1999 Flashbacks

The SPX strength is relentless.  There is widespread optimism about the global economy and Fed rate hikes are being ignored as a negative catalyst.  With tax cuts due to pass this week, no one wants to be short when it is officially in the books.  Also, with the big gains for the year, most investors will be withholding their stock sales to push their capital gains to 2018.  This should create an upward drift for stocks for the remainder of the year.  Will not try to fight this uptrend for the remainder of the year.  There are easier battles to take.

I will be interested in the short side starting from January, as the delayed selling should kick in.  Plus, after tax cuts, there is not much of a positive catalyst, unless you think infrastructure will get passed in 2018.  With Trump's low popularity and with tax cuts already passed, the motivation to get it done by Republicans will be low.

After some profit taking at the beginning of 2018, we should have one last strong rally to form the final top, some time in the spring.  It is extremely difficult to predict tops, so this is just a broad outline that I have for the coming months, things will probably be quite different than I expect, but in general, we are very late in this rally and things should get choppier as we form a top.

Unlike 1999, there is not the unbridled retail enthusiasm for stocks, and you don't have the flood of IPOs and supply that hit the market like you did leading up to the top in 2000.  So the top will be trickier than it was back then, but the institutions are basically all in on stocks.

I expect bitcoin to make a top after the SPX, so probably summer or fall of 2018.  I will have a different mindset when trading the markets next year.  If things go according to projections, it will be less waiting, and more trading.