FAST FIVE: Market Risk Elevated Heading Into Distribution Season
Such levels of ownership have previously coincided with short- to intermediate-term corrections in the market.
Deviations Are Extreme Lastly, the market's monthly deviations from the 3-year moving average are pushing well into 3-standard deviation territory and trading more the 30% above its mean.
Global economic growth fails to reaccelerate in the second quarter of 2021.
As shown below, with fund managers carrying some of the lowest cash balances on record, we could see selling pressure to make distributions. With the markets exceedingly exuberant on many fronts, caution is certainly warranted. With margin debt near peaks, stock prices at all-time highs, and “junk bond yields” near record lows, the bullish media continues to suggest there is no reason for concern.
As such, here are the 7-impossible trading rules to follow: 1) Sell Losers Short: Let Winners Run: It seems like a simple thing to do, but the average investor sells their winners and keeps their losers, hoping they will eventually return to even.