“The U.S. stock market is firing on all cylinders, and that’s bullish for its near-term prospects,” Mark Hulbert writes for MarketWatch. “The five largest U.S. stocks by market capitalization are grabbing attention, but their performance doesn’t tell the whole story.”
These five — Microsoft, Apple, Amazon.com, Alphabet, and Facebook — currently represent 20% of the S&P 500’s total market cap. That’s the highest concentration since at least 1980.
Also significant is that 94% of S&P 500 stocks now trade above their 50-day moving average (according to FactSet). Moreover, most stocks are not only in uptrends, the uptrends are accelerating. For stocks listed on the NYSE, 90% are now trading above their 20-day exponential moving averages, according to Hayes Martin, president of Market Extremes, an investment consulting firm that focuses on major market turning points. “That’s about as high as it ever gets,” he said.
These indications are bullish because major market turning points usually are accompanied by significant divergences in the market… divergences can materialize fairly quickly, and the bulls should not become complacent… Yet at the moment, Martin says the market’s strength is impressive and its near-term prospects are promising.
MacDailyNews Take: What happened after the 1918 influenza pandemic, the most severe pandemic in recent history? The Roaring Twenties!
Yes, the “Roaring 20’s” followed a few years later by the GREAT DEPRESSION, which entirely re shaped our Country and was responsible for the mass poverty and mass migration West.
The Roaring Twenties did not cause The Great Depression.
Indeed, the Roaring Twenties were a time of consumerist excess among a certain moneyed class — think of the lavish parties in “The Great Gatsby.” But the period wasn’t primarily defined by this kind of indulgence or market speculation. Milton Friedman and Anna Jacobson Schwartz’s comprehensive 1963 study, “A Monetary History of the United States, 1867-1960,” shows that the 1920s experienced low price inflation and stable economic growth. Scholar Harold Bierman Jr.’s research on the 1929 crash found that overvalued stocks were isolated to a few sectors and were of relatively short duration. A 2003 study by the Federal Reserve Bank of Minneapolis concluded that in 1929, many stocks were undervalued.
In any case, only a small percentage of the population owned securities at the time.
The downturn that characterized the Depression—a global phenomenon—was brought about by an almost perfect storm of factors, including Germany, France and Britain returning to the gold standard that they’d abandoned during World War I, which proved unsustainable. In part to boost European economies, the Federal Reserve kept interest rates low. But when it increased rates in 1928 and again abruptly in 1929, lending decreased, as did resulting economic activity. World War I’s vanquished didn’t keep up with reparations payments imposed by the Treaty of Versailles, which made it harder for the victors to repay their war debts to the United States…
More: https://www.washingtonpost.com/outlook/five-myths/five-myths-about-the-great-depression/2019/09/06/ce6fa63e-cf54-11e9-9031-519885a08a86_story.html
We are entering that “irrational exuberance” level again. Should be around 18,000 – 20,000 IMHO
My accounts are now only $5k below February’s peak. The stock market is stupid.
The 3:00 pm sell off has started… right on time…..
Followed by a 3:50 spike. The market was virtually flat for the day despite the fact that there is often some sell off on Fridays.
The market is moving because:
Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.” –Stan Druckenmiller
I disagree. It’s the potential for earnings that move the overall market. The Fed can only do so much. Take the Obama years for instance. The Fed had interest rates near zero the whole time and the market only improved so much.
The Fed was “QE’ing” during Obama’s term…as they are now, under a different name. “… the market only improved so much. ” What!? Take a look at a graph of the market’s ascent to see the inaccuracy of the statement. Interest rates aren’t the only “tool,” besides.
Liquidity from the Fed, via money infusion, and the biz world gaining confidence and embracing debt…it’s a symbiotic relationship. This was true then and it is now…except there’s more reticence to use credit now because there’s more uncertainty, because the amount of debt staggering and, of course, the V.
The V is no match for the D.
