S&P 500 Momentum Index Jumps 34%, Surpassing Dot-Com Peak as Strategist Warns of Excessive Optimism
Updated
Updated · Business Insider · Jul 9
S&P 500 Momentum Index Jumps 34%, Surpassing Dot-Com Peak as Strategist Warns of Excessive Optimism
3 articles · Updated · Business Insider · Jul 9
Summary
A 34% gain in the S&P 500 Momentum Index across April and May marked its strongest two-month run since at least 1995, topping levels seen around the 1999-2000 dot-com peak.
That surge followed an 18% rebound in the S&P 500 since the March 30 low and a semiconductor-led rally that lifted the iShares Semiconductor ETF as much as 106% from its trough.
Morningstar Wealth CIO Philip Straehl said the move signals excessive optimism and supports a cautious market outlook, arguing the reward for risk is poor and investors should be more selective.
Straehl said other sentiment gauges — including zero-day options activity and leveraged ETF flows — also point to exuberance, while valuation measures such as the Shiller PE and equity risk premium look extreme.
Capital supply indicators are elevated but not yet at extremes, he said, even as equity and debt issuance rise alongside examples such as Google's $85 billion secondary offering and stronger M&A activity.