What Lurks in the Stock Market Summer Haze

Ah yes, the smell of the summer haze coupled with the impending doom of summer swoon projections…

It’s like an itch you just can’t scratch.

And it’s what has kept $9.3 Trillion in the bank for consumers, as the last 14,000 (plus) Dow Jones points have ticked higher.    

JP Morgan was the first to suggest "a summer top with a correction into fall" in a report out at the end of last week.

Nothing like getting a jump on things, eh?

Well, a brief review of history makes that type of prediction look like a pretty normal bet; about 50/50 when you look at the regular seasonal pattern that tends to occur at this time of year.

Of course, the results of trying to "time" the market are clear - and heavily outweighed to the losing side.

But heck, who keeps track of that stuff when a good scary headline will work well on a Friday afternoon as the lazy days of summer are just getting underway?

Don't say we didn't warn you.   

And Then…

The Citron article about Nvidia hit the tape a couple of hours after JP Morgan and, well, with the weekend at hand you can guess what unfolded next.   

This is precisely the type of shenanigans that we’ve repeatedly suggested you should expect leading into summer; because lower volumes, less attention, fewer players and wider spreads are like putting a match to pine straw in the dry mountains of California in summer.  

It does not take long to light a fire.

And those taking the hit were the big winners of the year so far - the FANGs and the tech index got bloodied a bit.  

Logically, we can chalk this up to yet another algorithm / high frequency trader effort striking while the iron is hot, the crowd is thin, the weekend bell is in site – pushing on the edge of light volumes with there’s no one there to fight back.   

The summer haze is here. And with it comes high speed trade machines will get what they can as trade thins.

I have a hunch we can safely assume this will not be the last nuke to hit parts of the market during the summer break.   

In fact, let's expect it.   

It’s not abnormal for the season, and likely not Armageddon, but you would not know that if you wasted any time listening to the talking heads shouting from the rooftops into the closing bell.  

Announcements like, "The NASDAQ's worst close since Brexit" were being screamed from every talking head desktop.  

Just stay steady at the wheel, even when / if it gets ugly.   

You should be praying for this type of ugly - it's perfect to drive down sentiment further and keep the masses on their heels, safely tucked away in bonds at 50 times earnings and trillions in cash sitting idle or earning nothing.