Posts by Kevin Chupka

  • The Pain Trade: Experts watch rally from the sidelines

    Kevin Chupka at Breakout20 days ago

    It may seem counterintuitive to classify the latest market rally as painful but for everyone sitting on the sidelines in cash it must have hurt to watch the tape tick higher. This “pain trade” goes back to legendary trader Jesse Livermore who posited that markets will move in whatever direction hurts the largest amount of people.

    David Lutz of Stifel says we’re in the middle of the perfect example of Livermore’s theory. Since the 2014 low on the S&P 500 back at the beginning of February the index is up over eight and a half percent. Lutz cites a Reuter’s poll from around that low that said, “the 51 leading investment houses, the 51 smartest houses on the street...had cash at 20 month highs, they had bond holdings at four month highs [and] equity weighting at almost nine month lows.” So up the market went.

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