. The ad suggests that anyone can benefit from options trading with their "professional advice", as a broker talks to a client in a room with a pool table in it.  Another person enters and asks if the client wants to play pool and he responds "no, it's too complicated."  So a person too daft to shoot pool can successfully trade options?  Hmm...

Then there was the renaming of the little known company "Long Island Iced Tea", a firm that makes and sells non-alcoholic lemonade, iced tea, and the combination.  Any additional ingredient needs to be purchased elsewhere.  A week ago the name of the firm was changed to "Long Blockchain", and the stock went up 500% during the day, then settled down and closed the day up 275%.  They still sell iced tea but said they plan to make blockchain related investments. This is an efficient market?

Strange things are happening around the edges of this placid market.  That usually indicates some waves are on the way.  They''re unlikely to come next week but watch out commencing January 4th.

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