Home Investments Education Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street




“The pundits are paranoid, they really are negative this market…” — Paul Ebeling

What happened last week

The S&P 500 rose for the 4th wk in 5, The Russell 2000 Index of small-caps rose more than 4%, the most since March, while the tech-heavy NAS Comp advanced for the 6th wk running, the longest winning streak in 5 months.

Valuations that started the year at 23X earnings have shrunk, thanks to the fastest profit expansion in 10 yrs.

Short sellers have been hammered as equity rally since January’s squeeze many dry, but they are still alive. Bearish bets on the SPDR S&P 500 ETF have climbed to 5% of its stock outstanding, from less than 2% at the start of this yr, according to IHS Markit data. Meanwhile, demand for protection against losses in coming months is rising in the options market.

Pushing hard against the Wall of Worry are millions of new retail traders who bought the dip during the VirusCasedemic Bear market and have since become the staunchest participants in this Bull market. A week ago, when the S&P 500 dropped more than 1%, retail investors poured a record $2-B into equities, according to the data .

And there is no indication they will be retreating anytime soon. According to a report by investment adviser Betterment LLC, 58% of the 1,500 day traders surveyed plan to trade even more as virus chaos restrictions are lifted. Only 12% said they expect to trade less.

The technicals

The NAS Comp punched a new high, and the S&P 500 marked its new high. The SOX and RUT are close to new highs too.

Support is deep and resistance is light to Nil across the board.

What to expect this week

We along have raised our forecast for households’ net equity purchases for the full year to $500-B from $350-B after Fed data showed robust buying from the group.

The trade-off households face between equities and other asset classes favors equities through year-end given anemic money market and credit yields,” Goldie’s head strategist David Kostin wrote in the note. “Additionally, any signs of a sustained increase in inflation would favor equities over bonds or cash.”

So, let the market haters hate, for me it is all about love now!

Have a positive week, Keep the Faith!

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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.