USA: Dow on verge of 30,000 and first record close in 10 months on back of Apple’s stock surge

The Dow Jones Industrial Average on Monday was knocking on the door of a psychologically significant 30,000 milestone, which would mark the first such round-number level for the benchmark since mid January as the stock market attempts to punch higher in the wake of the volatility inspired by the COVID-19 pandemic.

Read more at: Dow on verge of 30,000 and first record close in 10 months on back of Apple's stock surge - MarketWatch

Wall Street Fata Morgana: Dow soars almost 4% main stock-market indexes turn positive for May on coronavirus vaccine hope

U.S. stocks soared on Monday, erasing May losses, on optimism that the American economy might be percolating again, while the medical community works toward a potential COVID-19 vaccine.

Risk assets also received a boost after Federal Reserve Chairman Jerome Powell on Sunday night struck a more upbeat tone on the U.S.’s growth prospects, while highlighting that the central bank still retained tools to limit the economic downturn.

Note EU-Digest: Wall Street "Fata Morgana" goes in overdrive, as it clamps on to imaginary "positive" news. Stop dreaming. It's time for a reality check folks. The US economy is on life support.

Dow soars almost 4% main stock-market indexes turn positive for May on coronavirus vaccine hope - MarketWatch

US: Wall Street Pipe-Dream: Market momentum has never been higher but the risk of a crash is high - by Marcus Padley

I wouldn't want to scare you but have you seen a chart of the Dow Jones or the S&P 500 index recently? The RSI or Relative Strength Index, a technical indicator used by chartists to measure the speed and change of price movements, is at record highs.

In the technical world the RSI goes from zero to 100 and if a stock has an RSI below 30 it is described as "oversold", and if the RSI is over 70, it is described as "overbought"

While individual stocks are quite volatile and can regularly appear as oversold and overbought, an index like the S&P 500 index, which represents the average of 500 stock prices, is, by definition, not volatile and rarely becomes either oversold or overbought.

At the moment the RSI for the S&P 500 index is trading at 87.9. The Dow Jones RSI is currently 90.5. That means they are both overbought, which is rare enough, but more significantly, I can't see that they have ever seen an RSI number this high, even in the tech boom, ahead of the 1987 crash, or before the global financial crisis. The momentum behind the US markets has never been higher than now

On top of that, the S&P 500 price earnings ratio is now at 24.87x; that is the highest since the tech boom and higher than pre-GFC. I own a couple of businesses and I have to tell you, if someone wanted to come and pay me 24.87x post tax earnings for either of them I would retire a gazillionaire. Yet this is the average, repeat, average, valuation of $US25.12 trillion, repeat, trillion, dollars worth of US stocks in the S&P 500.

There has rarely been such positive sentiment. Trump-inspired of course although there are a myriad of other factors you could list to justify it in the short term, anything from economic recovery to anticipation of a solid results season which is ongoing in the US.

I have our portfolios almost fully invested at the moment, but I have them on a hair trigger. When I see Wall Street fall a few hundred points in one night I will quietly start selling. This herd could turn nasty at any time and with the top of the S&P 500 long-term trading range 17 per cent below where we are now, we could see a 10 per cent correction in the US markets for absolutely no fundamental reason at all, other than the herd deciding to have a sentiment change for some invisible reason, which is usually because some large fund manager somewhere holds an asset allocation meeting and decides to sell, and the rest follow.

It can happen any day. But don't be too smart for your own good by selling before it happens. These exponential moments only come around once every decade and you can't miss them.

Read more: Market momentum has never been higher but the risk of a crash is high

US Economy: Re-Energized Dollar Looms Over the Rest of the World - by Ira Iosebashvili

On Wall Street, the rising dollar has been one of the most visible signals of growing optimism in the U.S. economy. For many other countries, it spells trouble.

Most analysts expect the U.S. currency to strengthen in 2017, extending a gain  that has boosted the value of US Dollarby more than one third since the US credit downgrade in 2011.

Note EU-Digest: the strength of the US economy could also be a Wall Street Fata Morgana created by Wall Street and the corporate controlled press - time will tell.

Read more: Re-Energized Dollar Looms Over the Rest of the World - WSJ