FX Evolution: Retail Investors Are Getting Squeezed Again
Following the market’s selloff and bounce higher, investors may think that markets are back in bull market mode. With companies like Tesla (TSLA) soaring 40 points higher in a matter of days on positive news, it’s easy to see how things look bullish.
The good news? The options market looks bullish as well. Stocks are moving back to positive gamma with the S&P 500’s return to the 5,100 range.
With many investors expecting a market pullback, the 5% drop in the past few weeks may have been sufficient. In total, that small selloff took $2 trillion in value out of the markets.
Plus, with earnings season kicking off, companies are reporting better-than-expected data on average. This positive earnings surprise could help keep stocks moving higher.
The best positive earnings surprises have come from earnings and consumer discretionary stocks. However, energy has been an underwhelming sector.
With stocks performing well on a fundamental basis, there’s room for stocks to head higher. That’s good news for investors focused on growth stocks. And for companies that can grow during periods of higher inflation.
The downside to this trend is that companies that have missed on earnings have taken a much heavier hit. Going forward, markets will likely want to see more growth coming from the bottom 490 stocks in the S&P 500. That still makes the current market one where investors need to pick and choose carefully.