Market mood
On 28/03 before the nice present rebound, we were writing:
“As developed in the previous posts, our confidence is improving on the market for the short term, even if it needs to be confirmed.
A key element is the situation on the mortgage business: the credit risk default has decreased the 2 last weeks by 25%. It means that things are evolving in the good direction: the confidence is increasing and then the credit default estimator is decreasing…
If we look at the SPX, we can track its situation with 2 simple numbers:
P/E ratio: 20 & the % of stocks above their 50 days moving average: 44% […]” (see post below)…. and the posts even before when we had anticipated the change in market mood!
It happens to be completely verified with the recent strong up direction of major stock indices, leaded by financials and retailers… We made a trade out of it these last days. Note also that money is flowing out of gold & bond positions into stocks again: this is an interesting balance that we need to follow over the next weeks…
It seems more likely that a test of the feb highs on the stocks is on the tape. It would be the decisive point: the bridge to win for bulls to prove their strength. Let’s observe how indices react today… As mentioned yesterday, we stay out of the market right now…