Has Euphoria Taken Hold of the Stock Market?

Posted On June 9, 2020 3:00 pm
By: Steve Smith

I’ve been willing to accept the stock market rebound but it appears to be approaching a dangerous speculative state which is due for a correction. We’ve made the case that the huge rebound is stocks can be justified by various factors from the economic shutdown being an artificial externality rather than a systemic failure or secular slowdown to the massive monetary and fiscal stimulus to simply the companies that comprise and carry the most weight, such as “Apple (AAPL) and “Microsoft (MSFT)” have actually benefited from the viral lockdown.

But over the past week or two, we’ve had behavior indicative of unsustainable speculation bordering on euphoria. It’s evident across a spectrum in which troubled companies such as “Hertz (HTZ)” or “Luckin Coffee (LK)” have seen shares more than double to new blue sky electric vehicle darling like “Nikola (NKLA)” has soared 700%

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.