Quick Comments On Yesterday's Action
It was reported that yesterday's move was the largest upward thrust in years. I seem to recall larger days in the Dow but be that as it may, it was a large day. We've had some reasonably large moves in both directions.
Where did all of the bearish sentiment go? There has been zero bearish action on the part of market participants in the last two weeks and no sign of any concern. Alot of people who were calling for a correction have revised their forecast to new highs. Those who said the recent sell off was a normal cleansing view yesterday as proof positive they were right. Goldilocks is back after a very short hiatus.
And, where has the buying been concentrated? The same commodities, energy, metals, deep cycle industrials, selected consumer stocks and brokers that they've been buying since this bull market began. In other words, some are betting on more inflation, more global demand for basic industrials, continued weak capex, more lack of demand for capital fueling mergers and a Fed who soon cuts rates. Compare that to action in the bond market. It doesn't seem to match up. More on that in one of the next few posts.
By many measures we are the most overbought we've been this entire bull market. By some measures, we are the most overbought of any time in the last decade on a short to intermediate term basis. That means the market is ripe for a pause at best or a sell off at worst. So, those who have taken yesterday's action to call for significantly more upside might just be disappointed. Regardless, we'll likely see more days like today in both directions as we discussed many times this year in regards to increased volatility.
Where did all of the bearish sentiment go? There has been zero bearish action on the part of market participants in the last two weeks and no sign of any concern. Alot of people who were calling for a correction have revised their forecast to new highs. Those who said the recent sell off was a normal cleansing view yesterday as proof positive they were right. Goldilocks is back after a very short hiatus.
And, where has the buying been concentrated? The same commodities, energy, metals, deep cycle industrials, selected consumer stocks and brokers that they've been buying since this bull market began. In other words, some are betting on more inflation, more global demand for basic industrials, continued weak capex, more lack of demand for capital fueling mergers and a Fed who soon cuts rates. Compare that to action in the bond market. It doesn't seem to match up. More on that in one of the next few posts.
By many measures we are the most overbought we've been this entire bull market. By some measures, we are the most overbought of any time in the last decade on a short to intermediate term basis. That means the market is ripe for a pause at best or a sell off at worst. So, those who have taken yesterday's action to call for significantly more upside might just be disappointed. Regardless, we'll likely see more days like today in both directions as we discussed many times this year in regards to increased volatility.
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