Note: To sign up to be alerted when the morning blog is posted to my website, enter your name and email in the box in the right hand corner titled “New Post Announcements”. That will add you to my AWeber list. Each email from AWeber has a link at the bottom to “Unsubscribe” making it easy to do so should you no longer wish to receive the emails.
The financials are catching fire as growing belief in the recovery decreases concern about their loan portfolios and rising interest rates increase their net interest margin . The S&P Financials are up more than 32% since November, according to Bloomberg’s Lisa Abramowicz, and are breaking out to new bull market highs (Chart Source: Lisa Abramowicz Twitter, January 12, 11:37am PST; Chart Source: 2kaykim Twitter, January 12, 9:52am PST).
We’ll learn more Friday when JPM WFC & C report 4Q earnings.
While the Financials are in the spotlight right now, just about everything is ripping with 92% of S&P components above their 200 DMA. As you can see, however, returns 5 days, 1 month and 3 months out are below average when the market is this strong (Chart Source: Daniel Lacalle Twitter, January 12, 10:26am PST).
The market is so frothy, in fact, that investors are now wading into the lowest priced stocks which have done the best so far in 2021 through Monday (Chart Source: MacroCharts Twitter, January 13, 12:00am PST).
This as the Equity Put/Call ratio plumbs new lows (Chart Source: Andrew O’Connell Twitter, January 12, 4:35pm PST).
I thought we’d reached the point of maximum optimism at the beginning of December but things continue to get frothier and frothier. We all know how this movie ends.