TAPE keeps moving UP......

TAPE has perplexed many seasoned traders, indices are not following old traditional technical definition of "overbought "......

Old traditional definition of overbought is RSI @ 60......

Currently RSI in S&P 500 is 83.42.......

Lat time RSI dipped below 60 was in second week of November 2017.....

SO...for last 9 weeks we have gone UP in RSI......

Strength in RSI is a sign of money flowing in market @ above average level.....

Currently, based on old interpretation, retail investors are " most exposed in this TAPE "

MAYBE.....just maybe, retail investors are getting in this market after being away from this market for last 17 years......

There is too much demand for stocks from retail, institutions and many portfolio managers who are  " most cautious "

I do not see any sign which tells me that we are going to make 
a " u turn " in this market.

We MAYBE @ the start of biggest inflow in stock market, retail investors are @ the highest level of exposure.....

IMAGINE...IF...institutions start allocating " trillions " into equities......

I do think we are witnessing inflow based on "lowest interest rate environment "

Money is finding stocks to be cheapest in terms of PE values...compared to other times of euphoria..

1999 / 2000 PE was "non existent " in most stocks.....

Established companies like CSCO were trading @ triple of current multiple........and still going higher....

SO..based on " new Tax treaty " profitability of most corporation in US is looking much brighter than before.....

In any "bullish " environment, worst mistake IS when one tries to guess where the TOP is ......

In conclusion, stay with this market in a diversified portfolio for a long time, we may have just started on another run in this bullish TAPE.....

Good luck with your own thesis and your own comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed