No trade has been more reliable over the last 7 months than the Monday Melt-up. Stocks have rallied in 25 of the last 31 Monday’s and look to make that 26 of 32 based on early futures action. The dollar is getting crushed versus the Euro as short covering drives the Euro higher and investors eye a bottom in the beleaguered Euro currency. The last trade on the Euro was 1.25% higher:
Equity futures are also soaring in Sunday trading action on the back of the Greek bailout news. Investors appear surprised at the news despite repeated warnings from the IMF and ECB that Greece was at no risk of default. Equity futures are poised to open more than 0.5% higher versus fair value.
As of late Sunday evening it’s looking like the gamblers who piled into equities in the waning moments of the Friday trading session will be paid handsomely for their risk. Stocks have now rallied over 40 sessions without a 1% loss. In addition, the SPY has rallied in 32 of the last 44 sessions while banks have rallied in 36 of the last 44 sessions. Bernanke’s reflation trade is beginning to get a very bubbly feel to it. Can the trends persist? Has trading the equity markets really become this easy or are we nearing a turning point?
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.