Awash in Liquidity
Stocks often move in ways that can be confusing to people but for those that are investing for tomorrow and not today, the moves can make a lot more sense. When we invest in a business, we seek participation in that company’s FUTURE growth, which means that the news of tomorrow will always supersede the news of today. As political instability and virus concerns dominate the headlines, savvy investors are looking through the news and asking “what will our companies earn in 2021 and beyond” and for many companies, the answers are quite attractive.
In today’s market review, we are going to take a close look at last Friday’s shocking labor market report and what it means for the economy and the stock market as a whole. More importantly, we will review how some of the high frequency data that we follow can give investors some insight to labor and consumer market trends ahead of the actual release. Second, we will look at investor positioning and sentiment data to assess whether the recent rally in stocks has led to euphoric behavior or continued resistance and apathy.
Additionally, we will measure the health of the current market bounce by assessing the sponsorship of the current market rally and whether breadth is continuing to expand or if there are signs of exhaustion as we enter the summer months. Lastly, we are going to take an in depth look at the amount of liquidity in the marketplace and how that has historically impacted the future trajectory of stock prices and most important, what it means for your portfolio today.
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