Wednesday, July 11, 2018

Wall Street: Where the Wild Things Are

Mid-week market update: There is a children's book called Where The Wild Things Are by Maurice Sendak that stands as a metaphor for the stock market's action. Here is a summary from Wikipedia:
This story of only 338 words focuses on a young boy named Max who, after dressing in his wolf costume, wreaks such havoc through his household that he is sent to bed without his supper. Max's bedroom undergoes a mysterious transformation into a jungle environment, and he winds up sailing to an island inhabited by malicious beasts known as the "Wild Things." After successfully intimidating the creatures, Max is hailed as the king of the Wild Things and enjoys a playful romp with his subjects. However, he starts to feel lonely and decides to return home, to the Wild Things' dismay. Upon returning to his bedroom, Max discovers a hot supper waiting for him.
A number of films have been made from the story, including a full length feature movie. Here is a animated short from Youtube (click link if the video is not available).

As the SPX corrected after testing a key resistance level at about 2800, Where the Wild Things Are is an apt metaphor for the market and its animal spirits. The question for the investors is what part of the story we are at. Are we at the stage where Max is romping with the Wild Things, or is Max about to leave the island, where the Wild Things threw their final tantrum by roaring their terrible roars, and showed their terrible teeth (FANGs)?

The full post can be found at our new site here.

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