My oh my. What a difference a few days makes. We went from hearing all about 1970s style inflation, supply chain woes and challenged Q3 earnings to partying like it’s 1999, all in one week. Well, good luck to those schizophrenic investors. As my friend and Twitter queen, Helene Meisler likes to say, “nothing like price to change sentiment”.
As you know, I have been firmly positive, whether or not the major stock market indices would see one more decline to new lows in October or forget ahead to new highs. We added a boatload of risk last Wednesday to express that view.
The bulls put on a nice show to end the week, but I gotta say, it wasn’t so wonderful beneath the surface. Sorry to pour cold water folks. The Dow Industrials were up more than 1% and the S&P 500 .75%. However, there were 100 more stocks declining than advancing on the NYSE. That shouldn’t be in a healthy rally. Granted, it’s only one day.
Looking at options pricing in volatility, traders are feeling mighty good right now which is the polar opposite of how they were behaving on September 20 when the pullback was at its worst. As I like to tweet, it’s a good day to feed the ducks. In other words when the ducks are quacking, feed them. Put another way, when people are clamoring for something, sell it to them. I sense that could be a minor theme today.
