Retail Investors Coming into Stock in Droves

$DIA, $SPY, $QQQ, $RUTX, $VXX

US stocks delivered the best Quarterly run in almost 5 years, luring retail investors back into the longest Bull market on record just as Wall Street started flashing yellow lights.

Individual investors drew down cash balances at brokerage accounts to record lows as the S&P 500 surged 7.2% in the 3 months ended Friday.

Meanwhile, big banks from Morgan Stanley to JPMorgan recommended curbing investments in American stocks, with strategists forecasting the 2nd-weakest year-end frame of the 9-year Bull run.

The conflicting views partly reflect a different approach to the market.

While individuals tend to chase stock performance, Wall Street pundits are growing cautious amid forecasts that profit growth will slow along with the pace of economic expansion.

The lack of consensus is good news for American stocks.

We here at HeffX-LTN do not really worry about markets when there is a lot of skepticism. We worry about markets when we do not see anybody being skeptical. The longer Bull runs North, the more people who have been sitting on the sideline feel like they are missing out aka FOL. So there is built up pressure to participate.

Retail investors poured into the market as stocks eked out a sixth straight monthly gain to cap a quarter that saw all major benchmarks reach records amid a surging economy and booming profits.

The S&P 500’s gainer was the best since Y 2013, while the DJIA jumped 9% and the NAS Comp increased 8.3%.

Just 8 months ago, the S&P 500 suffered its worst pull back years, sparking fears of a repeat. A distinction now is that optimism is not as widely shared as it was then, when Wall Street strategists rushed to raise their forecasts after President Donald Trump’s tax overhaul and hedge funds amped up borrowing to bet on stocks.

Now, the strategists look a bit timid.

Based on the average year-end S&P 500 target of 2,956, they predict just a 1.4% gainer in Q-4. That would be the worst close to a year since Y 2012.

Alarms are ringing at firms from Goldman Sachs to Citigroup as strategists warned over peaking growth, trade tensions and stretched valuations. Earlier this month, hedge fund clients at Morgan Stanley reduced their leverage to the lowest level this year, a sign that risk appetite is retreating.

Friday, the major US stock market indexes finished at: DJIA +18.38 at 26458.31, NAS Comp +4.38 at 8046.33, S&P 500 -0.02 at 2913.98

Volume: Trade on the NYSE came in at 957-M/shares exchanged

• NAS Comp +16.6% YTD
• Russell 2000 +10.5% YTD
• S&P 500 +9.0% YTD
• DJIA +7.0% YTD

HeffX-LTN’s US Major Stock Market Indexes Technical Analysis for the Month/Quarter Ended 28 September 2018

Have a terrific weekend.

  bull, Bullish, caution, cuts, DIA, DJIA, growth, investors, QQQ, retail, RUN, RUTX, sentiment, SPY, stocks, street, target, tax, Trump, VXX, Wall

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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