January 14, 2020

Earnings are the single best guide in the stock market in the long term.

In the short term, sentiment rules.

Only 8% of the strong move up in the stock market last year was attributable to earnings. The rest was triggered by the Federal Reserve reversing its policy of raising interest rates, which boosted sentiment, especially among the momo (momentum) crowd.

In short, sentiment is driven by fear and greed. The CNN Fear & Greed Index stands at 90, representing extreme greed. Our proprietary sentiment indicator at The Arora Report differs from CNN’s conclusion in that the stock market is not yet at an extreme bullish level; it is approaching the extreme zone.… Please click here or the title below to read more.