First off, some comments on recent market action. In my last post I talked about frothy sentiment indicators but a funny thing happened the next day after that post - the main short-medium term indicators I look at reversed course to a moderate degree thus leaving a window for the market to advance and advance it did! Even the left for dead Cathy Wood stocks i.e. ARKK caught a bid....OK left for dead is over the top in describing it.
The job number on Friday absolutely blew away expectations. Usually the permabear types will find something to pick on when you get a report like this but this time...crickets. Goldman Sacks and JPM have come out with reports claiming that there's going to be a massive spring boom in economic activity as vaccine rollouts allow major locked down states like California, Illinois and New York to re-open. We could see growth rates that challenge China.(temporarily) even when excluding base effects. If this bullish scenario was to happen, then it's going to take off the charts level of bullish sentiment to mark a top of any significance. The SPX has made a new all time closing high. That has to be respected. Fresh all time highs tend to be beget further new highs. My bearish inclinations are premature it would seem. However, I will not let emotions take hold and still be disciplined and on guard. Sentiment can be fickle and we could see the recent caution be thrown to the wind on a dime.
Lets say we do this get massive surge in economic activity. It's going to put tremendous pressure on Powel to change his "no rate hikes until 2023" tune. Any hint of him doing that would cause a knee jerk market correction you would think. We're just going to have to wait and see how this all plays out...it will be interesting no doubt. Commodities is one area I have been focusing on...more on this in a future post.
