8 Charts Reading: Greed or Fear? Bullish Run or Correction?

1.The Future Path of the Market: Bullish Run or Correction?

Will the market continue its bullish run, or is a correction on the horizon? This is the million-dollar question for investors. Technically, the overbought conditions of the S&P 500 and InvescoQQQ suggest the possibility of a short-term pullback. However, the massive buying by retail and institutional investors, combined with the extreme levels of the Fear and Greed Index, indicates a strong upward momentum.

Below are some charts observation.

The current market landscape is a complex tapestry of signals and emotions. Both the $S&P 500(.SPX)$ and the $Invesco QQQ(QQQ)$ have reached their most overbought levels since July. Historically, such overbought conditions often hint at the potential for short-term market corrections. However, the recent actions of market participants tell a different story, one of exuberance and optimism.

Source from Tiger brokers.

2.The "Frenzy" of Retail Investors

Despite the overbought conditions, retail investors have shown an unprecedented level of enthusiasm. During the first three hours of Monday's trading session, retail traders purchased $4.1 billion worth of U.S. stocks, marking a historical record. This massive influx of capital reflects an extreme level of optimism among retail investors. They may have been emboldened by the recent rally, believing that the market's upward trajectory will continue. This sentiment is also evident on social media and investment forums, where many retail investors are sharing their bullish strategies and encouraging one another to participate in the market.

Source from JPMorgan

3.Institutional Investors' Aggressive Positioning

Institutional investors, on the other hand, have also been increasing their equity exposure at an unprecedented rate. According to Deutsche Bank, long equity positioning surged to its highest level in history last week, with a significant focus on mid-cap stocks. This move suggests that institutional investors are confident in the long-term prospects of the economy and corporate earnings.

Source from Deutsche Bank

Mostly, moved in midcap stocks. Mid-cap stocks are often seen as having higher growth potential compared to large-cap stocks, and institutional investors' preference for them indicates a belief in the ongoing economic recovery.

Source from bloomberg

4.The Extreme Fear and Greed Index

The Fear and Greed Index currently stands at 77, the highest level in a year. This index is a measure of investor sentiment, and a score of 77 indicates extreme greed. When investors are this optimistic, they tend to drive markets higher, as they are more willing to take risks and buy into the market's rally. However, history has shown that extreme levels on the Fear and Greed Index can also signal potential market reversals. Investors should be cautious about the risks associated with such extreme sentiment.

Source from Tiger Trade

5.The Subtle Shift in the Bond Market

The bond panic index has risen slightly but has not yet surpassed the highs seen in April. Bond market movements are often considered a leading indicator of economic conditions. The current uptick in the bond panic index may reflect concerns about inflation expectations, but it has not reached a level that would trigger widespread panic. Unless the index continues to spike, the bond market's fluctuations are unlikely to have a significant impact on the stock market.

6. Will "Sell in May" Persist?

The "Sell in May" strategy is a traditional investment adage suggesting that May is often a weak month for the markets. However, historical data shows that the period from May to July rarely sees declines. This phenomenon may be related to seasonal factors and the timing of economic data releases. For example, summer is typically a quiet season for corporate earnings reports, and investors may focus more on long-term trends rather than short-term volatility.

Source from Barchart

7. 6 Institution Increased target price for $S&P 500(.SPX)$ for 2025

Prior to May, this year, 22 institutions had provided target prices for the S&P 500 Index, with an average target of 5,774 points.

Since May, six institutions—Yardeni Research, BNP Paribas Exane, Goldman Sachs, Natixis, Raiffeisen, and Citi—have updated their target prices for the $S&P 500(.SPX)$ , all of which are higher than the average target price set by the previous 22 institutions.

As of the time of this report, the S&P 500 Index is quoted at a certain level. If there is a pullback, technically, we may need to pay attention to the potential pattens from A higher degree pullback looms for SPX by @TRIGGER TRADES

Source from Bloomberg

Summary

The current market is characterized by a divide between retail and institutional investors, as well as extreme sentiment signals. While there is a risk of overbought conditions, the optimism of investors and historical data suggest that the market may continue to remain strong. Investors should closely monitor developments in the bond market and economic data releases to make more informed decisions.

Will you continue to long or sell to take profit?

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Jackson Hole Watch: Where’s the Market Headed Next?

U.S. stock index futures moved little on Monday evening as investors stuck to the sidelines in want of more economic cues from the Jackson Hole Symposium and a host of major retail earnings due this week. Futures were flat after a largely rangebound session on Wall Street, with focus also on the Donald Trump administration’s attempts to broker peace between Russia and Ukraine. ----- Will market decide the direction this week? What to focus on Jackson hole? More clues about rate cuts?

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