META - SPDR S&P 500 ETF And Invesco QQQ Trust: Almost All Investors Are Crowded Into The Same Side Of The Boat
2024-02-21 06:40:53 ET
Summary
- Passive funds account for over 50% of all assets and 60% of domestic equity funds, with passive fund flows even greater, leading to market euphoria.
- The combination of passive flows, volatility suppression trades, gamma call squeezes, 0DTE options, and futures positioning is fueling the market melt-up.
- Despite all the hoopla and hype, the Invesco QQQ Trust and the SPDR S&P 500 ETF are significantly underperforming energy and material investments since the March 23rd, 2020, pandemic low.
If everybody indexed, the only word you could use is chaos, catastrophe… The markets would fail."
- John Bogle, May 2017
Introduction
Watching the broader equity markets melt-up higher the last 16 weeks, where both the Invesco QQQ Trust ( QQQ ) and the SPDR S&P 500 ETF ( SPY ) are up 14 of the last 16 weeks, and watching a stock like Super Micro Computer ( SMCI ) reach overbought readings that only GameStop ( GME ), during its epic short squeeze, has reached previously in recent memory, I am struck how much this euphoria resembles a combination of previous market episodes of market euphoria ....
SPDR S&P 500 ETF And Invesco QQQ Trust: Almost All Investors Are Crowded Into The Same Side Of The Boat