U.S. Equity Markets were closed yesterday for the Labour Day Holiday. However, the Futures Markets were open with the S&P September Contract rallying for most of the past 24 hours. In a recent report, the Financial Times said Goldman Sachs and Morgan Stanley were seeing clients reduce leverage in August. This is a sign that investors are lowering their risk exposure to the market. You see, experts closely watch margin debt as a sign of investor sentiment. A tell-tale sign of a euphoric market is how much money investors borrow to buy stocks. When you hear that someone is taking out a second mortgage to buy more of their favourite stocks, you know that you’ are deep in a Melt Up. So, when margin debt is high, more people are borrowing to increase their returns in the stock market. That is a sign that investors are extremely bullish. But these numbers tell us they are worried about the near-term move. After all, Federal Reserve Chairman Jerome Powell told us last week that the Fed could begin pulling back on bond purchases by the end of this year. And like I stated previously, September is the worst month of the year for the S&P 500. So, it should not come as a surprise that Wall Street money managers and traders are anticipating a sell-off. Usually, when institutional investors think the market may be too pricey from a valuation standpoint, they look for a 3% to 5% pullback before putting money to work. But if one does not materialise, they start to get antsy. Inevitably, that leads to that cash pile slowly trickling out into the market at first. But before long, as others notice a pullback is or isn’t materialising, the investing turns into a flood. This certainly explains the rally we have had in the S&P since the 4130 low on June 18. European Markets closed higher in light trading while the big story of the day was the 11% surge in Silver before reversing this move overnight.
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For anyone following my Platinum Service it was flat yesterday as none of my trades were hit and is still ahead by 375 points for September, having closed August with a gain of 1543 points, and 996 points in July. The Platinum Service made 1366 points in June, 1439 points in May, 1244 points in April, having ended March with an impressive gain of 3769 points, 3286 points in February, 2077 points in January, and 2273 points last December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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