So far, so good. That may not be your immediate take away as you read the rest of the first page but I’m fairly content with how the first month of the year is unfolding. Yes, I think we may be in for an imminent correction on the major equity markets. But I think that is a GOOD thing, not a bad one. We are way, way overdue for one. The longer the big markets run without some sort of corrective selling, the more likely it is that the next drawdown is a major, not a minor one.  Its better for the markets to just get a correction out of the way and adjust prices and the risk/reward equation to something more balanced and likely to last a while. Keep in mind we’re focused on late-cycle movers like metals. Its in our interest to have the last couple of acts drag out rather than coming to a quick and terrifying conclusion.

There was a bit less news than I expected in the past couple of weeks but several HRA company management teams promised more would be on the way soon. Fireweed and San Marco provided the exploration good news this issue.

I have heard the requests of several of you for a portfolio list and will try to have that starting in the next Journal issue, or the one after at the latest. Partially in preparation for that, several companies are coming off the HRA list as of this issue.

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In the last issue I noted how remarkable, and unusual, the 2017 market in New York was. Well, if you look at the chart below you can see the streak has not only continued, it’s strengthened.

We’re not even through the first month of the year and the SPX has already racked up a gain equal to a third of 2017’s full-year advance. If anything, trading has gotten even more one-sided and the chart has steepened. Therein lies the problem. I think there is a significant risk (>50%) of a 10-20% correction in New York in the very near future.

Before I go any further I want to make clear that I’m not painting some apocalyptic scenario here. I’m expecting a correction, not a crash. While a deep correction does increases the odds of traders panicking and creating something worse but it would still be healthy. I don’t know a single experienced trader that isn’t uncomfortable about how fearless the current market is. A correction could return some balance to the market and increase the odds the broader bull run continues.

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