The only three S&P 500 sectors with negative year-to-date performance are the Consumer Staples Select Sector SPDR Fund (XLP), Industrial Select Sector SPDR Fund (XLI) and Materials Select Sector SPDR Fund (XLB). Bad as that may seem, the declines in lagging sectors have been modest, thereby muting the impact on the overall U.S. stock market.
Market Sentiment
Could the stock market’s mood or sentiment be a sign that trouble is brewing? And if stock prices are over-inflated to the point of a looming pop, this should be reflected by overly bullish extremes. What do the indicators say?
Instead of showing a reading of “extreme greed,” the CNN Fear & Greed Index’s current reading of 55 is essentially neutral. A reading near zero indicates “extreme fear” whereas anything near 100 signals “extreme greed.” CNN’s indicator is a composite of seven different factors, including stock market breadth, safe haven demand and market volatility. Based upon current levels, stock prices do not reflect bullish extremes.
Summary
The longer it has been since the stock market’s last bear market, the sooner the next one will be. But until then, the indictors clearly say the bullish trend in stocks isn’t over. Or as Mark Twain might say, “Reports of the stock market’s death have been greatly exaggerated.”
Ron DeLegge is founder and chief portfolio strategist at ETFguide.