In August, the U.S. stock market did not perform poorly in the traditional off-season trading season. After the NASDAQ index repeatedly set new record highs, the S & P 500 index broke through the “ceiling” on February 19 after half a year.
although the novel coronavirus pneumonia in the epidemic situation is still grim and the new round of stimulus bill in the US Congress is in suspense, liquidity provided by the Fed is still an important source of market confidence. First financial reporter noted that the US broad money supply (M2) surged from US $15 trillion and 300 billion in early August to US $18 trillion and 200 billion in early August, an increase of 20%. < p > < p > behind the recent surge in star stocks such as Tesla, apple and Amazon, it is inseparable from the US retail investors. According to the association of individual investors (AAII), as of the 13th of this month, 42.12% were short on US stocks, 30.14% were long on US stocks, and 12.09% were net bearish, down nearly 60% from the 28.99% high in early May. According to Li hengzhao, an international investment strategist at Guotai Junan, the data shows that the valuation difference between growth stocks and value stocks has reached the extreme level in the past 20 years, and the value stocks are far lower than the growth stocks. And the US stock market rose and profit and other factors led to the most high valuation of the plate. At present, investors’ enthusiasm for the information technology sector has risen to an unbelievable position, which makes us think of the Internet bubble. < / P > < p > another indicator of market sentiment, CNN’s business fear & Greed index, broke through the 70 mark this week (with a maximum of 100), reaching the highest level since the beginning of the year, indicating that the market is about to enter a state of extreme greed. German bank analyst Parag thatte said in the report that since the US stock market bottomed out in March, a large number of individual investors have actively entered the market through emerging Internet securities companies, such as Robin Hood and Ameri securities, in order to reduce transaction costs, while institutions that had previously hesitated about the market prospects also began to turn upside down. According to the latest survey released by Bank of America Merrill Lynch, fund managers’ optimism on the market has also reached its peak since the epidemic worsened in March. A net 12% of respondents chose to increase their shares, an increase of 7 percentage points from July. 46% of the institutions believe that they are in a bull market and 35% believe that the bear market is rebounding. In July, 47% of fund managers thought it was a bear market rebound, while only 40% of respondents believed that US stocks were in a bull market. The agency’s expectations for performance were further optimistic, with investors expecting corporate profits to improve in the next 12 months surged 21 percentage points to 57%, the highest level since March 2017. Fund managers, who held a lot of cash at the beginning of the epidemic, are returning to the stock market, pushing the index of positions close to historical highs, and positions are beginning to get crowded. In addition, many institutions have recently raised their target positions for the end of the year for US stocks. David kostin, chief US equity strategist at Goldman Sachs, substantially revised the S & P 500’s expectations by 20%. COSTIN pointed out that the increase in the target position was due to the positive news from the vaccine that raised Goldman’s forecast of US economic growth. < / P > < p > “as has been demonstrated in the past few months, stock prices depend not only on the expected future income streams, but also on the rate at which they are discounted. Looking forward to the future, Goldman Sachs’s earnings forecast for US stock companies is higher than the market’s general expectation, so it raised the target level of the S & P 500 index at the end of the year to 3600 points. ” According to the Goldman Sachs report. < / P > < p > generally speaking, the market tends to usher in turning points when sentiment is extreme, such as the short-term top in late January this year and the year’s low in March with panic killing and venting of pessimism. This time, US stocks may be approaching a new critical point. Boris Schlossberg, macro strategist at BK asset management, an asset management organization, said in an interview with first finance reporter that bullish sentiment in the market once again controlled the market after the fierce game. As news about vaccine research and development continued to spread, investors had reason to be optimistic about the future. < p > < p > the CBOE panic index VIX, which measures market volatility, has fallen by more than 10% in the past week, hitting a new low since the US took isolation measures in March. On the 20th, CBOE S & P 500 index options PCR (put call ratio) was 0.46, a new low in nearly a month. The trend of the index is often seen as a sign of market turning. April Joyner, a strategist at Reuters, points out that PCR indicators indicate that the market may soon face instability. Generally speaking, the higher the S & P 500 index rises and the lower the PCR value, the greater the risk of stock market correction. Now the indicators reflect that investors are too optimistic or too complacent, and the situation is easy to reverse. < / P > < p > since the end of 2018, when the S & P 500 index reaches an important level, the reading of the index is often lower than 0.60. At the beginning of June, when the index fell to a 20-year low of 0.402, the S & P 500 fell more than 8% from its high in just five trading days. Joyner believes that with the success of the S & P 500 index breaking through a record high, whether the index is to form a near perfect double top or continue to go up, the market may soon have a huge shock. < / P > < p > one of the potential risk points triggering market adjustment is the impasse in the negotiations on the stimulus bill of Congress. Li hengzhao told reporters of the first finance and economics that from the current situation, the financial stimulus may not be implemented until September as soon as possible, and the retail data representing consumer spending in August is expected to further slow down. It is worth noting that the tide of corporate bankruptcies is accelerating. The data shows that up to now, more than 400 large-scale US enterprises have declared bankruptcy. If the economic stimulus policy is not implemented, this number will grow rapidly and cause investor nervousness. The general election is another potential negative factor. Mark Hulbert, a MarketWatch columnist, points out that in the three months before the presidential election, US stocks have almost always fallen. Since 1900, for example, the Dow has fallen by an average of 5% during this period. Considering the special background of this year, Hulbert mentioned that in August 12 years ago, the market sentiment was also high. According to the institutional research paper published at that time, the mainstream view of analysts was that the subprime mortgage crisis was basically over, and just two months later, the bankruptcy of Lehman Brothers triggered a global financial storm. Today, on the eve of a new election, the stock market is once again out of touch with the grim economic reality. Schlossberg told the first financial reporter that the longer the U.S. economy stays in an uncertain state in the future, the more likely the upward energy of the market will be exhausted.