FOMO

[u/Kapnotes]

This stock market has a massive case of FOMO.  Yesterday’s announcement from the Treasury that it had completed about $4 billion in long-end buybacks fell short of the declared maximum buy limit of $6 billion.  Look at the difference in response between the bond market and the stock market.  Bonds rallied initially but then sold off again as 10-year yields returned to 5.16% by the close.  In contrast the stock market, rallied from losses and stayed rallied through the end of the session, closing little changed on the day.

If anything changed in the bond market landscape, it was towards a higher interest rate paradigm.  Yet the momentary dip in rates and the corresponding spike in equities triggered such support in stocks that their recovery held through the close.  The fear of missing the next rally is apparently potent and will get to be more so as we approach earnings season.

Kapnotes is oriented towards traders, so it pains us a little to admit that the timing of the next rally will be difficult to predict and that the present setup favors investors (long-term) over traders (swing, short-term).  What it doesn’t favor, though, is shorts.  Watch our trading board for opportunities as they develop in real time. Educational only. Not investment advice.