Talking Points:
• The S&P 500 Index has matched its longest rally for 2015 with Monday notching a fifth consecutive gain
• Given market position, disparate levels of return potential and saturation; the recent upswing faces headwinds
• In current market conditions, short-term speculators far outweigh long-term investors - an obstacle to momentum
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The recent rebound in 'risk' trends is both strong and wide, however it comes with a fundamental disadvantage. Participation is naturally biased to the short-term speculator rather the buy-and-hold investor. While a near-term bid doesn't different according to the underlying party, the continuity of the interest does. Speculators look to take advantage of short-term mispricings and periods of perceived low risk. That inherently means they are transient patrons of bulls trends - willing to bail at any fundamental or technical wobble. For the more committed investor, market price is still trading at exceptional levels to value, volatility remains dangerously and the risk trade is still saturated. This mix does not immediately call for a reversal on capital markets, but it will impart a bias that distorts expected risk and reward. We discuss this mix in today's Strategy Video.
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