After strong start to the year, the stock market now looks vulnerable as investors appear to be overdoing it, according to Fairlead Strategies' Katie Stockton.
January in particular saw some encouraging stock market breakouts, which typically indicate wider participation as a broader range of equities drives the rally,But since then, participation has been narrower, with the Nasdaq outperforming the S&P 500 amid heavy reliance on the handful of mega-cap tech stocks. The S&P 500 is up more than 7% year to date, while the Nasdaq is up nearly 15%.
Such outperformance will be fleeting with a relative pullback likely that will set up a test for the market, she predicted. "Sentiment has now gotten what we call sort of extremely greedy," Stockton added."You can see it maybe yesterday in bitcoin. That greedy sentiment makes for a fragile tape."The stock market's 20% rally off its mid-October low has
Nah, fund managers are 34% underweight equities and AAII is around 35% bullish.