U.S. Stock Market Update: Investor Sentiment Remains Frothy

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Stocks have climbed a wall of worry for much of the past months so it’s not surprising that investors are getting complacent and have become overly bullish.

Near-term complacency has eased somewhat but weekly surveys are still heavily tilted toward optimism.

Most investors are positioned for late-2020 momentum to carry stocks higher into 2021.

With stock market breadth robust (as seen in both industry group trends and the percentage of world markets trading above their 50-day averages), near-term sentiment risks are more about volatility that sustained weakness. Longer-term, earnings growth expectations (on a median basis) are not unduly high, but overall valuations on both a trailing and forward basis are not consistent sustained stock market strength.

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Twitter:  @WillieDelwiche

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