The Greatest Market Rally Of All-Time

In this week’s Dirty Dozen [CHART PACK] we look at the measured move target on the Qs, go through the top highlights + a number of charts from the latest BofA Fund Manager Survey, celebrate the greatest market rally of all-time, plus more…

Let’s dive in.

***click charts to enlarge***

  1. BofA’s latest Global Fund Manager Survey is out. Below are the highlights.

  1. Sentiment and positioning are hot. But if you’ve been focused solely on these variables then you’ve been kept out of a very rewarding market. That’s why it pays to have a process that uses a Trifecta of inputs as we do at MO. Breadth, liquidity, and of course, the tape, have kept us in and buying. The next target on the Qs is the 14k level.

  1. It’s official… this is now “The greatest rally of all time” via BofA.

  1. Speaking of hot sentiment and crowded positioning, Goldman’s Risk Appetite Indicator (RAI), which “aggregates 27 risk premia and procyclical pair trades across assets” rose sharply last week to close above 1 — a level that’s only been crossed a few other times over 30-years of data.

  1. Historically, this hasn’t led to great 1, 3, and 12-month returns according to GS.

  1. According to BofA’s FMS, a record number of investors are taking higher than normal levels of risk.

  1. They now have a record overweight position in EM equities.

  1. Inflation expectations are at record highs.

  1. Steeper yield curve expectations are at… you guessed it, record highs.

  1. The consensus expects above-trend growth and below-trend inflation. The only other time where the consensus was more positive on the outlook was on Jan 18’.

  1. Greater rebounding growth in the US relative to the rest-of-the-world might turn the “Dollar smile” back to driving the US dollar higher. This, of course, would put the pinch on all these record consensus expectations… Chart via @MacroCharts
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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