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.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.