Major indices are higher again this Wednesday morning, despite a reversal of the market’s other recent trends: oil prices fell significantly overnight, the dollar slipped, and interest rates ticked ever so slightly down. Of course if oil prices, a strong dollar, and higher interest rates aren’t driving the rally, it now seems possible stock buyers aren’t responding to fundamentals at all, but to rising faith in their own rising confidence.
Something similar occurred when internet company stocks de-coupled from earnings in the internet boom of the late 1990s. The market’s average P/E Ratio rose far higher than at any other time in history, and remained high for three or four years. Faith in the potential of internet companies caused some companies to succeed when they likely would not have otherwise, but eventually led to the dot-com crash of 2000-2001. It will be interesting to see if the current surge follows a similar pattern. Ford (F) is up 3.5% after December sales were up 5%.
Here are your Wednesday morning market metrics. Industries doing well today include automobiles, multiline retail, and leisure products. Industries showing weakness include healthcare technology, communications equipment, and diversified telecom. The VIX is down 4.75% to 12.24 after closing on Tuesday at 12.85. The most heavily traded options this morning are for the SPDR S&P 500 ETF (SPY), with 8,356 January 221 puts on the board. The total put/call ratio as of 10:00 AM was 0.9 (247,667/222,744). NYSE Adv/Dec 2,341/550. Nasdaq Adv/Dec 1,928/601.