Extreme Optimism Continues Surprisingly, the stock market rallied on Monday even though it’s extremely overbought and there are riots in the streets. We are close to a correction. A tense situation on the streets is escalating and stocks are due for a correction anyway. This reminds me of February w
Moment Is Here The moment is finally here. A country fully recovered from COVID-19. Yes, it’s Germany, but this is still important. It’s a potential leading indicator for America. To be clear, Germany had less of an impact from coronavirus than America did. Germany had 103 deaths per 1 million peopl
Jaded Investors Investors who follow the fundamentals have become jaded. You can tell because there were discussions on FinTwit about how the stock market would rise after the weekend protests and riots. These investors are wrong to suggest the fundamentals don’t matter and they have recency bias. W
Worst PCE Report Ever By A Mile April PCE report was the worst PCE report ever. It gives us the details on how bad the economy would have been if the government didn’t give out extra unemployment benefits. It also shows how horrible it likely was for people who didn’t get benefits or got them
Euphoria Takes A Quick Breather With the decline on Thursday and the selloff on Friday morning, it looked like markets were calming down after a big explosion. Then, madness occurred. President Trump gave a quick speech on Hong Kong which caused stocks to briefly selloff and then explode higher. Thi
Earnings Growth Estimates Stop Falling This article will be all about rate of change analysis. The stock market loves when the economy and earnings go from terrible to less bad. Since this was the worst recession in modern history, we are getting a lot of that. As you can see from the table below, Q
Stocks Finally Decline There was some volatility on Wednesday morning, but the market ended up higher which put it on a 3 day winning streak. That was a 7.66% gain since May 13th. Stocks were very overbought. You could tell sentiment was overheated because there were people saying you should be perm
Spending Growth Is Improving Consumer spending growth is in a steady uptrend. That’s not surprising because the fear in late March and early April was unsustainable. There is a sense of a return to normalcy as the economy reopens. Plus, most people who applied for unemployment benefits have gotten t
Not Extremely Overbought, But Due For A Correction The stock market is overbought. It’s not at an extreme level because the AAII sentiment and the NAAIM exposure indexes aren’t showing signs of froth. Plus, the Bank of America fund manager survey showed managers were hoarding cash. To be clear, that
Economic Anxiety Scars of the COVID-19 shutdown won’t heal easily. These are economic and social. That’s a toxic combination. This situation is directly the opposite of the recent stock market performance. The stock market is acting as if COVID-19 is a done deal and any of its consequences will be g
