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"I have tried to keep on with my striving because this is the only hope I have of ever achieving anything worthwhile and lasting." ~ Arthur Ashe

Good evening,

Major stock-market indices have continued to advance and, as of Friday, the S&P 500 has closed up nine out of the last 10 days. With a decided scarcity of new macroeconomic data to drive the markets this week, Fundstrat Head of Research Tom Lee saw positioning as one of the main reasons for the rally.

Lee told us that despite what the rising indices might suggest, “this is not a rally that investors are trusting or embracing.” He added, “based on our conversations with clients, many remain skeptical. In fact,” he said, “it is not just our clients. Equity fund flows remain negative, investors have been buying more puts in the past week, and the CBOE US equity put-call ratio has been hovering near a high of 1.0 for the past few days. And CTAs as a group have essentially been selling stocks. That’s a contrarian bullish signal,” and it is shown in our Chart of the Week:

Lee reiterated that when investors are positioned like this, he believes “markets can levitate in the absence of catalysts such as macroeconomic data.”