Benefiting from the deep development of Artificial Intelligence (AI) technology and the Federal Reserve's (Fed) initiation of a monetary easing policy cycle, the US stock market has truly experienced a "long bull" this year: not only have the stock prices of Apple, Nvidia, and Tesla continued to rise throughout the year, but the S&P 500 index also hit a record high of 48 times this year on October 18, approaching the 6,000-point mark, with a year-to-date gain of 22.6%.
The Buffett Indicator Reaches 200%
However, in the face of the current hot US stock market, @Barchart recently reminded investors on Twitter that the so-called "Buffett Indicator" has recently reached 200% for the first time in history, surpassing the levels seen during the dot-com bubble and the global financial crisis.
JUST IN
: Warren Buffett Indicator hits 200% for the first time in history, surpassing the Dot Com Bubble and the Global Financial Crisis pic.twitter.com/w0NV4RaMw7
— Barchart (@Barchart) October 22, 2024
Citibank: S&P 500 Exposure Reaches Highest Level Since Mid-2023
Against this backdrop, Citibank analysts pointed out in a report this week that the exposure of the S&P 500 has reached its highest level since mid-2023, and the market is showing signs that a collapse could occur at any time:
The bullish positions in the S&P 500 have reached their highest level since mid-2023, and at that time, such high exposure led to a decline of more than 10% in the following three months.
We are not suggesting that investors should start reducing their positions, but when the market reaches this stage, the risk of the positions will undoubtedly increase.
However, it is worth noting that the Citibank strategy team led by Chris Montagu also pointed out that the prospect of a soft landing for the US economy has provided support for the bullish momentum of the US stock market and the S&P 500 index, and although the current exposure level is very high, it is not as extreme as it was in 2023. Therefore, bears who choose to increase their short positions will also face higher risks in the short term:
Although the uncertainty of the US elections in November, the narrative of a soft landing for the economy and solid earnings have undoubtedly supported investors' bullish momentum.
The current market condition is that all bears are in a loss position, but if they continue to increase their short positions, they may face the risk of a market rally in the short term.
Gold Surges 32.5% This Year
It is worth mentioning that gold, which has long been seen as a hedge against political and economic uncertainties, has risen 32.5% so far this year and hit a record high of $2,758 per ounce on October 23. Yesterday (24th), it experienced a slight pullback, trading at $2,733 per ounce at the time of writing.
However, RJO Futures strategist Bob Haberkorn said that the market may currently be taking some profits, but as the risk-averse sentiment has not weakened, the gold price is expected to continue to rise to $2,800 by the end of this week.
