Over the 20 trading days ending 11 February, an average of 15.8 billion shares was traded on U.S. equity markets, Bloomberg reported.
The number came close to the 20-day average of 16.1 billion shares reached last 25 March as the economy was crashing, panicked investors were dumping their portfolios, and opportunists were scooping up bargains.
A key difference between then and now is the markets’ sense of volatility, measured by the Cboe Volatility Index (VIX), which rates volatility – a proxy for investors’ sense of uncertainty – from zero to 100.
Last March, the index soared past 80 amid the crashing economy; on 12 February, the VIX ended below 20.
That suggests “the jump in trading activity is one more sign of exuberance in the stock market,” Bloomberg noted.
Another indicator: bull call options reached a record volume, signaling investors’ confidence in the markets’ future.
Chris Weston, research chief at Pepperstone Group, called the level of speculation “frenzied” in a comment to Bloomberg and attributed trading volume to the market’s influx of retail, or individual, investors.
The S&P 500 index has gained more than 4 percent this year and reached another all-time on 11 February.
TREND FORECAST: Yes, this is a market bubble, and yes, there will be a strong economic rebound this spring, summer, and autumn. But the devastation the lockdowns have wracked across continents will not be repaired or replaced. An array of existing businesses will bounce back, others will decline, and few new ones will be created.
And, with pent-up demand from a lock-downed society, when restrictions are lifted, there will be a go-out-and-spend splurge that will ignite economies.
However, what has been lost will take years to recover. We forecast that the high-rising equity markets will begin their crash as interest rates rise higher, inflation spikes, and the debt bubble inflated by nations across the globe bursts.
While it is difficult to precisely forecast when those events will transpire in tandem, we estimate before the end of this year.
