Fed Data Hints Americans Still Too Bullish For Stock Market Crash To End

  • Survey data from N.Y. Federal Reserve suggests the stock market crash may not be over.
  • Retail investors are still bullish prices will be higher in 2021 than in the present day.
  • Small traders are historically on the wrong end of big moves in the Dow Jones or S&P 500.

If bear markets end when investors reach maximum despair, this year’s stock market crash may have further to run. Data released by the New York Federal Reserve indicates that American’s are now more bullish that equity prices will be higher in 2021 than they were before the pandemic.

Can the Dow Jones have bottomed if bearish sentiment has not yet peaked? Probably not.

Investors More Bullish After Historic Stock Market Crash

After the coronavirus inspired a virtual shutdown of the global economy, asset prices around the world plunged. In the U.S., this prompted a historic stock market crash, which moved faster than anything we have ever seen in the Dow.

The Dow Jones endured the fastest stock market crash in history this year. | Source: Yahoo Finance

As unemployment has skyrocketed, initial jobless claims have risen to historic levels as over six million Americans filed claims last week. The fundamental pillar of the United States service-based economy has eroded, not to mention a significant collapse in the price of oil (of which the U.S. is the world’s largest producer).

There are also massive underlying issues in the mortgage market. Lenders are apparently on the brink of collapse as they’ve been forced to defer a historic amount of missed payments.

Fed Survey Perfectly Timed The Bounce In The Dow

Despite all this, N.Y. Fed consumer survey data demonstrates that Americans believe the stock market will be higher in a year at a rate higher than they did in February.

The survey shows that peak bullishness was achieved right at the Dow Jones’ low between March 17-23.

Retail investors were most confident the stock market would be higher in one year (53.9%) at precisely the YTD low in the…

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