VT - SPY: Don't Fall For The Greed
2024-03-20 08:15:45 ET
Summary
- Inflation was on the rise recently, but we've seen no SPY reaction to rising bond yields (market valuations have continued to edge up despite falling rate-cut expectations).
- The sharp rise in bullish sentiment recently is a sign of greed to me. I see some troubles with that amid current market conditions.
- In today's article, I present 3 logical scenarios that could happen next with SPY.
- Today's P/E ratio is 1 standard deviation away from the norm, which is why I think today's market rally is not sustainable in any of the likely scenarios ahead.
- Overall, I reaffirm my earlier "neutral" view on SPY, but this time the alarm in the back of my head is ringing louder. I beg you not to be swayed by greed.
At the end of January 2024, I wrote an article entitled " SPY: Black Swan Hiding In Plain Sight ", dedicated to SPDR® S&P 500 ETF Trust ( SPY ). In that article, I argued that the attacks by Houthi militants on ships in the Red Sea are causing significant disruption to shipping capacity, which is driving up transportation costs and could lead to rising inflation in the foreseeable future. My recommendation was that retail investors should consider reducing their capital allocation to equities as an asset class to avoid a possible return of inflation and, therefore, a longer-than-expected period of Fed tightness so to speak. I didn't want to time the market then, realizing that AI hype could drive the market much further than it seems possible to calculate. But today I take a much gloomier view of the stock market than I did two months ago....
SPY: Don't Fall For The Greed