Last week the S&P 500 cash index closed a hair below the all the time of 3025.86. No one can argue the strength of the price action. It is climbing a huge wall of worry and repeatedly dispelled the worries of an imminent recession that have dominated the media. We came to this conclusion by examining the internals of the market.
One of the world’s most successful mutual-fund managers, John Templeton once succinctly summed up the mass emotions in different stages of the stock market as: Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria. The market is near all time high, yet the sentiment is very negative as the skepticism is bountiful about the many issues that have held the stock market hostage for the last 20 months.
The much anticipated trade deal is here. It is only a partial deal, which the White House has said many times before that a partial deal was not acceptable. What has changed? Both sides have changed a lot for various self-serving reasons. The stock market and the 10-year treasury yield were at a critical
On Thursday October 3rd, the percentage of S&P 500 stocks fell below 10-day moving average reached 3.39%, which was an extreme oversold condition. The market bounced immediately after the extreme condition was met briefly, but with weak volume on all indices. The administration was leaking trade talk hope while the market was rallying on Friday morning.
