The Bulls Paused to Refresh, Fears of a Large Market Bubble are Overblown

#Bulls #bubble

$DIA $SPY $QQQ $RUTX $VXX

As global shares are hanging at record highs, and we believe that this stock market is not an overblown bubble, but there are some little sector bubbles where the risk lies.

With MSCI’s All Country World index, which tracks stocks across 49 countries is where the fears are mounting. And so some booming areas could finish with a burst.

But, for now our view is simply that concerns over a large stock market bubble are not warranted.

To understand why, let’s look at why markets are valued so high now, as follows:

The Key is that the world is seeing unprecedented levels of monetary/fiscal support, ultra-low bond yields, historically low interest rates, super earnings, plus both institutional and retail investors have large reserves of of sidelined cash.

This is a very rare combination, so barring another medical chaos attack, or an extreme inflation spike we might expect it to take yrs for markets to cool significantly as happened in the Roaring 20’s after the Spanish Flu pandemic.

More concerning are some little-bubbles in a small group of stocks that consistently rush to new highs and reject all balanced valuations.

Hyper-growth stocks, which often lure in civilian investors with their headline-grabbing current performance, at the moment appear to have no ceiling.

In my 40+ yrs experience, highly profitable members of those sectors will bring the story stocks back down to Earth, with painful corrections.

Investors should work with a good fund manager, and seek out stocks most likely to generate and build their wealth over the long-term.

Today, it is not the macro-bubble investors should be worried about.

Tuesday, the US benchmark stock indexes finished at: DJIA -22.96 to 30937.04, NAS Comp -9.93 to 13626.07, S&P 500 -5.74 to 3849.62

Volume: Trade on the NYSE came in at 1.1-B/shares exchanged.

HeffX-LTN’s overall technical outlook for the major US stock market indeses is Bullish with a Very Bullish bias in here.

  • Russell 2000 +8.9% YTD
  • NAS Comp +5.7% YTD
  • S&P 500 +2.5% YTD
  • DJIA +1.1% YTD

Looking Ahead: Investors will receive Durable Goods Orders for December, the FOMC Rate Decision, and the weekly MBA Mortgage Applications Index Wednesday. 

Have a healthy day, Keep the Faith!

The following two tabs change content below.

Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   
#bubble#Bullish#Bulls#DIA#Fed#FOMC#institutional#investors#money#NYSE#QQQ#retail#RUT#RUTX#SPX#SPY#stocks#VIX#VXX