May 14, 2020
The most important considerations for equities are always interest rates and bond yields. Both are extremely bullish for equities at the moment. Money supply is a massive input for the economy 6-9 months forward (very strong correlation between M1 to PMI data two months forward) and is booming at the moment with the most intense phase just getting started. The technical indicators from the paragraph above are interesting, but I wouldn’t get too focused on secondary effects. And I’ve also extensively covered the positive contrarian signals from extreme bearish sentiment and light equity positioning…both highly supportive. The weekly AAII sentiment survey results for the week ending yesterday released with bearish sentiment at 50.61, the third highest reading on record and keeping the 50-day moving average at an all-time record. This is the herd, and you don’t want to travel with the herd.