Setting the scene… ( S&P500):

 

S&P500

S&P500.

 

As the US stock indices have almost gone vertical I thought it might be interesting to map just how euphoric investors are today…

 

  • Yesterday the largest S&P500 ETF saw the second biggest inflow in over 5 years.

 

ETF inflows

SPY ETF flow.

 

  • Cash held in NYSE margin accounts are near record low ( ie. “all in” and then some).

 

NYSE available cash

NYSE Available Cash.

 

  • NYSE margin debt is at an all time high (ie. Never before has investors borrowed this much to leverage up on stocks).

 

NYSE Margin Debt

NYSE Margin Debt.

 

  • Bull/Bear sentiment ratio is the highest in 30 years.

 

Sentiment

Sentiment Bull/Bear.

 

As always, the market can remain irrational for a very long time. Going long now is going long with the biggest horde of bulls perhaps ever. If we get inflation rising even further, we may not have a real bear market in stocks for years to come. Thus, I do not want to short stocks at this time, even with sentiment and valuations near record high.

 

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