by Wayne Duggan
FOMO traders have been pouring money into whichever assets have been generating the highest returns.
Source: U.S.News & World Report
https://finance.yahoo.com/news/investin ... 17521.html
FOMO traders have been pouring money into whichever assets have been generating the highest returns.
Gluskin Sheff’s chief economist, David Rosenberg, notes that rising markets have made Americans feel wealthier, so they’ve been spending more and saving less. “This is a classic late-cycle development,” he says.
Investors have put $24 billion into equities during each of the two most recent weeks, notes Bernstein strategist Inigo Fraser-Jenkins, a big change from 2017, when they withdrew $9 billion during the last six months of the year.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
The economic history of the modern world is one of long-term incremental progress. Unfortunately, “Long-Term Incremental Progress” doesn’t make a good headline.
So the next time you hear a scary news report accompanied by predictions of market chaos, treat it like you would a 5-pound tenderloin.
Give it at least 48 hours to marinate.
It has been a record 398 trading days since the last 5% pullback in the S&P 500. That eclipses the prior record of 394 trading days realized during the dot.com bubble era in the late 1990s.
Since 1929, the average length without a 5% pullback in the S&P 500 has been 92 trading days.
1. Rates stop going higher.
2. Stocks keep going lower until they readjust.
3. Sharply higher-than-expected earnings
4. Apple (AAPL) stops going down
1. FEWER NEW LOWS
2. SEARCHING OUT THE SECTORS: Strength in ex-Utilities
3. TECH TRIPS UP
4. VIX VISION
5. RELATION TO RATES
6. PANIC SAFE-HAVEN BUYING
7. MINDING MOMENTUM
8. TEST OF 200-DAY MOVING AVERAGE
Hedge fund clients at Bank of America Corp., who dumped stocks at a record pace in late January before diving back in as markets headed toward their Feb. 8 bottom, were back in selling mode during last week’s rebound.
As hedge funds resumed backing away, other clients stepped in, with the biggest source of demand coming from companies themselves.
Pickup in corporate repurchases . Wealthy individuals continued to scoop up shares and institutional investors such as pensions turned net buyers for the first time in 16 weeks.
1. Seller fatigue
2. A flight to safety
3. That “big puke” moment
4. More fear
5. The price of insurance
6. A line in the sand
7. The TRIN
One of the big tell-tale signs of the end of a speculative boom is when individual investors heavily commit to buying, like we saw during the dot-com boom in 1999.
Stock allocations have soared during this bull market. They went from around 40% at the 2009 bottom to more than 70% right now.
During the last “Melt Up” in stocks – when the market soared during the dot-com boom – stock allocations first broke above 70% in 1996. That was three-and-a-half years before the ultimate peak.
The last great Melt Up started from similar levels of stock ownership. That tells me that this red flag is simply a marker of where we are now – the beginning of today’s Melt Up in stocks. It’s not a sign of the end.
Based on history, stocks can still soar dramatically – even from these levels.
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