(Posted June 7, 2016)
There have been a lot of calls recently for the market to go even higher, ranging from a) The Fed won’t raise interest rates this month because of the weak jobs number, b) Energy and Basic Materials companies are now bottoming and will have less worse earnings, c) the earnings recession is close to an end with the rate of declining earnings slowing and earnings expected to grow again next year.
One of the lessons the market will teach you is that it doesn’t operate like you and I do. It’s not, “I’ll believe it when I see it” — it’s more like, “I’ll believe it before I see it.” That is the nature of a so-called discounting mechanism.
Despite all these calls for the market to go higher, it’s helpful to step back and look at it from another perspective.
CNN has a great website that tracks seven different indicators that collectively illustrate the market’s fear and greed sentiment, which they appropriately call the Fear & Greed Index. You can find it here. This is what it currently looks like:
Rainier Trinidad, CFA
San Diego and Coronado’s Fiduciary Financial Advisor
Parabolic Asset Management
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Coronado, CA 92118
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