Navigating The Tidal Wave Of Liquidity –
SectorFinancial Markets
CountryMiddle east

The moved marginally higher in spite of its short-term very extended position, powered by liquidity. Credit markets were hinting at deterioration, the yen carry trade I talked about a week ago has run into a brick wall as viewed by the exchange rate reversal – but stocks didn't listen, and their market breadth indicators are actually quite healthy. We're still in the rare constellation I discussed two days ago – Treasury yield moves are exerting no real pressure either on value stocks or technology, including heavyweights, which are picking up the tech upswing slack. Microrotations still pointing higher are the name of the game, on the wave of infrastructure bill expectations as well. Still, the risk-reward ratio for the bulls is at unsavory levels in the very short run even as the longer time frame perspectives remain really bright. Consider these points I made yesterday: (…) we have seen quite a record number (around 95%) of stocks trading above their 200-day moving averages, which is similar to the setup right after the post-dotcom bubble bear market 2002/3 lows, or 1-2 years after the bull market run off the Mar 2009 lows.

Hard to say which one is more hated, but I more...