The Fed raised rates on day 1 for Trump and kept going. The Trump market was going up fast despite the Feds raising rates. But the Fed went too high, too fast. Obama had rates near zero for his whole tenure.
It’s almost as if the Fed was working as hard as it could to help Obama and hurt Trump. But it could only help Obama’s failed policies so much.
See the Fed rates here:
https://tradingeconomics.com/united-states/interest-rate
The Board of Governors of the Federal Reserve System includes four Republicans and one Democrat. There are also two vacant positions, one from 2014 (two Obama replacements were rejected by the Republican Senate) and the other from 2018. President Trump appointed both the current Chair and Vice-Chair of the Board.
Yeah but the mainstream Republicans didn’t like Trump at first. Now they have no choice, they need him. As does America and the world.
You lefties never tell the whole truth.
Three of those Republicans were appointed in 2018.
The other was appointed in October of 2017.
Democrats had two years to try to screw Trump over.
The graph at the link I provided shows that clearly.
your bleach injection is ready.
Some Dude, The market is not a part of Main Street. It is a separate animal. Particularity in current times.
The Fed uses rates to facilitate the health of the econ. They’re lowered if the econ needs some assistance and raised to keep the econ from running too hot…to prevent inflation. Might there be some allegiance to an administration? Sure? To actually “hurt” the/a President…a “vendetta” at the expense of the country and compromising the Fed Chair’s own professional and personal economic principles? I don’t share your view.
Look at what was going on in each admin and how the rates were tweaked. Early in O’s term, GDP was sacked, unemployment was high and the stock market was tanked. Lowering rates served to revitalize all. “Cheaper money” facilitated lending/borrowing for investment (growth).
Trump’s term in comparison, unemployment low and reaching record lows, GDP at “acceptable levels” and, except for the drop b/c of the V, the stock market was pointing upwards. Fed Chair Powell, a R btw, chose to keep the economy from overheating by keeping rates higher. Foolishly, per my perspective, Trump advocated for lower rates because he saw the low rates/cheap $$ in Europe and wanted the same here in the US. Ask anyone with more knowledge of how things work and they’ll say the rates in Europe are anything BUT a sign of econ health. Low rates can serve to stimulate lending/borrowing for investment purposes, but they can also serve (necessity) to keep debt payments lower…which isn’t a sign of health, but of gargantuan debt load.
The original discussion started with Drunkenmiller’s comment that liquidity was the real market driver. The statement is relevant in the last 10 yrs, especially…obviously functioning to kickstart and propel the econ during O’s term, but also during T’s term. A very clear example that pumped the econ AND AAPL is what happened the fall of 2019. In August AAPL was at/near the $200/share level and approx 5 months later it was $125 higher..which was a new all-time record high. It hit the high ($327) with paltry earning/profit levels, gains mainly b/c of buybacks and the effect of a big govt infusion announced in Sept and completed in Oct. The Fed injected $400 billion into the “Repo Market,” which is a debt/lending market place that didn’t have the money (liquidity) to balance the books. One report stated, “ The repo market is looking a lot like it did on the precipice of the 2007 housing market crash.” The Fed infused the “Repo”, and the market climbed again—NOT because of earnings (nor interest rates)—but because the money supply was there to “play” with. To use your word, it’s growth on “potential” alright, but not based on the traditional balance sheet and earnings (nor interest rates)…but market liquidity.
It was the 1st time since ‘08 the Fed infused $$ in the banking system and the result was clear. This article lays it out nicely: https://www.washingtonpost.com/business/the-repo-markets-a-mess-whats-the-repo-market/2019/09/28/e8fd43b2-e1d8-11e9-be7f-4cc85017c36f_story.html
Another, but similar perspective: https://www.cnbc.com/2019/11/07/the-feds-monetary-juice-has-tied-directly-to-the-rise-in-stocks.html
The V needs the D and the D needs the V. Each needs to grab the other, and the result can be a child.