On Tuesday, the United States stock market closed at record-breaking highs. Since then, traders and investors have been on a buying spree. However, Private Wealth Management’s senior portfolio manager, Michael Baele has urged investors about buying stocks because of the recent highs. Speaking to the Wall Street Journal, he said that the United States stock market is trying to repeat what happened in the last quarter of 2018.
In his opinion, the current buying pressure is influenced by panic and not strong technicals and fundamentals. Long-term traders are worried that the Feds will increase the rates so they want to buy as much as they can at the current rate.
Michael Baele isn’t the only experienced analyst who has advised investors to proceed with caution. ThinkMarkets UK analyst, Naeem Aslam said that investors should not struggle to profit from the latest price hike. According to Aslam, about 79% of the S&P 500 companies have always risen above the forecasted first quarter rates. However, he noted that institutional investors haven’t studied the trend yet.
He made reference to the recent data from the Commodity Futures Trading Commission that gave a vivid description of how investors are positioned in the United States equity markets. According to the data, the institutional bullish sentiment for S&P reduced by over 36%. What this means is that most of these investors are taking short positions rather than long ones.
While it’s a good idea to listen to experienced analyst and use data from surveys as insight when taking market positions, it is important to note that these predictions aren’t always accurate. Last December, when the S&P fell as low as 2,351, many predicted that it may never recover to its all-time high. In about three months the market didn’t just reach its all-time high but moved above it.