Bubbles require two pieces. First, the market must be experiencing rapid price gains. Second, these gains must be irrational. Right now, homebuilding is too slow to meet demand. That long lead time for new projects means a shortage will persist for years.
When prices stretch too far, they tend to snap in a market pullback. SPY has peaked 5% above its MA. Like a rubberband, it will pullback. This could indicate a general downtrend.
Smart money is buying gold and other commodities to hedge against inflation. To side with smart money, investors could buy commodity exchange-traded funds.
Pets are a big business with a significant number of companies fighting for their share of the profits. Invest in this trend is with an ETF.
Old traders like to say: “Don’t fight the Fed.” This saying could be the most important factor in the stock market right now. Traders should remember that adage and expect gains until the Fed reverses course.
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