11/14/19 Thursday

The S&P continues to move further into all time high territory while sentiment has turned exceedingly bullish over the past month; our fear and greed index currently scores 100 (highest greed level). While this denotes very strong odds of a near-term pullback, seasonality, the belief that the U.S. and China are on the verge of striking a “phase one” deal, today’s news that the USMCA is likely to be ratified soon, the Fed’s accommodative stance and, way below the radar, the potential for the Fed to roll back banking regs to fix the present overnight funding issue could absolutely spark an immediate rally.

If I had to pick one reason why the market continues to hold up against suspect technicals and, on balance, waning fundamentals, it’s the obvious fact that traders suffer from an acute case of FOMO. That is, the fear of missing out on what they believe will be a serious rally should a trade truce be struck.

The more this continues the more the potential good news gets priced in. Question being, will this ultimately turn out to be your classic “buy the rumor, sell the news event”? Of course we won’t know till after the fact.

Given the latest data, hard and soft, and its trajectory, I do believe we’re within a few months of having more conviction — in terms of the big picture going forward — one way or another.