Equities – Stocks Ramp Further
This has been an amazing summer for stocks. The party kept going on Wednesday.
The S&P 500 was up 0.57% and the Nasdaq was up 0.99%. Amazon stock was up 3.4% which gives it a market cap of $932 billion.
Amazon announced it will be unveiling a free ad-supported video service which will compete with Roku. Roku’s stock fell 4.9% on the news. The service will be developed by its IMDb subsidy. It will be shown to the 48 million people who use Fire TV.
Apple stock was up 1.49%, pushing the tech sector to a year to date gains of 17.04%. The VIX fell 2% to 12.25.
The S&P 500 is now up 8.99% year to date. I came into the year expecting gains between 5% and 10% which means it is fast approaching the high end of my range.
Telecom was the worst sector as it was down 0.76%. Consumer discretionary was the best as Amazon helped it increase by 1.12%.
Equities – Euphoria Is Here
I think the market is in another euphoric run like January. My perspective has always been that euphoria will never get to the January peak again this cycle.
We need earnings to improve for stocks to go up as multiples should contract or remain stable.
Because I think the market won’t get as overbought as it was early in the year, I think we are near the limit that this run can achieve.
As you can see from the chart below, the 14 day RSI for the S&P 500 is 69.76 which is slightly below 70. This signals the market is overbought.
The indicator is the highest since January. However, the January peak was much higher as it hit the mid-80s.
The CNN Fear and Greed index is even more bearish as it is at 78 which signals extreme greed. This is just a couple of points away from the peak in January.
Another signal euphoria is here is seen in the Investor’s Intelligence poll.
59.6% of investors are bullish and only 18.3% are bearish. The survey rarely shows bulls over 60% which means there’s little room to push higher.
