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Investing.com – RBC Capital Markets said major U.S. indexes on Monday were looking set for a fall, reversing from record highs hit late last week.
As of 10:40 ET (14:40 GMT), the index was down 0.2% at 5,223.49, the index was down 0.3% at 39,353.39, and the index was down 0.2% at 16,401.91.
RBC said in a March note that U.S. stock market sentiment is stalled based on a variety of indicators, including AAII Netbull, CFTC buy-side, positioning in U.S. stock futures, and a University of Michigan survey question on stock price outlook. Said it looks like. Fed funds flow data as a percentage of U.S. stocks in financial assets.
However, Friday's updated data shows that buy-side CFTC's positioning in U.S. stock futures has reversed course and moved higher, the bank noted.
“We believe sentiment remains tense and a U.S. stock market pullback is premature,” RBC said. “However, the risk of a meltup is clearly increasing, especially given the dovish Fed meeting and the ongoing rapid growth in 2024 GDP.”
Analysts at the bank are closely monitoring AAII's consumer sentiment data, saying net bullishness is about one standard deviation above the long-term average, but not the two standard deviations that sometimes mark the top.
“We are once again starting to worry that we will reach our target before this rally takes a breather,” RBC said.
While this is good news for the U.S. stock market in the short term, it is bad news in the long term, as the S&P 500 tends to decline when it hits the two standard deviation threshold on a 12-month forward basis.
