The $4 trillion boom lifting equities for a month has been a YOLO feast, complete with spiraling meme stocks and surging options.
The result is a market of contrasts, in which a virtually uninterrupted march higher in the major indexes has pushed volume in the day trader flier-of-choice, bullish call contracts, to some of the highest levels in history.
At the same time, similar runs have come in fraught years for equities — 2007 and 1999, specifically — suggesting to some that the time for prudence is at hand.
Without a single down session, the Nasdaq 100 just scored two perfect weeks in a row, something that has happened only once before — in 2017.
Federal Reserve Chair Jerome Powell said officials can be patient on raising interest rates and Bank of England kept rates on hold, upsetting bond bears.
As traders piled in on speculative wagers for quick profits, daily trading in options averaged $538 billion last month, a record high, data compiled by Goldman Sachs Group Inc.
The firm’s strategists including Gonzalo Asis pointed to a spike in premium spent on small-lot calls as a sign that retail money may have helped drive the share rally.
Alon Rosin, Oppenheimer & Co.’s head of institutional equity derivatives, had the first-hand experience with the retail euphoria.
To say this year’s equity rally has surpassed expectations is an understatement.
The good news is all the price appreciation appears to have come from profit expansions.
Amid a wrong-footed rally in meme stocks and the Fed’s policy update, hedge funds cut back their positions.
Chris Senyek, chief investment strategist at Wolfe Research, sees a bubble forming in stocks, though he cautions about exiting too early now that major central banks have taken a more dovish tone in a coordinated fashion.