A Tale of Two Markets
A tale of two markets today. Momentum is overbought; yield and many high quality strong dividend companies are oversold. In 1999, long momentum/short quality played out for over a year before correcting in a bubble burst in 2000. Right now there is no bubble but when indexes like QQQ and IWM go weeks staying overbought, it eventually leads to a sharp short-term pullback in those stocks. In the meantime, the path of least resistance remains higher.