As a seasoned researcher with a knack for navigating financial markets, I’ve seen my fair share of market fluctuations, from bullish surges to bearish plunges. The recent rally in the S&P 500, adding $5 trillion in just 20 days, is nothing short of astounding. It’s a stark reminder of the power of capital flows and the irrational exuberance that often drives market behavior.
Over the past 20 days, the S&P 500, a key stock market indicator, has seen its total value increase by over $5 trillion. This daily surge amounts to approximately $250 billion per trading day. The index reached its lowest point on August 5, but in just this short period, these gains have equated to the index’s annual return.
As per Kobeissi Letter, a respected economics outlet on microblogging platform X (previously known as Twitter), their strategy primarily focuses on leveraging divisive opinions. Essentially, they advise against blindly following market trends in the long run because it’s generally unprofitable to do so.
According to reports, a significant decrease was indicated by the S&P 500’s Relative Strength Index (RSI) falling from above 70 to below 30 within a single month. This rapid shift means that the market moved from overbought to oversold during this timeframe. Notably, the last instance of such a drastic drop coincided with the index hitting its lowest point in April 2024.
Since August 5th, the S&P 500 has gained an astonishing $5 trillion in market capitalization. This impressive surge represents a 10.5% increase over just 20 trading days, which equates to approximately $250 billion per day. In essence, we’ve witnessed the stock market’s average annual return accomplished within a mere 20-day period starting from August 5th.
— The Kobeissi Letter (@KobeissiLetter) September 1, 2024
The article pointed out that the sell-off exhibited a sense of urgency since while certain individuals felt that the yen carry trade, an investment strategy involving borrowing Japanese yen at low rates to purchase higher-yielding securities like Treasury bills and stocks, had reached its end, Wall Street dealers were convinced otherwise.
According to the Kobeissi Letter, with more capital flowing into the market, the potential increase in the S&P 500 sped up noticeably, causing them to boost their prediction for the index’s target.
According to an interview with CryptoGlobe, investment analyst Gareth Soloway has noted a striking resemblance between the current trends of the S&P 500 and those observed back in 2007.
He pointed out that the market has experienced drops followed by rebounds, which, in his view, could lead to a new all-time high before a significant downturn. Soloway attributed this potential pattern repetition to consistent investor behavior over time, driven by emotions such as greed and fear.
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2024-09-03 03:53