AFMC - CDT Insider Sentiment Ratio January 2024: Low Sentiment

2024-02-05 07:30:00 ET

Summary

• The S&P 500 Total Return Index has gone up in what feels like a straight-line +20% power rally. Underpinning the move is a growing consensus around a handful of high-conviction, high-market impact expectations of the future.
• However, insider sentiment has darkened, as evidenced by six weeks of historically low and declining insider purchasing activity.
• We do not know for certain what has caused sentiment to sour, but we should be alert to the fact that the most informed market participants in the world are, at the moment, unable to find and exploit pockets of value.

Fasten your seatbelt.

An unrelenting rally. From the local market low in the latter half of October through today, the S&P 500 Total Return Index ( SP500TR ) has gone up in what feels like a straight-line +20% power rally. Underpinning the move is a growing consensus around a handful of high-conviction, high-market impact expectations of the future. Namely, the principal market expectation of the moment is that inflation in the coming months will normalize around 2% and the Federal Reserve will have to lower interest rates more aggressively than they have publicly admitted (see here ). Adding to the positive mood is a resilient jobs market and the expectation that it will remain so (see here ); and, of course, there are hyper-expectations around the future of AI and the new technology's ability to assist in solving some of humanity’s most confounding problems (see here )....

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