Happy New Year As Investors Go All In

This is an abridged version of our Daily Report.

Happy New Year

The S&P has enjoyed a record start to the year, with back-to-back gains and new highs. It has never before managed to climb more than 0.5% with 52-week highs on the first two sessions. Similar years saw pullbacks, with the short-term gains being erased, and less stringent tests also mostly saw weakness over the shorter-term.

All in

Individual investors haven’t been this exposed to stocks since 2000. They have an extremely high allocation to stocks, and have drawn down their cash cushion even further.

In 30 years, the only times they were more exposed were in early 1998 and mid-1999 to early 2000.

Emerging market breakout

The emerging markets ETF, EEM has spurted higher at the open the past two days and never looked back, leaving gaps of more than 0.25% between the day’s low and previous day’s high.

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