New York market strategist Ed Yardeni has expressed concern that investors may be overreaching in the current market environment, despite his overall optimism for the S&P 500. This caution comes as the Investors Intelligence Bull/Bear Ratio jumped to 4.27 last week, surpassing the 4.00 mark. Yardeni views this high ratio as a contrarian indicator, suggesting that a short-term pullback may be imminent.
Yardeni noted that rather than rebalancing portfolios, investors are heavily concentrated in the ‘Magnificent 7’ tech stocks. These include Alphabet, Meta, and Microsoft, all of which released their quarterly results after market close on Wednesday, with Apple and Amazon scheduled to report on Thursday. He questions whether current capital spending on AI infrastructure will ultimately prove profitable.
Yardeni suggests that the S&P 500 may be due for a pullback, especially considering it is currently 13 per cent above its 200-day moving average. Yardeni Research, Inc. is an investment strategy firm specializing in global investment research and asset allocation recommendations. The firm provides independent research to institutional investors and high-net-worth individuals.
