Investor Optimism Highest Since Crash of 1987
$DIA, $DAX, $DJSH, $N300, $NSEI
The US and global stock market’s seemingly unstoppable rise to record highs has boosted investor optimism to levels not seen since the Crash of 1987, some are worried.
The difference between The Bulls and The Bears has not been this high in 30 years, according to the data.
The last time investor sentiment was this far apart, stocks rallied until the could not. All of the sidelined money was invested, then a correction, that’s what markets do.
When investors feel invulnerable and start to overpay for stocks, they become complacent with the expectation that they can sell their stocks to new buyers, when there are no buyers, the market correct, huge money is made on the Southside move fast, and the Northside action begins again.
The Bulls in this week’s Investors Intelligence survey totaled 63.5% compared with 14.4% for The Bears. That spread of 49.1 points is higher than the level editors say shows potential danger in the market.
A spread above 30 points signals “elevated risk” while 40 points calls for “defensive measures,” aka caution and prudence.
Jeremy Siegel predicts the Dow Jones industrials will certainly top 24,000 by year’s end.
However, the next milestone may be tougher to achieve, the finance professor said.
“I think we’re going to get to 24,000,” he said Wednesday on TV.
“I have almost never seen a week with this many Earth-shattering economic events,” Professor Siegel said.
Q-3 earnings in general have come in above expectations. With more than 50% the S&P 500 components reported, earnings are estimated to have climbed 7% in the Quarter, up from an expectation of 5.9% growth at the start of October, according to Thomson Reuters I/B/E/S.
We continue to see better-than-expected economic numbers and corporate earnings, and fundamentally investors are focused on those numbers more than the media background Noise