The S&P 500 has defied expectations with a remarkable $5 trillion surge in market capitalization in just 20 days. That's about $250 billion in daily inflows, reviving the index from its August 5 lows and effectively delivering its annual return in record time.
The Kobeissi Letter on X (formerly Twitter) attributes this swift rebound to a savvy strategy of leveraging market sentiment extremes. It warns against following the crowd, emphasizing that such herd mentality often fails in the long run. The S&P 500's RSI plummeted from overbought levels above 70 to oversold conditions below 30 in less than a monthâa pattern last seen when the index hit rock bottom in early April.
This dramatic turnaround underscores the volatile nature of the market and the potential pitfalls of succumbing to collective behavior. Keep a sharp eye on sentiment shifts, as they can lead to significant market moves in an astonishingly short time.
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