You know that quiet, slow feeling when you're getting to the top of the first hill of a roller coaster? It's the last few moments of quiet before things get exciting – and maybe a little scary.
There's a unique perspective I watch on the market that's telling me… we just had that moment.
Those of you that follow me know that I've been complaining about the fact that this market is missing the "risk on" trade. Those of you that aren't familiar with this concept will get it fairly simply with one of my "Ten Commandments of Trading".
Commandment IX states: "Stocks are driven higher by speculation, not fundamentals."
That's right; as much as we want to believe that fundamentals drive the market higher… they don't.
Speculation – the act of investing $1 because you expect to get back $1.01 or more – is what makes stocks go higher.
This bedrock truth is always on my mind, so I watch the small-cap Russell 2000 and how it's trading against the backdrop of the more widely watched S&P 500.
Here's what I see…
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.