I wrote the following in a post I titled “Wait for It” back on March 23rd. Coincidentally, that was the day the market bottomed:

“…traders want more, they want what the Fed served up (if not more from them), but more-so they want that $2 trillion stimulus package.

Chuck Schumer gave the market hope when he suggested that it looks like today; stocks nearly retraced all of their losses. But then the bill failed again in the senate; politicians want more. Stocks moved back toward the day’s lows.

If you’re not thinking “how ridiculous”, you’re just not thinking. A bill will absolutely pass, today or tomorrow, it’s a virtual certainty.

All cynicism aside, people indeed will need it badly, and the market will love it — that is for a second, a minute, a day, a week, even a month or longer…”

Well, we’re at a month and a half, and the market’s still loving it!


Now, I’m tempted right here to write another “Wait for It” post and call a top, but of course that would be utterly stupid of me! I mean, if I blow it I’ll no longer be able to bask in the glory of calling the bottom 😎.


All kidding aside, if I was really any good we would’ve abandoned our hedges and dumped everything into the Nasdaq on March 23rd, and, well, that would’ve been really really special! But of course, that — throwing all caution to the wind and buying into a bear market rally during an epoch recession — is simply not how we do things around here.


Here’s the rest of that prescient post:

“…but ultimately folks, per my earlier Quote of the Day, you can only defy economic gravity for so long.

I.e., we’ll continue to invest based on what real world conditions dictate, taking all into account, including the impact of the most massive stimulus the world’s ever seen.”

“Invest based on what real-world conditions dictate” are the operative words above.


So why might I call a top (I won’t!) right here? Well, where do I begin? Suffice to say that while things are of course improving a bit as economies reopen, “real-world conditions” are anything but bullish. All the while, complacency is beginning to set back in.


Our PWA Fear and Greed Index is, as of this morning, back in the red (net greed), albeit slightly (+12.5 [max greed is +100]), after reading max fear back at the March bottom. 


Two of its components — adviser sentiment and the equity put/call ratio — are currently sending huge warning signals. 


Adviser Sentiment:
Click to enlarge…

The equity put/call ratio (white line) is virtually screaming “selloff” (yellow line S&P 500) — now even lower vs the historic low it flashed at the February high:
Click to enlarge…

Again, not calling a top, just reiterating that the risk in today’s equity market, for a plethora of reasons, is exceedingly high.

The Fed wraps up its 2-day policy meeting this morning. Here’s a note a sent to Nick a little bit ago:

“If I were on the fed board, wanting to save the world but trying to be thoughtful of the risks along the way, I’d be saying to my colleagues this morning: “How do we let a little air out of the equity bubble without busting it? If these retail traders and fomo (fear of missing out) professionals keep bidding this thing up we’re going to have a nightmare on our hands. Yeah, I know, we’re essentially in a depression, and we’ve managed to hide the fact from the public via asset prices…. but this has gone too far and is the makings of a huge equity market meltdown if it doesn’t slow down or correct sometime soon… we’re in a really tough spot right here!””

Stay tuned…


Thanks for reading!
Marty