By Shawn Langlois, MarketWatch
'Investors seem still caught in a past-tense, future-perfect kind of mood'
The stock market has a lot to navigate this week, from the daily dose of coronavirus gloom to a hefty lineup of earnings, including huge names like Apple(AAPL) , Amazon(AMZN) , Alphabet(GOOGL) , Exxon Mobil(XOM)and Pfizer(PFE) .
But if investors are worried about getting caught wrong-footed, you wouldn't know it from this chart from Qontigo, which shows that they are "uncharacteristically positive in the face of rising uncertainty about the economic rebound in the second half of the year":
The chart shows Qontigo's recently created ROOF score, an acronym that stands for "risk-on/risk-off." It's basically a gauge of how bullish investor are at any given moment.
As you can see, bullishness is currently running high.
"Investors seem still caught in a past-tense, future-perfect kind of mood having decided that they should not worry about all the facts, only those they can live with," Qontigo analysts wrote in a note this week about the divergence between market performance and fundamentals.
In their view, quantitative easing is trumping the presumption of economic fragility.
"The second wave of new infections is threatening large swath of the global economy and raising the probability of second lockdowns," the analysts wrote. "But like the mother of a drug dealer, or the neighbor of a serial killer, investors seem to be the last to know, preferring instead to focus on the stimulus packages this will invite." So it's "BUY, BUY, BUY!" regardless.
Bottom line: The consensus, according to Qontigo, is that even if the big earnings lineup doesn't support the current valuations, easy money from the Fed and/or a new stimulus package will.
"Risk tolerance continues to rise and risk-aversion decline, despite a worsening COVID-19 narrative as investors recreate their own 'fuggedaboutit' moment," the analysts said.
Meanwhile, the bulls took a bit of a hit in Tuesday's trading session, with the Dow Jones Industrial Average , S&P 500and tech-heavy Nasdaq Compositeall moving into the red early.
-Shawn Langlois; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
July 28, 2020 09:57 ET (13:57 GMT)
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