I want to take you back to January 2018.  The S&P 500 had been screaming for four months.  The index had tacked on almost 14% in that span.  Everyone was bullish.  And no more so than the hedgies.  At the forefront of that giddiness was Bridgewater's Ray Dalio.  

Was Ray ultimately correct?  You betcha!  Financial assets have screamed since that call.  Cash has been a terrible place to be.

Was Ray right in the short run?  Not a bloody chance.  Let's run the tape and see the timing of his "holding cash is stupid" call:

The S&P proceeded to puke over 12% in the next couple of weeks after Ray's comment.  

Today the S&P 500 is once again running like it stole something.  We are up almost 10% since the end of the third quarter.

Could we go higher?  For sure!   The momentum is electrifying and the stock market's rise has begun to capture the public's attention with stocks like Tesla and Apple gapping higher every night.

However, I would like to remind you that the dentists in Kansas no longer matter.  No, it's the computers in Secaucus New Jersey calling the shots these days.  And they seem even more bullish than the dentists.  From a recent Deutsche Bank report:

"Equity allocations for Vol Control, CTAs, and Risk Parity are all near a historical maximum.  The only other time that systematic strategy positioning was higher was in Jan 2018, prior to the large Feb selloff."

Be careful up here.  As the speed of the move increases, the risks for a painful correction increase. The possibility of another quick correction like 2018 are high.  I just don't know if it will be from this level, or another 5% higher.

Thanks for reading,
Kevin Muir  
the MacroTourist