A “Legendary Buying Stampede”

It might not be Japan’s 60%+ equity market rally, but the S&P seems to be setting all kinds of records that even have the real veterans left confused (via Jeff Saut):

“As for the overall stock market, today is session 82 in the now legendary “buying stampede” because the Industrials have not experienced as much as a three consecutive session decline since the back-to-back 90% Upside Days of 12/31/12 and 1/2/13. At the time I was writing that such back-to-back sessions have left the INDU up 12.8% three months later 100% of the time; and while we didn’t quite achieve that this year, we certainly came close. Last week’s rally occurred from marginally oversold levels with the Buying Power Index rising while the Selling Pressures Index fell. Buying has also been broad based with all of the Advance/Decline metrics I monitor reaching new bull market highs. In summary, the data suggests the equity markets have once again dodged the opportunity to correct in any meaningful manner; and I must admit, I have NEVER seen anything like what has occurred since the “buying stampede” extended beyond the previous record of 53 sessions! That said, my work continues to suggest the equity markets do not face a period of serious vulnerability until this summer, unlike the last three years where “Sell in May and go away” has played so well, provided you redeployed the cash raised in the spring to stocks sometime during the summer months. I don’t think the scenario plays that way this year.”

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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Comments

  1. The price action today makes total sense with central banks depressing interest rates and buying anything they can get their hands on, including equities… this little global experiment is eliminating the most basic requirement of a functioning capitalist system, bankruptcies… until that happens I think the usefulness of price signals and fundamentals are going to be somewhere between mildly interesting and completely broken(depending on season)… unless of course everything works exactly as centrally planned (and if history is any guide, it usually or always does, right?)

    • Investors and this equity market do not see the black swan lurking out there somewhere. So far the central banks and central planners have had it their way for quite a while. I must admit that as one of the skpetics of the current rally it has been quite annoying and it is testing the patience of a great many bears and/or neutral skeptics. Jeff Saut may be right that the CB’s will continue to have it their way until summer, but I doubt that the bull stampede can last into the fall.

  2. So Japans economic data showed a huge jump in consumer spending as the newly “wealth affected” go spend. So they have found their own house ATM over there now.

  3. The S&P500 rally gives a whole new meaning to the adage:

    “Do not fight the Fed”

    What not even veteran investors could foresee has been the determination of the Fed to lie cheat and steal in order to preserve the financial system’s status-quo, under the pretense of stimulating the economy.

    Just as a reminder, the Nikkei has had large 60%+ rallies in the past when investors probably also though that the worse was over. Most of those rallies have ended in even lower markets eventually.

  4. The bull… I walk by that statue every day to and from work, and it looks like its almost smirking with a knowing tone. Like it knows something you don’t.