Post-inauguration and expanded markets

Promoting the best post election and inauguration

The drums of the markets are getting bigger and bigger. From election to inauguration, the S&P 500 accounted for 13 percent, the best performance for any president since 1952. All key indicators after inauguration Russell 2000 (IWM), Dou Jones (IIV), S&P 500 (Spy)and Nasdaq (QQQ) achieved the highest performance of all time. More markets, by 2021, the foam market has risen to its highest level. All major markets have been in an almost non-stop bull market, with the Nasdaq and S&P 500 rising to 100% and 75%, respectively, since the pandemic level.

These actions include the task of distributing the vaccine, ongoing incentives from Washington, living with large financial and monetary resources from the Federal Reserve, a new policy aimed at accelerating economic growth, the election period began with the presidential inauguration. Despite these round winds, the markets have an overly broad view, as this is a wide range of historical criteria and current indicators that should be taken into account by investors in the near future.

Historical measurements and current indicators

A recent e-commerce survey found that the majority of investors (91%) have $ 1 million or more in their brokerage account and believe the stock market is in or near a bubble. . Historically, markets have surpassed levels reminiscent of the noisy twenties and are now approaching the point-com bubble region. These historical comparison options put / call ratios, broad participation in stocks exceeding their 200-day moving average, and P / E rates could be potential warning signs of near-term pressure. Current indicators also show bubble markets as measured by the Bollinger Bands and the Relative Strength Index (RSI).

The basics are high-level ratios

The income-to-income ratio is largely at odds with the economic background and historically high levels measured by Schiller PE. This indicator eliminates the fluctuations that occur as a result of changes in profit margins during business cycles. Outside of the 1999/2000 technology bubble, the current Schiller P / E ratio of the S&P 500 composite has surpassed that of the Roaring Twenties (Figure 1).

Figure 1 – Historical ratio of S&P 500 Schiller P / E over time

Call / call option ratio

Transfer / call coefficients estimate the size of bearish options compared to the volume of rough call options. This ratio is at its lowest level in 20 years, which may indicate irrational optimism by investors. The measuring instrument may be the opposite signal for most stock markets (Figure 2).

Figure 2 – Data on the 5-year put / call ratio, which recorded the lowest figure in the last 20 years

The highest figures of all time are the 200-day moving average

The stock rally was very broad, and almost every share of the S&P 500 is on a technical upward trend (e.g., stocks above the 200-day moving average). About 90% of S&P 500 shares are trading in this technical upward trend after the inauguration, which is the highest figure in recent years (Figure 3).

Figure 3 – S&P 500 technical trends, percentages of shares above the 200-day moving average

Relative power and Bollinger bands

Other technical indicators, such as the Relative Strength Index and the Bollinger Bands, also show markets that have been overbought and are going through two standard deviations from the 20-day moving average. The Russell 2000 indices are an example of how the RSI is chronic in the over-purchased region (reading> 70) and that Bollinger’s upper extremities are almost broken. These show the potential average change in underlying security (Figure 4).

Figure 4 – Russell 2000 ETF exited the high Bollinger band and the RSI recorded an oversold buy.

Conclusion

From election to inauguration, the S&P 500 accounted for 13 percent, the best for any president since at least 1952. All key indicators after inauguration Russell 2000 (IWM), Dou Jones (IIV), S&P 500 (Spy)and Nasdaq (QQQ) achieved the highest performance of all time. These efforts began with the task of distributing the vaccine, ongoing incentives from Washington, placement by the Federal Reserve, and the election period with the inauguration of the president. Despite these round winds, the markets have an expanded outlook according to many historical criteria and current indicators that investors should consider in the near future.

Noah Kiedrovski
INO.com Assistant

Note: The author owns shares in AAL, AAPL, AMC, AMZN, DIA, GOOGL, JPM, MSFT, QQQ, SPY and USO. He can trade options with any underlying securities. The author has no business relationships with the companies mentioned in this article. He is not a professional financial advisor or tax expert. This article reflects his personal views. This article should not contain recommendations for buying or selling any of the stocks or ETFs mentioned. Kiedrowski is an individual investor who analyzes investment strategies and disseminates analyzes. Kiedrowski encourages all investors to conduct their own research and related investigations before making an investment. Please leave your comments and feedback, the author appreciates all the answers. Founder of the author www.stockoptionsdad.com Where there are no options, bet on where the promotions will not go. Trading high-probability options to reduce steady gains and risks is evolving in both bull and bear markets. Visit stockoptionsdad’s for content based on more fun, short-term options YouTube channel.