good points both you and zman...even thou consumer may be tapped out, rates are still pretty low...the full effect of the fed hikes haven't been felt and consumers seem to find a way to spend...some folks seem to think the year will start strong then peter out...could be. I think if I do a call spread I'll keep it to just 5pts...
I dont think the people that are not going to be able to handle 2% on their credit cards minimum payment, play any role that affects the markets. My take on the rally is the Institutional boys bought big after the Santa Rally fizzle, and that will be followed by a spurt of more buying by retail traders, prone to buying at higher prices rather than lower, which will lead to more upside. I dont even want to look at call spreads. The buying has been done on good volume too, which means it could continue for a while. Returning to the debt issue, this year I've had to interview at least seven recent Dental School Graduates for positions. Each and every one was carrying school loans for 250,000 plus. They were all driving new top of the line vehicles, probably financed, and they all had substantial credit card debt. This is now a fact of life, banks still lend them money to start practices, and the newbees dont lose a wink of sleep over it! They just handle it, buy big homes , and make it work. I guess my point is that life goes on, the markets continue to function, the national debt increases, trade deficits worsen, but in the short term, our life time, dont bank on any imminent collapse or financial ruin. Leave that for your grandkids to ponder, and continue to follow the trend and play the swings that occur. All worth 2 cents
All the charts we are discussing here seem to line up the possibility for a pull back. I suggest all of you getting close to 15 points continue to evaluate the price action and charts to determine your follow-up moves. Make the plans now while the market is closed so you can do it calmly. Look at potential partial hedges, potential roll ups and pull back opportunities to take profits.
My 2 cents: oil got above $64 last week, any report showing the economy is hot may adjust the Fed's "almost done" stance, the first week of January is when funds invest a lot of new money, overly optimistic sentiment right now, the yield curve remains flat/inverted,... and fundamentally, nothing changed from a week or two ago! So, every bone in my body says pullback... if not this week due to the momentum, then the week after. DISCLAIMER: I am five years old, have ADD, was asleep when I wrote this, and skipped breakfast today.
What we really need to slow down this break out is the sure thing.... Coach to go long some ATM calls. Murray