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Pros, Retail Investors Alike Seen Maxed Out In Bubbly Bull Run
On the heels of an unthinkable "red" day for stocks, things got back to "normal" Wednesday, as equities touched fresh intraday records.
The summit push to new peaks came less than 24 hours after health officials confirmed the first US case of the Wuhan virus.
Pandemic fears aside, the dip-buying propensity is deeply entrenched. Familiar dynamics are serving to suppress volatility. "FOMO" reigns. "The force is strong with this one".
Read more: Markets ‘Still Insulated From Shocks’, Nomura�
Using margin debt balances to calculate the retail appetite for stocks is jaw-droppingly crazy. How many individual investors, as opposed to hedge funds and high-frequency traders, use margin anymore? What I see on the ground is investors tapping margin loans to “bridge” property transactions and such (no avoid taking capital gains).
The melt-up is hedge funds scrambling to justify their miserable existences.
While the latest “melt-up” shares technical characteristics from Jan and Sep 2018, the difference now is that the Fed is ultra accommodative and is continuing to pump liquidity into the markets. So what is going to be the catalyst for that kind of pullback? Markets seem to be shrugging off everything else (war, geopolitics, pandemics).