Markets hit new highs – what now?

Today, the US Indices hit new record highs at the close. The Dow Jones last did this towards the end of July but has been flirting with new highs since May 2015. We had such a drop last August and then again in Jan/Feb ’16 that it has taken this long to get back to these sorts of levels.

So have I gained from this? Well, yes and no.

I should have gained a lot from this. I bought into the Dow at a low on Jan 20th at around 15,450 (I had been waiting for a low point and this seemed low enough) and in my mind I was going to hold this until the Dow reached 18,500, or at least 18,000 which I was sure it was going to this year.

In fact, I only held it until around 15,800 which was, in hindsight, pathetic!

It appears that the price I had bought at was pretty much the lowest it has been (so far!) all year. Of course I was not to know this and a few days later it began to drop back to near this level again, so I cashed in. Had I been braver and held it, I would have banked, by now, over 3,000 points. That’s a minimum £3,000.

So why did I sell of too early? Good old fear I’m afraid. This period of the year was highly volatile and it was always possible that we could have gone further down. I did want to bank something at least, so cashed in to avoid getting nothing. I had not had a particularly good start to the year so this was a welcome boost to funds at the time.  This is what can make trading so tricky, you can’t predict the future so you can only make decisions based on what you see each day. It was looking bad so I had to cash in.

That doesn’t mean of course that I have not benefitted from this steady rise this year. There have been plenty of opportunities, Brexit caused a shake up, but I picked one particular Jewelry brand up at the low point and today have over 800 points in my pocket with this.

So, as the title asks, what now? Well, of course I have no idea. August is traditionally a weak time for stocks, so reaching a new high is pretty remarkable.

But then again, 86% of people trading the Dow on IG right now think it is going down, and they have done for the last month. Considering most people get it wrong, this may well be a sign that this rise may continue. For a bit anyway.

At some point we will inevitably see a drop off. The last two years, September has been particularly weak and we may well see a repeat of this again. The US election is looming, and though the bookies have Clinton as the winner, markets don’t like uncertainty and may well hold off new highs again until after the result in November. Who knows?

I am still holding all my current positions at least until Sept. and will only think about selling if any major news comes in to spook the markets.

My next move at that point may well be to short the Dow or my other favourite market tracker, XIV.

FSTE is nearing all time highs as well. So much for Brexit losing all your pension money, quite the opposite. Now if only people realised this….

Love as ever,

Chris K


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