New, new, and new. Home Run. Strikeout. Either of these terms could be used to classify Tuesday’s session, where the three US indices registered new all-time highs. Not to vary the main reason for buying pressure was the optimism created about the possibility of a partial settlement later this year, which puts a brake on the escalating trade conflict between the two largest economies in the world. Positive feeling that came from news from a Chinese state newspaper who reported that both parties were approaching to an understanding. This would be classified as misleading and manipulative news few years ago, but today, due to Trump’s unpunished influence on markets is already the new normal.
But if Wall Street is at levels never reached before, we must also be aware of the technical fragility of the movement, beyond the lack of fundamental motives. It’s been that since October the gains have been made mostly from a handful of titles, Apple and Microsoft for example worth over 20% of the S & P500‘s rise since then, and if we join Google and Facebook, the result would come close to 30% mark. In addition to the substantial weight these companies have on the indices, the drag they emanate is even greater, spreading buying pressure across sectors and indices. Therefore, despite the undeniable excellent behaviour of the stock market this year, it is important do not get into euphoria, that’s what usually lead investors to ruin.
