EC A Monday Dozen - Monday, September 9

I’m also a firm believer in predicting price direction, but not magnitude. I don’t set price targets. I get out when the market action tells me it’s time to get out, rather than based on any consideration of how far the price has gone. You have to be willing to take what the market gives you. If it doesn’t give you very much, you can’t hesitate to get out with a small profit.Linda Bradford Raschke

Good morning!

In this week’s Monday Dozen we look at the historical magnitude of the current tech bubble, the incredible financialization of our economy, the best-performing assets year-to-date, the end of an era, and much much more. Let’s begin.

1. The S&P is within spitting distance of all-time highs but investors aren’t buying it. AAII Bull-Bear sentiment remains in the gutter. This is bullish and makes it odds on we see new highs in US equities very soon.

 

2. Here are the subsections of the AAII survey broken down. See the chart in the bottom right-hand corner. Investors are holding their lowest levels of stocks relative to cash and bonds since January of 13’. This can mean two things (1) there’s a lot of potential fuel to drive this coming bull leg higher or (2) there’s trouble ahead because we need investors to eventually start buying in.

 

3. At least one would think so because how much longer can this lopsided equity demand trend continue?

 

4. If equities are about to rally like I think they will then crowded bond longs may be in for a world of hurt. The US Citi Economic Surprise Index (CESI) just turned positive for the first time in nearly 150 days. Bondholders, MIND THE GAP….

 

5. When I reference the financialization of the economy, this is what I’m referring to. This is why investor confidence is so critical to the economic cycle. The financial asset tail now wags the economic dog (chart via BofAML).

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Disclaimer: All statements are solely opinions and are for educational purposes only.

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Currency Trader 5 days ago Member's comment

I thought the HODL terminology only applied to crytocurrency?

David M. Green 6 days ago Member's comment

What kind of inclinations do you have about those deglobalization effects?