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Small Cap Stocks Surge To ‘Most Overbought’ In 20 Years, Bonds Shrug

Courtesy of ZeroHedge. View original post here.

The largest secession movement since Brexit and the biggest mass shooting in American history… buy stocks!!

Spain felt the pain…

The US market breaking helped to get things going early on…

Futures show the buying binge at Sunday's open – amid Catalonia's chaos – and then the debacle around the US open (as the market broke after VIX snapped to 10)…

Record Highs for everyone… you get a record high, you get a record high, you get a record high, we all get a record high

Small Caps continue to surge (Trannies underperformed but was also panic bid into the close), Dow surged 150 points to top 22,500 (and the S&P 500 is just 70 points below Goldman Sachs' 2019 year-end target!!)

Small Caps are the most overbought since October 1997… (up 23 of the last 28 days and up 7 in a row)

Which saw Small Caps drop'n'pop before crashing 38% in 1998…

And do not worry because it's all based on fundamentals…

But it is noteworthy that 'high-tax' companies dramatically underperformed the market…

Value stocks dominated growth (especially after Europe closed)…

Gunmaker stocks surged on the day…

GM spiked to post-bankruptcy record highs (as Tesla tumbled) on news that GM will launch at least 23 vehicles by 2023…

FANG Stocks followed the same path as last Monday, selling off notably (as value dominated growth)

Netflix was a big loser among the FANG Stocks…

But banks underperformed the market, catching down modestly to the flatter yield curve…

From the European open, it seems a bid for bonds and stocks appeared….

Treasuries ended the day unchanged after some early weakness (in Asia) and strength (in Europe)…

The dollar index rebounded to Thursday's highs on EUR weakness after Catalonia…

Gold limped lower once again to its lowest since Aug 16th as Bitcoin surged back above $4400 (its highest since Sept 8th)…

WTI had a tough day on a surge in production from various OPEC members coming back online…

Finally remember the 'curse of 7' for Q4…

As Bloomberg reports, some of the biggest fourth-quarter declines in the Dow Jones Industrial Average have occurred in years ending in seven, the worst being in a Black-Monday plagued 1987.

*  *  *

The venerable Art Cashin summed up today's market perfectly… "I've been doing this for 50 years, and I've never seen anything quite like it"


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