Market sentiment has improved over the last couple of quarters as aggressive monetary policy, and fiscal stimulus supported asset price increases.
The risk markets were extremely oversold at the lows in March and have since rallied impressively, coinciding with a historic rally in the money supply. That oversold condition has flipped to extraordinarily overbought.
Market trends are positive for most asset classes we follow over the short-term, intermediate-term, and long-term. That is positive for now, but with overbought conditions and diverging market internals, participants should be prepared for potential trend reversals.
Economic activity and monetary policy are currently supportive of market sentiment. Leading economic indicators are continuing to improve significantly, and stimulus efforts provided the life support needed to stabilize the U.S. economy. Employment trends, which are historically lagging indicators, remain negative for now, indicating that the Fed will remain accommodative.Click below to read the full report.
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