Strong energy in Wall Street has yet to fully recover, which implies the stock market’s rally over the last month still has room to grow.
This is alleviating news, since the stock market’s fast return from August-September, which was more than 10%. This could’ve led to an influx of eager investors that are following the trend.
The Hulbert Financial Digest (HNNSI) monitors a subset of short-term trades in the NASDAQ. The NASDAQ responds quickly to changes in investing action, making HNNSI the most sensitive measurement of investor reaction.
The HNNSI is currently at 37.5%, which is way below the peak levels in which it has usually risen to during market rallies over the past couple of years.
Surely, the HNNSI is not almost as strong as it was a month ago. Therefore, any rally from here on holds lower possibilities than those triumphed in late September. The average HNNSI at rally peaks are well below its past two year’s level, which topped off at almost 80%, which is double its current level.
In conclusion: The stock market response does not block the direction of a higher market.